5.1.

1 Recent G-33 proposals on Special Products and the Special Safeguard Mechanism The G-33 has been under increasing pressure to produce indicators for operationalising the criteria for SPs outlined in the Framework Agreement, i.e. food security, livelihood security and rural development needs. In October 2005, the group came forward with a non-exhaustive list of indicators outlining some potential ways in which SPs could be identified. This list was further developed and presented at the Hong Kong Ministerial Conference (see Box 3) Noting that each country's situation is unique and that members will apply their own set of indicators when designating their SPs, the G33 paper put forward indicators under each of the three broad sets of criteria. National level food security concerns included access to food across regions and in individual households, as well as the share of a product in average calorie intake. International concerns included countries vulnerability to interruptions in supply. In looking at the importance of products to livelihood security, the G-33 paper focused heavily on the role of small and resourcepoor farmers in the production of particular crops that may be displaced by imports. The paper also said that the needs of special groups, such as tribal communities or women, or products from disadvantaged geographical regions could be taken into

account. On rural development, the paper noted the need for options to improve the living conditions of rural populations, based on both existing products and the potential for value addition in rural areas. The G-33 noted that countries should have the flexibility to designate new SPs in place of existing ones, as circumstances change.

Notably, the G-33 paper argued that products whose world market prices are distorted by rich country subsidies should automatically be eligible for SP status. At the same time, the G-33 also tabled a detailed proposal on the SSM. This proposes that the SSM be triggered by both import volume surges and price decreases, and argues that price decreases should be insulated from recent depreciation in the domestic currency rates of the importing country, which could otherwise make imports seem artificially expensive and thus above the trigger level. The SSM paper proposes that developing countries would be able to use the mechanism to impose duties higher than the bound ceiling level on farm imports in the event that import volumes rise above their three-year average, or if import prices fell below their average level for the three

years preceding the year in which the duty was being imposed. These duties would last a maximum of 12 months regardless of the calendar year. The G-33 also outlined provisions for four tiers of increased import levels and maximum additional tariffs that could be levied, the sizes of which would still to be negotiated. According to the proposal, products en route to importing countries on the basis of contracts settled before the SSM trigger volume was exceeded would be exempt from additional duties but counted towards the threshold volume and price level for the following year. Safeguard measures imposed in response to a drop in the import price of a product would be levied in one of two ways: on a shipment-by-shipment basis; or on a percentage ad valorem basis. Finally, the G-33 suggested that developing countries would have to notify the Committee of Agriculture of any measures taken under the SSM.

5.2 Modalities for Special Products In the ongoing WTO negotiations many questions have been put forward on the SPs: What should be the guidelines for the application of the three criteria? At what level of the Harmonised System (4-digit or 6digit) should products be identified? Should

SPs be exempted from tariff reduction? If not, what kind of tariff treatment should developing countries seek for these products? Should these products be eligible for the SSM? What, if any, would be the relationship between sensitive products and SPs? This section attempts to answer some of these questions.13