South stress food security and SSM outcomes at MC11
The latest round of agriculture negotiations at the WTO saw many developing countries reiterate the need for WTO mechanisms to enable the holding of public food stocks and to protect farmers from excessive market volatility.
by Kanaga Raja
GENEVA: A number of developing countries, at dedicated sessions of the WTO agriculture negotiations held in the first week of June, stressed on the importance of a permanent solution for public stockholding programmes for food security as well as an effective Special Safeguard Mechanism (SSM), and called for meaningful outcomes on these issues at the eleventh WTO Ministerial Conference in Buenos Aires this December.
The Committee on Agriculture in Special Session held dedicated sessions on 2 June on both the issues of public stockholding programmes for food security purposes and the SSM.
These were preceded by an informal meeting of the Committee on 1 June to discuss the state of play in the overall negotiations on agriculture.
No common ground
At the dedicated session on public stockholding for food security purposes, the Chair of the Special Session of the Agriculture Committee, Ambassador Stephen Karau of Kenya, said that all members recognize that they have a firm deadline and very clear mandates, from both the Bali and Nairobi Ministerial Conferences, to find a permanent solution.
“I can confirm that none of the members contested the mandates or the deadline for reaching a permanent solution,” said the chair.
According to trade officials, he however acknowledged that members are still some distance away from finding common ground. “One of the key questions that remain open is the starting point for the discussions. The G33 [group of developing countries] maintain that their proposal should be the basis, while many others prefer the Bali Decision,” the chair said.
Karau said that he had detected some flexibility in the talks. “As compared to previous reports, what has been new to me is the increasing number of members indicating that they see the permanent solution somewhere in between.”
“My conclusion from this meeting is that members need to engage pragmatically with each other,” the chair said. “I am convinced that there are practical solutions that could help to narrow the gaps between your positions,” he told the members.
[The first operational paragraph of the Ministerial Decision on Public Stockholding for Food Security Purposes adopted at the ninth Ministerial Conference held in Bali in December 2013 states: “Members agree to put in place an interim mechanism as set out below, and to negotiate on an agreement for a permanent solution, for the issue of public stockholding for food security purposes for adoption by the 11th Ministerial Conference.”
[The second paragraph states: “In the interim, until a permanent solution is found, and provided that the conditions set out below are met, Members shall refrain from challenging through the WTO Dispute Settlement Mechanism, compliance of a developing Member with its obligations under Articles 6.3 and 7.2 (b) of the Agreement on Agriculture (AoA) in relation to support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes existing as of the date of this Decision, that are consistent with the criteria of paragraph 3, footnote 5, and footnote 5&6 of Annex 2 to the AoA when the developing Member complies with the terms of this Decision.”
[Subsequently, in November 2014, it was agreed at the WTO General Council to have an accelerated phase of negotiations and to finalize a solution by end-2015. But this did not materialize at the Nairobi Ministerial Conference held in December 2015.
[The Nairobi Ministerial Decision on public stockholding for food security purposes states: “1. Members note the Ministerial Decision of 7 December 2013 (WT/MIN(13)/38 and WT/L/913) and reaffirm the General Council Decision of 27 November 2014 (WT/L/939).
[“2. Members shall engage constructively to negotiate and make all concerted efforts to agree and adopt a permanent solution on the issue of public stockholding for food security purposes. In order to achieve such permanent solution, the negotiations on this subject shall be held in the Committee on Agriculture in Special Session (‘CoA SS’), in dedicated sessions and in an accelerated time-frame, distinct from the agriculture negotiations under the Doha Development Agenda (‘DDA’).
[“3. The General Council shall regularly review the progress.”]
Call for engagement
According to trade officials, the G33 recently made a submission that recalls the various existing mandates as well as the G33’s previous submissions on this issue. In its submission, the G33 urged members to immediately engage in a constructive manner.
At the 2 June session, Indonesia, on behalf of the G33, said that it supports the chair’s approach to continue to use the dedicated session as a platform for members to discuss the issue of public stockholding for food security purposes.
Indonesia underlined that the negotiation of this issue shall not be linked to other issues, as it is distinct from the agriculture negotiations under the Doha Development Agenda.
