Background on the Cairns Group and the WTO Doha Round

Introduction

The Cairns Group is a unique coalition of 19 developed and developing agricultural exporting countries with a commitment to achieving free trade in agriculture*. The Cairns Group has been an influential voice in the agricultural trade reform debate since its inception in 1986.

The Cairns Group negotiated successfully for the inclusion of new agricultural trade rules to reform global agricultural trade during the 1986-94 Uruguay Round negotiations under the General Agreement on Tariffs and Trade (GATT), These efforts brought agriculture into the global trading system for the first time and ended the export subsidy war that threw global agriculture into crisis in the late 1980s.

Since the end of the Uruguay Round and the creation of the World Trade Organisation (WTO), the Cairns Group has continued to be a strong and constant voice for agricultural reform. It played an important role in launching the current Doha Round of negotiations in 2001, ensuring that agriculture remained front and centre of the Round’s "development" mandate.

The Cairns Group has pushed hard for ambitious agricultural trade reform throughout the Doha negotiations in the face of considerable resistance from some WTO members who prefer that protection for agriculture be maintained. In doing so, the Cairns Group has engaged effectively with other groupings in the WTO, in particular the G20 group of developing countries, to build support for agricultural trade reform.

The Cairns Group is an excellent example of successful coalition building in the trade arena and has maintained its cohesion for over 20 years. Since the end of the Uruguay Round, membership has risen from 14 to 19; Bolivia, Costa Rica, Guatemala, Pakistan, Paraguay, Peru and South Africa have joined the Group. Collectively, the members of the Cairns Group have exerted far more influence than its members could have achieved independently.

Agricultural trade and the Cairns Group

The GATT was formed in 1948 to develop multilateral rules for fairer world trade. The GATT rules enshrined the fundamental principles of non-discrimination and "national treatment".

Agriculture was effectively excluded for the first four decades of the GATT’s existence. This omission enabled rich developed economies to protect and subsidise their farmers - with dire consequences for other agricultural trading nations.

The main offenders were the European Community (EC), the United States, and Japan, which managed their agricultural markets using a combination of high tariffs on agricultural imports and subsidies to their farm sectors. These policies resulted in competitive exporters in Latin America, South East Asia and Oceania playing the role of residual suppliers to their traditional markets and being crowded out of most other markets.

The main justification for the high levels of support for EC, US and Japanese farmers was the politically destabilising effect of food shortages. Memories of food shortages during the Depression and World War II continued to resonate and self-sufficiency in food remained a common objective.

The problem was that the approach of these three members to farm support was fundamentally flawed and had seriously negative consequences for efficient agricultural exporters and developing countries. Farm subsidies and/or high tariffs resulted in huge food surpluses which were then disposed of on the world market, driving down world prices. As a result, in the early 1980s, international farm trade was historically depressed.

The challenge for the Cairns Group lay in persuading the EC and the US to reduce their farm support programs and particularly their direct export subsidies, in the face of strong political pressure from their farm constituents.

The first Cairns Group meeting was held in Cairns, Australia, on 27 August 1986, one month before the launch of the Uruguay Round. Fourteen countries attended, including a mix of developed countries (Australia, New Zealand and Canada), developing South American countries (Argentina, Brazil, Chile, Colombia and Uruguay), developing ASEAN countries (Indonesia, Malaysia, Philippines and Thailand), an eastern European country (Hungary) and a non-GATT member (Fiji).

In September 1986 at Punta del Este, Uruguay, the Group quickly achieved its first success by helping to negotiate a broad negotiating mandate to reform agricultural trade. While the outcome of the Round was delayed until 1994, it was ultimately successful in starting the process of reform to global rules governing trade in agriculture.

Critically for the Group, the Uruguay Round outcome set some limits on the use of export subsidies and farm support programs and was also successful in making WTO members convert non-tariff measures, such as quantitative restrictions, into tariffs. The resulting "tariff equivalents" were high but this simplification would make it easier for future WTO rounds to negotiate tariffs downwards.

The Cairns Group and the Doha Round

While the conclusion of the Uruguay Round was a significant milestone, the Cairns Group always understood that it was only the beginning of the battle to redress global distortions in agricultural markets. At the first WTO Ministerial Meeting in Singapore in 1996, the Cairns Group began to shape the future agricultural negotiation agenda - the first step in the long process towards the launch of the Doha negotiations.

In 1998, the Cairns Group agreed to renew its blueprint for reform, issuing a Vision Statement on the steps necessary to complete the process. These steps included deep cuts to all tariffs, the elimination of all trade-distorting domestic support; the elimination of export subsidies and clear rules to prevent circumvention of export subsidy commitments. The Vision Statement also reaffirmed the Group's support for the principle of special and differential treatment for developing countries.

The core philosophy of the Vision Statement was that agricultural markets free of distorting subsidies and open to global trade are key drivers of international economic growth and development. This philosophy has remained central to the Cairns Group’s approach to the Doha Round of negotiations, launched in 2001.

Over the course of the Doha negotiations, the Cairns Group has pushed strongly for agricultural trade reform. The Cairns Group has continued to espouse the importance of substantial reductions in trade-distorting domestic support and the elimination of export subsidies. Also critical to an ambitious outcome in the Round, the Cairns Group has called for deep cuts to all tariffs, an expansion of tariff quota access and improvements in tariff quota administration.

