Key points of compromise issued by Lamy
July 28, 2008
Here is a summary of key proposals put forward by Pascal Lamy, the director-general of the World Trade Organisation (WTO), in a bid to break the deadlock among the 153 member states and finally secure a new global trade pact.
Subsidy cuts
Lamy's proposals envisage sweeping subsidy cuts by rich Western countries that have often been accused by developing nations of undermining free trade and pushing their farmers into penury.
The biggest subsidisers will make the biggest cuts, notably the EU, which will have to slash its payments to farmers by 80 percent and see its maximum subsidy threshold fall to €24 billion (R284 billion).
Japan and the US will cut their domestic support by up to 70 percent, taking the total US subsidies to $14.5 billion (R110 billion). Other developed countries will cut support by between 50 percent and 60 percent. These cuts will be implemented within five years.
Agricultural tariffs
Major agricultural exporters such as Brazil have long demanded that powers such as the EU lower their tariffs on imported agricultural products.
Under Lamy's proposals, the highest tariffs will be cut by the greatest amount, with the aim of reaching a minimum average of 54 percent across the board for developed countries.
The highest tariff band (75 percent or more) will be cut by 70 percent, meaning a tariff of 100 percent would be cut to 30 percent.
Developing economies would face a minimum average of 36 percent, while least developed countries would not be obliged to make any cuts.
Industrial products
Industrial products is the other main bone of contention in the Doha round.
Rich countries are seeking greater market access in the developing world, in exchange for concessions on agriculture.
Lamy has proposed that about 30 developing countries reduce industrial tariffs on the basis of a coefficient formula between 20 and 25 (the lower the coefficient, the greater the cut).
Under this so-called Swiss formula, emerging economies such as Brazil or India would cut their industrial tariffs to an average of between 11 percent and 12 percent. Developed countries would use a coefficient of eight, taking the average to below 3 percent.
Developing countries would also be able to shelter up to 14 percent of products as "sensitive", depending on which coefficient they used, though it would not be possible to block off any sector in its entirety from tariff cuts.
Here is a summary of key proposals put forward by Pascal Lamy, the director-general of the World Trade Organisation (WTO), in a bid to break the deadlock among the 153 member states and finally secure a new global trade pact.
Subsidy cuts
Lamy's proposals envisage sweeping subsidy cuts by rich Western countries that have often been accused by developing nations of undermining free trade and pushing their farmers into penury.
The biggest subsidisers will make the biggest cuts, notably the EU, which will have to slash its payments to farmers by 80 percent and see its maximum subsidy threshold fall to €24 billion (R284 billion).
Japan and the US will cut their domestic support by up to 70 percent, taking the total US subsidies to $14.5 billion (R110 billion). Other developed countries will cut support by between 50 percent and 60 percent. These cuts will be implemented within five years.
Agricultural tariffs
Major agricultural exporters such as Brazil have long demanded that powers such as the EU lower their tariffs on imported agricultural products.
Under Lamy's proposals, the highest tariffs will be cut by the greatest amount, with the aim of reaching a minimum average of 54 percent across the board for developed countries.
The highest tariff band (75 percent or more) will be cut by 70 percent, meaning a tariff of 100 percent would be cut to 30 percent.
Developing economies would face a minimum average of 36 percent, while least developed countries would not be obliged to make any cuts.
Industrial products
Industrial products is the other main bone of contention in the Doha round.
Rich countries are seeking greater market access in the developing world, in exchange for concessions on agriculture.
Lamy has proposed that about 30 developing countries reduce industrial tariffs on the basis of a coefficient formula between 20 and 25 (the lower the coefficient, the greater the cut).
Under this so-called Swiss formula, emerging economies such as Brazil or India would cut their industrial tariffs to an average of between 11 percent and 12 percent. Developed countries would use a coefficient of eight, taking the average to below 3 percent.
Developing countries would also be able to shelter up to 14 percent of products as "sensitive", depending on which coefficient they used, though it would not be possible to block off any sector in its entirety from tariff cuts.