No credible outcomes likely at MC11 on domestic support
Published in SUNS #8529 dated 12 September 2017
Geneva, 11 Sep (D. Ravi Kanth) - The South countries are unlikely
to secure any credible outcome for reforming global trade-distorting
farm subsidies, based on the 2008 revised draft Doha agriculture modalities,
at the World Trade Organization's eleventh ministerial meeting in
Buenos Aires starting on 10 December.
The chair for the Doha agriculture negotiations, Ambassador Stephen
Karau of Kenya, has suggested that "several members are of the
view that only a limited outcome on Domestic Support may be attainable
at MC 11 [WTO's eleventh ministerial conference]."
"To that end," he said, "they [members are not named]
would like to see that discussions on the Domestic Support pillar
continue after MC 11."
The unidentified members put ideas such as the inclusion of Blue Box
support in the overall limit to trade- distorting domestic support
at a later stage, while some other unidentified members "have
proposed a roadmap as a fall-back alternative, should there not be
any concrete outcome at MC11," the chair suggested.
In an ambiguously worded (Job/Ag/109) document on the "state
of the play in the Agriculture Negotiations" issued on 5 September,
the chair has merely included all the proposals tabled by members
until now, without providing his assessment on what is possible at
the Buenos Aires meeting starting on 10 December.
The chair's report did not even mention what is set out on Domestic
Support in the Doha Work Program of 2001, the mandate under which
he is currently operating as chair for the Doha agriculture negotiations.
The chair has nearly buried all the hard work done in Doha agriculture
negotiations, including the most credible 2008 revised draft modalities
issued by the former chair of the agriculture negotiations, Ambassador
Crawford Falconer of New Zealand, said several trade envoys, who asked
not to be quoted.
The 2008 revised draft modalities had suggested what the developed
countries are required to do for cutting down their most trade-distorting
domestic support in AMS (aggregate measurement of support), de minimis,
the blue box support, including counter-cyclical payments provided
by the United States, the product-specific subsidies and other vital
At the failed 2008 ministerial meeting, the US had agreed to an overall
AMS support up to US$15 billion, but later withdrew the proposal and
walked away from the agriculture negotiations, said a trade envoy
who is familiar with the meeting.
Subsequently, the then Brazilian trade envoy Ambassador Roberto Azevedo,
who is now the WTO's director-general since September 2013, had said
"The December 2008 draft modalities are the basis for negotiations
and represent the end-game in terms of landing zones of ambition.
Any marginal adjustments in the level of ambition of those texts may
be assessed only in the context of the overall balance of trade-offs,
bearing in mind that agriculture is the engine of the Round.
"The draft modalities embody a delicate balance achieved after
ten years of negotiations. This equilibrium cannot be ignored or upset,
or we will need readjustments of the entire package with horizontal
repercussions. Such adjustments cannot entail additional unilateral
concessions from developing countries."
Shockingly, the same Azevedo, as Director-General and chair of the
Trade Negotiations Committee, has not only altered the dynamic in
the Doha agriculture negotiations as per the needs of the United States,
particularly its February 2014 farm bill, but is now trying hard to
postpone all the issues on domestic support to the 12th ministerial
meeting because Washington is now preparing its new farm bill, said
another trade envoy who asked not to be quoted.
Already, the 2014 US farm bill had provided for increased outlays
for domestic farm subsidies well beyond what was suggested in the
2008 revised draft modalities; and now the US is in no mood to allow
any negotiation to reduce trade-distorting domestic subsidies.
The US has repeatedly shifted the goalposts time and time again by
insisting that the major developing countries - China, India, Indonesia,
and South Africa among others - undertake commensurate commitments
along with the developed countries and also agree to the elimination
of input and production subsidies allowed for developing countries
under Article 6.2 of the Agreement on Agriculture.
Against this backdrop, the Agriculture chair's state of the play document
on Domestic Support is aimed at pushing the negotiations beyond 2017
until there is clarity on what the US is going to do in its new farm
bill, said a trade envoy who asked not to be quoted.
Effectively, this means the poorest Cotton Four countries - Benin,
Burkina Faso, Mali, and Chad - cannot secure any credible outcome
on domestic support at the Buenos Aires meeting.
To start with, the chair's repeated use of terms like "some,"
"several", "many", and "a number of"
members in the report to indicate the depth of support for various
proposals has raised considerable doubts about the integrity of the
overall assessment, said a trade envoy who asked not to be quoted.
The chair, for example, said "overall limit on trade-distorting
domestic support has been suggested in several submissions and has
been a focus of our discussions for a while."