Milestones since commencement of the Doha Round Negotiations

On 31 July 2004, WTO members reached agreement on the July 2004 Framework on Agriculture to guide the agricultural negotiations in the Doha Round. Agreement was reached on the structures for reductions in domestic support and cuts to tariffs, with the effect that the greatest distortions would be treated most rigorously.

The WTO Hong Kong Ministerial Declaration made in December 2005 saw further progress on the approach to reform agricultural trade, and as part of concluding the Doha Round, established a commitment for the elimination of export subsidies by the end of 2013.

The negotiations were suspended at the end of July 2006 after an attempt by ministers from six key players - Australia, the United States, the European Union, Brazil, India and Japan - to break the deadlock on a number of technical issues.

The Cairns Group used its 20th Anniversary Ministerial Meeting in September 2006 to explore practical ways to get the negotiations back on track. This meeting sent a united message to the major players about the importance for global development of an ambitious and conclusion to the Round. The Cairns Group agreed on a program of work to establish the conditions for a successful conclusion to the negotiations.

Bilateral exchanges and ongoing technical discussions assisted in creating a political environment for the resumption of negotiations. As a result, WTO Members agreed to a full resumption of the Doha negotiations in late January 2007.

The 31st Cairns Group Meeting in Lahore, Pakistan, in April 2007 reaffirmed its efforts to conclude the Round, and highlighted a number of proposals that fed into the development of the modalities texts.

In July 2007, the Agriculture Chair released a draft text, and discussions and subsequent revisions of the Chair’s text continued until mid 2008.

The meeting of WTO Ministers in Geneva 21-29 July was the largest WTO Ministerial Meeting since 2005. The July 2008 Package reflected the considerable progress made by the WTO’s 153 Members since 2001. Convergence was reached on many of the outstanding issues, in both agriculture and non-agricultural market access (NAMA). A handful of elements in the package were unresolved – in particular, the Special Safeguards Mechanism (SSM) for developing countries and cotton domestic support.

The December 2008 negotiating texts for agriculture and NAMA incorporated the main elements of the progress made at the WTO’s Ministerial Meeting in Geneva in July 2008 and subsequent technical work by officials. These texts represent the significant progress achieved to date in the two core areas of the Doha Round.

The 33rd Cairns Group Ministerial Meeting in Bali in 2009 provided an important opportunity to reinvigorate the negotiations and further build on the progress that had been made. The Cairns Group recognised the good progress made in the negotiations, and reaffirmed their commitment to resolving the handful of outstanding issues. Cairns Group Ministers called for senior negotiators to convene in Geneva to map out a clear path towards conclusion of the negotiations, and to start before the 2009 European summer break. Special guests, US and India, endorsed this approach.

Following negotiations in the second half of 2009 (after the northern hemisphere summer break), Cairns Group Ministers expressed concern at the limited progress in narrowing the differences on the outstanding issues at the 34th Cairns Group Ministerial Meeting in Geneva in 2009. The Cairns Group continued to call for all WTO members to secure an ambitious and balanced outcome to the Doha Round based on the progress already made, including regarding the agriculture modalities.

During the March 2010 stocktake of the WTO Doha Round in Geneva it became clear that Members were not in a position to substantively resolve matters, and that further work is required. The Chairman of the Committee on Agriculture Special Session, David Walker, provided a report to the Trade Negotiations Committee for the purpose of the stocktake. The report provides a useful summary of the state of play in the Doha Round's agriculture negotiations.

The 35th Cairns Group Ministerial Meeting in Punta del Este, Uruguay, in 2010 provided the first opportunity for Ministers to meet to review the Doha Round following the March 2010 stocktake. This meeting was set against the background of a slowly recovering global economy.

In April 2011 the negotiating chairs circulated an Easter Package of documents, including a report by the Chairman of the Committee on Agriculture Special Session, David Walker. Following the 2011 APEC Ministers Responsible for Trade Meeting, and the subsequent informal meeting of Trade Ministers that was hosted by Dr Emerson in the sidelines of the OECD meeting in Paris, ministers acknowledged in May that the negotiations appeared to be deadlocked. By the Trade Negotiations Committee meeting in June, the Doha negotiations in Geneva had stalled, owing to what WTO Director-General Pascal Lamy described as ‘unbridgeable gaps’. While retaining aspirations for an ambitious Doha result, WTO members supported a downpayment of agreements focussed on Least Developed Countries for the 8th WTO Ministerial Conference in December.

In that context, the 36th Cairns Group Ministerial Meeting - to be held in Saskatoon, Canada, in September - comes during an especially challenging period for the WTO membership, in the lead-up to the WTO ministerial meeting in December.

The Cairns Group remains strongly committed to the Round and securing a clear path forward for agriculture related issues, including the elimination of export subsidies by 2013, substantial reductions and caps on trade distorting domestic support and substantial improvements in market access.

* Members of the Cairns Group are: Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand and Uruguay. Hungary (now part of the European Community) and Fiji were founding members of the Cairns Group, but have since withdrawn.