US, EU and Australia want “hefty payment” for PSH and SSM

Member states of the WTO remain sharply divided over moves to better enable developing countries to hold public food stocks and to protect their farm sectors from drastic market fluctuations.

by D. Ravi Kanth

GENEVA: The Cairns Group of farm exporting countries led by Australia, along with the United States and the European Union, seem determined to seek a hefty payment from the G33 group of developing countries for a permanent solution for public stockholding programmes for food security (PSH) and the Special Safeguard Mechanism (SSM) for developing countries, several negotiators told the South-North Development Monitor (SUNS).

The Nairobi Ministerial Conference of 2015 has mandated the WTO’s eleventh ministerial meeting to reach a solution on PSH in developing countries and an SSM that developing countries could use.

During dedicated negotiating sessions on PSH and SSM on 19 and 21 July at the WTO, members of the Cairns Group as well as the US and the EU, among others, raised several questions and mooted conditions that would make it difficult for the G33 to secure credible outcomes on these two issues.

The two separate dedicated sessions were convened by the chair of the Doha agriculture negotiations, Ambassador Vangelis Vitalis.

No change

At the session on PSH on 19 July, the chair informed members that he has held 49 bilateral sessions and 15 meetings with group coordinators until now. There is no change in the fundamental positions on PSH among the G33 proponents led by Indonesia on the one side, and the non-proponents led by Australia, Brazil, Argentina, the US and the EU on the other, the chair suggested.

The G33 members made a strong case that the permanent solution for PSH is linked to addressing the problem of poverty in their countries. Indonesia on behalf of the G33 demanded that the permanent solution should be a standalone outcome for the WTO’s eleventh Ministerial Conference, the chair said, according to negotiators who attended the meeting.

Vangelis maintained that the non-proponents such as Australia, Brazil, Argentina, the US, the EU and Norway, among others, expressed their concern over the G33’s demand to create a special annex in the Green Box to exempt market price support programmes from commitments, on the ground that this would create unintended consequences and systemic implications, the negotiators said.

The chair suggested four principles – parallelism, transparency, no presumption and no prejudice – for members to follow during the negotiations on all issues in the Doha agriculture negotiating body.

On behalf of the Cairns Group, Australia had circulated a set of questions for the G33 to answer on PSH over two months ago. The questions include:

l     How do you see the way forward?

l     How do you see the basis for taking the issue forward?

l     What are the elements you consider should be part of a permanent solution?

l     How can any outcome address the unintended consequences on trade and food security of other members?

l     What, if any, safeguards are currently in place to assure that “stocks procured under such programmes do not distort trade or adversely affect the food security of other members”?

l     How much production procured under these programmes has been exported in practice?

In response to the questions, Indonesia, which is the coordinator for the G33, emphasized the importance of PSH for the G33 and developing countries. It said a permanent solution for PSH must be negotiated in an accelerated timeframe. Indonesia said it had already submitted a detailed proposal on how to arrive at the permanent solution by creating a separate annex in the Green Box to cover market price support programmes that would be exempt from any commitments.

Indonesia maintained that the WTO Agreement on Agriculture (AoA) does not provide any policy space for addressing food security challenges. It maintained that the G33 is ready to answer questions on the unintended consequences, including safeguard provisions, with any members.

The Philippines emphasized the importance of PSH for developing countries to implement poverty alleviation programmes.

China said PSH is important for all developing countries to sustain the livelihood of poor farmers. It urged all members to make a sustained effort to arrive at the proposed permanent solution by the time trade ministers meet for the eleventh Ministerial Conference next year. China said the G33 members are ready to answer questions on how to prevent stocks procured for PSH from entering into the export market.

Korea said it is important to take the concerns of domestic constituents into consideration for addressing the permanent solution.

India made a detailed statement on the importance of the permanent solution for the G33 and other developing countries to address growing poverty and rural development concerns. It spoke about the need to rectify the shortcomings of the AoA, particularly for including PSH programmes in the Green Box measures.

In sharp contrast, the Cairns Group members – Chile, Australia, Pakistan, Colombia, Argentina, Canada, Thailand and Brazil, among others – ruled out any inclusion of market price support programmes in the Green Box. Australia said it is surprised that the interim solution which was concluded at the ninth Ministerial Conference in Bali in 2013 is not working.

Australia said several issues such as transparency, safeguards to protect international markets and methodologies must be discussed before considering the permanent solution. It also raised several issues concerning India’s exports of wheat procured from alleged public stockholding stocks.

Brazil and Argentina emphasized the importance of safeguards to ensure there are no slippages from the PSH programmes into exports. Pakistan said it concurred with the concerns raised by Australia on wheat and rice that were released from public stockholding programmes into the international market.

The US said while it remains committed to the Nairobi ministerial decision for working on the permanent solution for PSH, it is concerned about unintended consequences. The US said it is important to ensure that governmental actions for PSH do not result in increasing trade-distorting support. It supported a suggestion from Canada under which PSH programmes should focus only on small emergencies, income support and other difficulties.

Canada argued that the permanent solution can create a broad outcome which will be vulnerable to abuse.

The EU said the permanent solution cannot be based on the Green Box programmes. It also called for adequate safeguards as well as a monitoring framework for PSH.

Norway said it is not proper to include PSH programmes in the Green Box.

In his concluding remarks, the chair admitted that there are diverging views on how to arrive at the permanent solution for PSH. He suggested that while the G33 stuck to its proposal circulated in 2014, the non-proponents are not comfortable with that proposal. “We are stuck and we need to be constructive,” said Vangelis.

Market access linkage

During the meeting on the SSM on 21 July, the G33 members led by Indonesia argued that the SSM cannot be linked with market access negotiations, as per the July 2004 framework and the 2005 Hong Kong Ministerial Declaration. The G33 maintained that it had circulated proposals for a simple and effective SSM based on price and volume triggers.

The Philippines said the SSM cannot be based on the special safeguards which are availed of by the developed countries. China said the G33 proposal offered a simple solution as to how the SSM can be constructed on the basis of price and volume triggers.

In sharp opposition, Argentina, Australia, Brazil, New Zealand and Japan, among others, said the SSM can only be discussed in the context of market access because of the inherent linkage between the two issues.

The chair said that while members are not opposed to any discussion on the SSM as per the Nairobi Ministerial Declaration, some members want to discuss the issue in isolation and other members want a link to market access. Vangelis said the SSM issue is not a North-South issue but one that centres around South-South trade.

He said there is no fundamental change in the positions on the SSM, adding that market access linkage is a divide between members.

In a nutshell, the discussions on PSH and SSM clearly revealed that the G33 members face an uphill battle to secure credible outcomes at the eleventh Ministerial Conference next year. Major developed and several developing countries are not prepared to adhere to the previous Doha ministerial mandates and agree to any outcomes on these two issues without payment, several negotiators said. (SUNS8289)                          

Third World Economics, Issue No. 621/622, 16 July – 15 August 2016, pp20-21