"A key question is whether this limit should be fixed or floating.
In the proposal JOB/AG/99 (Brazil, the European Union, Peru, Colombia,
and Uruguay), proponents put forward the idea of a floating limit,
expressed as a percentage of the VoP (Value of Production)."
"However," he said, "several Members have expressed
a strong preference for a fixed limit (Australia, Canada, New Zealand,
"It has been suggested that it could be based on existing entitlements
(i.e. AMS and de minimis), be set in accordance with the latest draft
modalities for developed countries or according to a methodology to
be defined," the chair said.
But the chair has not clarified as to what "latest draft modalities"
he is referring to, and has not explained why he has shied away from
mentioning the 2008 revised draft modalities, said a trade envoy,
who asked not to be quoted.
"Other Members [who are not specified]," the chair said,
"have expressed the view that an overall limit should not be
introduced or should be left to a later stage."
Ambassador Karau said "the other issue that has been discussed
is what type of support such a limit should apply to. It is suggested
in the proposal JOB/AG/99 [the EU, Brazil, Peru, Colombia, and Uruguay]
that it should apply to the sum of AMS and de minimis support, at
"Many Members [the many members are not specified nor any numerical
figure given for "many"], however, prefer a wider coverage
that would also include the Blue Box and/or Article 6.2 support,"
the chair said.
The chair goes on to say "some Members [without specifying who
they are] have expressed strong reservations against the potential
inclusion of the Blue Box, de minimis and/or Article 6.2."
The EU and Brazil also suggested that "Special treatment in the
form of a longer implementation period has also been suggested for
Members with trade-distorting domestic support above a certain level."
On Aggregate Measurement of Support or the most trade-distorting domestic
support provided by the major industrialized countries, particularly
the US, the document maintained that "a number of Members are
of the view that priority should be given to further reducing AMS
"For some of them," the chair said, "this [AMS] should
take the form of a complete elimination for developed Members."
China and India have called for the complete elimination of AMS, and
this is supported by a large majority of developing and poorest countries.
But the chair's document gives a twist (to the level of large support
for the elimination of AMS as demanded by China and India) because
it is not beneficial for the US, the EU, and other industrialized
countries, said a trade envoy who asked not to be quoted.
The G10 farm defensive countries led by Switzerland want "the
current AMS entitlements should remain unchanged."
On de minimis, which is the only entitlement that a large majority
of developing countries have from the Uruguay Round, the chair said
"many Members have indicated that de minimis is a very sensitive
issue for them."
The EU, Brazil, Peru, Colombia, and Uruguay who are "seeking
reduction in trade-distorting domestic support have been considering
the idea of an overall limit that would further discipline the use
of trade-distorting domestic support in general, rather than seeking
a reduction in de minimis entitlement per se."
"The views and ideas put forward also include exclusion of de
minimis entitlement from any additional limitation; exclusion of LDCs,
Net Food Importing Developing Countries (NFIDCs), and developing country
Members in general from any additional commitment; and curtailing
the de minimis entitlement notably for the world's largest producers
and exporters," the chair said.
As regards Blue Box, again a major trade-distorting farm subsidy program
availed by industrialized countries, the chair said "a number
of Members [neither the number nor identification of Members are provided]
consider the Blue Box as a sensitive issue for them."
"It is the view of some Members [without specifying who they
are] that while the Blue Box is trade-distorting, it is less trade-distorting
than the Amber Box" and "they argue that maintaining it
is necessary to facilitate reforms aimed at moving away from Amber
(Box) support," the chair said.
But, "several Members consider that given its trade-distortive
nature, it [blue Box] should be further disciplined," the chair
Among the disciplines suggested for Blue Box are "a fixed overall
limit; product-specific limits; and its inclusion in an overall Trade-Distorting
Domestic Support coverage - immediately or at a later stage."
On product-specific disciplines, it is well known that the US, the
EU, and Canada among others provide huge subsidies for a range of
"Many Members consider product-specific limits or disciplines
as a necessary element to limit trade-distorting domestic support,"
but "doubts have been cast by several Members about the feasibility
of an outcome at MC11," the chair said.
Here again it is obvious that the chair and the WTO director-general
do not want to pursue this issue at a time when the US is going to
continue with its product-specific subsidies in the new farm bill.
The views and ideas put forward on product-specific support, according
to the chair, "include product-specific numerical limits; product-specific
AMS limits; overall limit on product-specific AMS, particularly for
products of interest to the LDCs; product-specific Blue Box limits;
product-specific limits to trade-distorting domestic support; and
linking trade-distorting support and exports."
