This record is a partial extract of the original cable. The full text of the original cable is not available.

191049Z Jan 06

UNCLAS SECTION 01 OF 04 PARIS 000347 
 
SIPDIS 
 
FROM USOECD 
 
STATE FOR EUR/ERA 
USDA FOR FAS/DHANKE/ACOFFING/JLAGOS 
STATE PASS USTR FOR ASTEPHENS 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD OECD
SUBJECT: OECD: UNITED STATES CRITICIZED, BUT HOLDS FIRM 
ON BLOCKING PUBLICATION OF SUGAR REFORM PAPER 
 
 
¶1.   SUMMARY: The 55th session of the Working Party on 
Agriculture and Trade (JWP) of the Organization for 
Economic Cooperation and Development (OECD) concluded 
on November 7 after one full day of discussion at OECD 
headquarters in Paris.  There actually was little 
contention among delegations for most items on the 
agenda, including papers on the commodity impacts and 
the household-level impacts of agricultural policy 
reforms and on tariff preferences, with Members 
generally exhibiting willingness to get the documents 
to the next step.  The most significant debate occurred 
over the sugar paper ("An Analysis of Sugar Policy 
Reform and Trade Liberalization," 
COM/AGR/TD/WP[2004]54/REV2), with many delegations -- 
including the "friendlies" (i.e., Canada, New Zealand, 
Australia, and Mexico) -- questioning and/or attacking 
the U.S. decision to block declassification.  As the 
meeting came to an end, the general atmosphere was 
tense, with many of the frustrations voiced against the 
U.S. position on the sugar paper appearing to linger in 
the minds of most of the delegations.  It was finally 
decided to have the Committee on Agriculture (CoAg), at 
its meeting beginning later that month, review the 
Joint Working Party's discussion and the decision to 
block the sugar paper.  END SUMMARY. 
 
¶2.   The draft Agenda (COM/AGR/TD/WP/A[2005]44) and 
draft summary record of the 54th Session 
(COM/AGR/TD/WP/M [2005]19) were both adopted as 
presented. 
 
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The Impacts of Trade and Agricultural Policy Reform 
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¶3.   Commodity Market Impacts of Trade and Domestic 
Agricultural Policy Reform (For Discussion and 
Declassification) (COM/AGR/TD/WP(2005)12/REV1): The 
United States began the discussion by stating that the 
paper was sensitive, since trade negotiators believed 
that any work that distinguishes winners and losers 
would not be helpful in Geneva.  In addition, the 
United States noted that further technical work is 
needed.  Other delegations supported the idea that the 
paper still needs further editing, but none threatened 
a political block provided that the author incorporated 
their comments.  France had the most substantial edits, 
focusing on semantics such as when the text repeatedly 
interchanged words like "export support" with "export 
subsidies" (which it argued could mean different 
things), as well as when the paper failed to take into 
account preferences or price volatility within its 
analysis.  Canada was a little annoyed that the 
Secretariat continued to inappropriately analyze 
 
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Canadian cheese, since it had mentioned this 
discrepancy at the last JWP meeting.  Australia and New 
Zealand had a few technical comments, while the EC 
asked for the writers to better clarify the overall 
presentation.  The Secretariat said it would work with 
Canada and the other delegations to get the changes 
made, and then directly confronted the U.S.  comments 
by stating for the record that the United States had 
placed a political block on the paper, hoping that at 
the beginning of 2006, in January, the United States 
would be more willing to approve declassification. 
 