The G33 believes that it is now in the interest of members to faithfully follow the mandate of the negotiations as stipulated in the Bali and Nairobi ministerial decisions as well as the General Council decision (of 2014) to intensify the discussion with a view to delivering a concrete outcome of a permanent solution for food security purposes no later than MC11.
“We are only months away and members are yet to discuss the outstanding elements of public stockholding,” said Indonesia, which encouraged members to engage immediately.
The G33 said it is aware that in the course of negotiations a number of outstanding issues were raised and discussed by members.
The G33 said that it shares the view on the importance of transparency elements in the permanent solution for public stockholding. However, it firmly believes that such elements should not be made so onerous that many developing countries are unable to use the mechanism.
The G33 said it has heard some members expressing their concerns relating to the export of public stocks and to members’ public stockholding programmes adversely affecting the food security of other members. However, it has not seen a written proposal expressing such concerns.
The Philippines, also a member of the G33, said that it did not consider the interim solution (agreed at Bali) a good basis for discussion, as it “renders the instrument inaccessible for developing countries”.
According to trade officials, Botswana, on behalf of the African, Caribbean and Pacific (ACP) Group, said that public stockholding programmes are of critical importance to address food security and rural development needs. It pointed out that the current interim solution does not provide a satisfactory response, “not the least because it excludes programmes that are not currently in place”.
According to trade officials, Egypt, China, Korea, Kenya, Nigeria, Dominican Republic, El Salvador, Turkey, Uganda and Zimbabwe expressed similar views, with many highlighting that a permanent solution should be applicable to all developing-country members and to both existing and future programmes.
According to trade officials, India expressed support for the G33 statement. The ministerial decisions must be implemented in all seriousness, it said. It expressed disappointment that some members are trying to link public stockholding with the discussions on domestic support in agriculture. It quoted the General Council decision that states that public stockholding is distinct from the Doha agenda.
Uganda said that the outcome of a permanent solution for public stockholding is important. It said that millions of people are undernourished and it remains an issue of importance for the majority of people.
Uganda underlined that the permanent solution should cover both existing and future public stockholding programmes. The current Bali decision does not cover future programmes, it noted. “We should not negotiate an instrument that is too difficult to use,” it said. Hungry people are usually angry people, it added, noting that it is a political issue and the government has a duty to feed the hungry.
China also agreed with the position of the G33 that members should arrive at a permanent solution for public stockholding and that it should be applicable to all developing members. The process of trade liberalization should not infringe on the right of developing members to ensure food security, which is more than an economic or trade issue, said China.
The ACP Group went on to propose two options for a permanent solution: (1) to replace the 1986-88 reference price with a moving average, or allow members to report the amount of subsidies in US dollars in order to accommodate exchange rate fluctuations; (2) to allow payments to be counted as Green Box subsidies, provided that administered prices are set in a transparent manner and address price volatility.
According to trade officials, Pakistan said that public stockholding programmes could lead to trade distortion if the stocks end up on world markets. It said that other policy measures, such as cash transfers, could be a more efficient way to address food security concerns.
Thailand said that price support measures could not be placed in the Green Box with no limitation. It maintained that the release of procured stock into the global market could be damaging to other developing countries, especially since the members of the G33 are some of the world’s largest agriculture exporters. It proposed that a permanent solution should include a prohibition of exports of stocks procured by these programmes.
Australia said to ensure food security is not to provide unchecked, unlimited market support. There are already millions of tons of wheat flooded in the market, to the detriment of neighbouring countries. Any permanent solution should include a requirement on transparency and safeguards for exports, it said.
According to trade officials, Argentina, Paraguay, the European Union and Mexico voiced similar views, saying that placing these programmes in the Green Box is against the spirit of agriculture reform.
Colombia, Brazil, Costa Rica, Canada and Japan said more information is needed to better understand the nature of public stockholding programmes.
Uruguay and Peru highlighted a communication from the agriculture ministers of eight Latin American countries in which they committed themselves to working together in search of a permanent solution to public stockholding.
At the dedicated session on the SSM, also on 2 June, the chair Karau reported that divergent views persist among members on this issue.