The chair said "there is also a suggestion to focus on those
products which benefit most from Article 6 of the Agreement on Agriculture
(AoA) and which are of specific interest to developing country Members,
including LDCs, NFIDCs and Small and Vulnerable Economies (SVEs)."
"However, many Members have expressed their opposition to product-specific
disciplines, whether in general or for developing country Members,"
Ambassador Karau maintained.
He argued that "regarding the nature of the potential limits,
the ideas include numerical limits; limits expressed in terms of a
percentage of the overall trade-distorting domestic support, in terms
of the VoP of the products in question, or in per capita terms."
"It has also been suggested to make a link to the importance
of the exports of the supported product in the international market,"
the chair argued.
On Article 6.2 special and differential flexibilities for developing
countries to support their resource-poor rural farming community,
the chair said that "almost all developing country Members consider
support under Article 6.2 as a sensitive issue" and "several
of them have indicated that they do not have flexibility to accommodate
the demands of other Members."
Some other Members, notably the United States, consider, however,
that at least certain types of support under Article 6.2 (such as
input subsidies) need to be disciplined and/or its use constrained
by an overall limit to trade- distorting domestic support.
As regards hundreds of billions of dollars of Green Box programs which
are found to be trade-distorting, the chair said ambiguously: "while
there is the recognition that Green Box support is non- or minimally
trade- distorting, several Members would like it to be disciplined
at some point owing to its increasing size and doubts whether certain
programmes meet the prescribed criteria."
"In addition, many developing country Members have expressed
the view that Green Box disciplines should be better adapted to their
needs," the chair said.
But, "many Members [these "many Members" are not specified]
remain opposed to any change in the current disciplines," chair
In reality, only a handful of countries - the US, the EU, Brazil,
and Australia among others - remain opposed to granting Green Box
support to developing countries, said a trade envoy who asked not
to be quoted.
On transparency and notifications, which is another major demand of
the US, the chair said "many Members would like to see an enhancement
of the relevant disciplines and/or stricter enforcement."
"Many developing country Members have, however, cautioned against
onerous requirements, especially considering the difficulties that
have been encountered by some of them in fulfilling the current requirements,"
the chair noted.
"The ideas put forward to enhance the transparency provisions
include additional data to be provided annually based on a questionnaire;
annual dedicated discussions in the CoA; and punitive penalties for
Members not fulfilling their transparency obligations, particularly
large producers or large exporters of particular products," the
Towards the end of his assessment, the chair mentioned that "the
importance of special and differential treatment (SDT) for developing
country Members is recognised by all Members [and] there appears to
be a general understanding that no further commitment would be required
In mentioning it, the chair somewhat ambiguously introduced the issue
of differentiation for availing SDT benefits when he said: "while
there is a recognition that SDT should be provided to all developing
country Members, there are divergences as to the nature of flexibilities
to be granted."
Ambassador Karau said "the views and ideas put forward include
higher overall limit (expressed as higher percentage) for developing
country Members and longer implementation periods or same limit (expressed
in percentage terms) as developed Members but longer implementation
period for them; exemption of developing country Members or SVEs and
NFIDCs from binding reduction commitments; and technical assistance
and capacity building to help the implementation of disciplines."
In conclusion, the chair said "several Members are of the view
that only a limited outcome on Domestic Support may be attainable
"To that end, they would like to see discussions on the Domestic
Support pillar continue after MC11. The ideas put forward for MC11
include an agreement to have as an objective the inclusion of Blue
Box support in the overall limit to trade-distorting domestic support
at a later stage," the chair maintained.
"Some Members have proposed a roadmap as a fall-back alternative,
should there not be any concrete outcome at MC11. In addition, it
has been suggested to include an agreement on the timeline for implementing
decisions adopted at MC11."
On cotton, "most Members support a meaningful and specific outcome
on Cotton Domestic Support, but a couple of delegations have cast
doubts about the possibility of achieving an outcome at MC11, taking
into account the overall negotiating environment," the chair
"More generally, several Members highlight the existence of a
de facto link between the overall negotiation on Domestic Support
and the negotiation on Cotton Domestic Support," the chair maintained.
"As regards post-MC11, some Members have expressed the view that
the negotiations should ultimately aim at eliminating all types of
domestic support that have distorting effects on the cotton market,
while others have suggested the phasing out of trade-distorting domestic
support provided only for cotton," the chair said.
In short, the prospects for credible outcomes on domestic support
are nearly atrophied for the upcoming 11th ministerial meeting in
Buenos Aires because the United States does not want any decision
in the vital area of global trade-distorting domestic subsidies, said
several trade envoys who asked not to be quoted.