¶4.   Global, National, and Household Effects of Trade 
and Agricultural Policy Reform (For Declassification) 
(COM/AGR/TD/WP[2005]45):  Most delegations supported 
declassification, adding only a few comments or 
questions on the document.  Those delegations that gave 
full support included the Netherlands, Canada, New 
Zealand, Denmark, and Australia.  Nonetheless, others 
asked for more time for review, including France, 
Germany, and the EC.  France and Germany differed on 
what aspects to edit: France believed that the 
methodology was not realistic, since the writers 
extrapolated the results of developed countries to less 
affluent nations, while Germany argued that the methods 
showed relevant conclusions, but that explanations were 
lacking.  Mexico had difficulty with the study as well, 
saying that it would declassify if its concerns were 
met, but gave no verbal critique and instead submitted 
written comments.  The United States was the only 
delegation that mentioned the political sensitivity of 
the document for the Doha Development Round of 
negotiations in the World Trade Organization (WTO), and 
again asked for publication  to be delayed until early 
¶2006.  However, the United States also provided 
comments on modeling and errors in the Mexican case 
study on farming communities, particularly on ejido 
communities.  The Secretariat, again a little perturbed 
at the U.S. position, said it would continue to work 
with the delegations in an effort to have 
declassification approved under the written procedure 
by mid-January, and hoped that there would be no other 
holdups.  Delegations were given two weeks to submit 
comments in writing. 
 
------------------------------- 
Agricultural Tariff Preferences 
------------------------------- 
 
¶5.   Agriculture Non-reciprocal Tariff Preferences by 
Quad countries (For Discussion and Declassification) 
(COM/AGR/TD/WP[2005]15/REV1): The general consensus 
from most of the delegations was that this paper was 
too sensitive for publication before the WTO 
Ministerial meeting in Hong Kong in December 2005.  For 
example, the EC focused on the realism of the tariff 
models, arguing that the document has high political 
sensitivity, but said it could entertain a 
declassification proposal after December.  France 
commented more on the trade flows and whether the study 
could concentrate on which liberalized products would 
more greatly benefit less affluent nations.  Japan and 
Canada had similar sentiments.  Noting that, with a low 
MFN rate, those countries that had preferential access 
would lose benefits, they requested more elaboration of 
this aspect within the paper.  Canada in particular 
pushed to have the Secretariat model the actual 
outcomes after the Doha negotiations have finished. 
The United States opined that both the AgLink and 
GTAPEM models have limitations and may not be the most 
appropriate tool for this study.  Moreover, the United 
States also declared this paper to be sensitive and 
said that it would revisit the possibility of 
declassification after January, but preferably in six 
to nine months.  After acknowledging every delegation's 
comments, the Secretariat singled out the U.S. 
political block and inquired whether the United States 
would be willing to consider declassification in 
January.  After the United States agreed to consider 
declassification at a later time, the Secretariat 
refrained from asking the other delegations the same 
question.  The consensus was to ask delegations to send 
in written comments within two weeks and to hold a 
written procedure for declassification sometime in 
January. 
 
¶6.   Summary of Expert Meeting on how to Model the 
Impacts of Preferential Trade Arrangements and how to 
Improve the Directorate's Empirical Trade Modeling 
Tools (For Information) (COM/AGR/TD/WP/RD[2005]46): 
There was very little discussion on this agenda item, 
with the EC noting how timely it was to get scholarly 
input from the OECD on future trade issues.  The United 
States stated that analysis using models other than 
AgLink and GTAPEM may be useful to better understand 
the questions that the writers pose. 
 
¶7.   For which Countries and Commodities do 
Agricultural Preferences Matter? (For Discussion) 
(COM/AGR/TD/WP [2005]47): Most countries had issues 
with the methodology used in the study.  Canada was the 
only Member that supported the paper.  France jokingly 
wondered if it had read the same document and asked the 
authors to analyze:  1) more developing countries; 2) 
how preferences affect exporters; and 3) the effects of 
quota rents.  Norway agreed with France and wanted the 
analysis to concentrate on the before and after effects 
of liberalization.  New Zealand questioned the actual 
data since it believed the quota rents were too high. 
The EC was particularly sensitive to the study's 
critique of its sugar program and said that its 
objective was not to make countries such as Fiji depend 
on sugar; rather, its programs were set up to encourage 
diversification.  Later, the EC delegation roughly 
criticized Australia, which questioned portions of the 
EC's soapbox lecture, and continued for a second time 
to rehash its logic.  The United States stated that the 
paper was put on OLISnet (the OECD's internal website) 
too late for review and regretfully had no comments. 
The Secretariat promised to work with the delegations 
to address their concerns and to use quota rents within 
its analysis.  This sparked a ten-minute debate between 
France and the Secratariat, since France wanted 
preferences to be analyzed first and quota rents 
second.  In the end, France promised to meet 
bilaterally with the Secretariat, but still appeared 
irked that its request had not been initially 
acknowledged. 
 
-------------------------------- 
FDI and Trade in the Food Sector 
-------------------------------- 
 
¶8.   Linkages between Foreign Direct Investment, Trade 
and Trade Policy:  An Economic Analysis with 
Application to the Food Sector (For Discussion and 
Declassification) (COM/TD/AGR/WP[2004]45/REV1): Little 
dialogue took place between delegations since everyone 
agreed to support declassification of this analysis. 
Canada and the EC were particularly favorable towards 
the document, whereas France, Poland, and the United 
States had technical comments, albeit ones that could 
easily be addressed in a revised version.  France 
argued to have both the French and English versions 
declassified at the same time, once the writers 
incorporated all the comments, which every delegation 
agreed to. 
 
--------------------------------------------- -------- 
Sugar Paper: U.S. Objection to Declassification under 
Fire 
--------------------------------------------- -------- 
 
¶9.   Other Business: An Analysis of Sugar Policy Reform 
and Trade Liberalization (For Declassification) 
(COM/AGR/TD/WP [2004]54/REV2): The Secretariat stated 
that it was going to add the sugar paper to the JWP 
agenda and kindly thanked the Netherlands, Canada, and 
Australia for their comments.  Afterward, the 
Secretariat redirected its attention to the United 
 
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States, noting that the latter had blocked 
declassification in the written procedure.  The United 
States responded multiple times to questioning from 
different delegations, explaining that we could not 
declassify now because of the sensitivity of the topic. 
The EC provided the most stinging remarks, pointing out 
that the United States had objected to six papers thus 
far in 2005 and opining that the United States has 
misused the OECD's resources by agreeing to a working 
agenda and then blocking it.  Both the EC and Denmark 
asked if the issue could be placed on the agenda of the 
JWP's parent body, the Committee for Agriculture 
(CoAg).  Most of the "friendlies" also spoke against 
the U.S. decision, with Australia and Canada offering 
the least scathing remarks and wondering when the topic 
of sugar would be less sensitive.  New Zealand 
completely agreed with the EC, and supported asking for 
the U.S. decision to be discussed at the CoAg.  (A 
"friendlies'" meeting had been held before the JWP at 
the U.S.  Mission, and the invited delegations made 
clear then that they would not support the U.S. 
position on the sugar paper.)  France decidedly 
remained quiet and composed, although in a side 
conversation with the U.S. delegation, admitted to 
having problems with declassification.  Adding more 
fuel to the fire, Agriculture Director Tangermann 
stated that the paper had been planned in the Program 
of Work and Budget (PWB) for some time and that the 
intention to release it publicly had been clear from 
the outset.  He believed that staff morale will be 
seriously affected, since it would be uncertain if any 
of their work would be published if the current 
precedent continues.  In the end, it was agreed to 
refer the matter to the CoAg for discussion. 
 
¶10.  Facilitating Adjustment: Sector Experiences from 
Agriculture, Telecommunications, and Chemical 
(TD/TC/WP[2005]28): The "Other Business" agenda item 
included the discussion of a new paper that would 
follow up on the Trade and Structural Adjustment 
Project (which was completed and presented to the May 
2005 Ministerial Council Meeting).  The Secretariat, 
responding to a question posed by the United States, 
confirmed that other developed countries would be 
included in the work.  Afterward, the Secretariat 
briefly gave a summary of an outreach activity in 
Manila, the Philippines, that concentrated on trade 
liberalization.  The conference went particularly well, 
and the OECD hopes to do another similar event in the 
Latin America and the Caribbean in 2006. 
 
MORELLA