“Members who are proponents of the SSM emphasize that they see these discussions as entirely separate from market access negotiations. They view the SSM as an essential tool to protect domestic producers from import surges, to fight against poverty, and to promote rural development,” said the chair.
“Other Members consider that it would be difficult to achieve an outcome on the SSM in MC11 in the absence of outcomes on market access more generally. Some also restated their concerns that the SSM would disrupt normal trade and had lingering doubts about the rationale for the SSM in the absence of market liberalization.”
According to trade officials, Indonesia introduced a G33 submission on short-term price volatility in agriculture and another paper on the SSM. According to members of the G33, the first paper diagnoses the problem, and the second paper offers the remedy.
The proponents of the SSM include Indonesia, the Philippines, China, India, South Africa, Korea, Ecuador, Bolivia, Turkey and the ACP Group.
According to trade officials, Botswana, on behalf of the ACP Group, said that the SSM “is of critical importance to developing countries in order to safeguard our resource-poor farmers from import surges and price declines.”
It noted that almost all ACP countries with the right to use the existing special agricultural safeguard had never been able to invoke it, on account of stringent procedural requirements and conditions associated with its application.
The ACP Group supports the establishment by MC11 of an effective and easy-to-implement SSM for developing countries that would be able to limit, on a temporary basis, imports in cases of volume surges or sudden price declines.
Indonesia, on behalf of the G33, said that over the years members have been discussing the issue with a view to arriving at an agreed solution. As a demandeur of the SSM, the G33 has been actively and constructively engaged in the discussions. There have been various proposals and technical papers submitted by the G33 to the Committee on Agriculture in Special Session with the objective of having more focused discussions, it pointed out.
The Nairobi ministerial decision on SSM is indeed a key milestone and reinforces the need to establish price-based and volume-based SSM, this time through negotiations in dedicated sessions under the Committee on Agriculture in Special Session. The G33 expressed hope that members will engage more constructively with a view to finding a pro-development and balanced SSM that ensures its accessibility and effectiveness in addressing import surges and price depressions.
Referring to its two submissions, the G33 said that the majority of producers in developing countries are small-scale farmers who are highly dependent on seasonal outcomes. The small and resource-poor farmers are highly vulnerable to short-term price volatility. It is vital for developing-country members to protect resource-poor and small farmers from excessive price volatilty of agriculture commodities, it said.
It noted that developing-country members have limited policy options due to financial, technical and social development constraints. The implementation of an effective and operational SSM has become an urgent need for developing countries, Indonesia emphasized.
According to trade officials, India voiced agreement with the G33 statement. The G33 has demonstrated a great deal of flexibility, it said.
India asked members which have concerns to table text-based proposals. It said it sees members trying to link the SSM with market access, but such a linkage never existed.
South Africa voiced agreement with the ACP Group statement. The SSM aims at adjusting distortions in trade, it said.
The Philippines said that the G33 has put forth constructive submissions and it called on the negotiating partners to come forward with evidence-based counter-proposals.
On the other hand, Argentina said that while it agreed that excessive price volatility can affect small farmers, what it could not agree on is to impose protectionist measures to combat price volatility. It said that while the SSM is justified to counteract subsidies, it should not affect countries such as Argentina that do not give subsidies.
Costa Rica said if the objective of the SSM is to deal with import surges, then it should contain disciplines to exclude products that are not produced domestically.
According to trade officials, Brazil, Japan, Mexico, Uruguay and Australia said that they could not support a standalone decision on the SSM without substantial cuts in customs duties. Australia also questioned the validity of an SSM in free trade agreements.
“I would encourage you to engage pragmatically and to talk to each other, and focus on identifying practical solutions to address the remaining obstacles in our negotiations,” the chair said. “My hope is that through these types of exchanges members can collectively generate new ideas to help bridge the divergent positions.”
Domestic support outcome
At the informal meeting of the Committee on Agriculture in Special Session on 1 June, the chair Karau concluded that the “discussions confirmed a certain number of key findings, in particular the near universal support among the membership for an outcome on domestic support.”
Meanwhile, he said, “several delegations stressed again that market access must not be absent from an outcome at MC11”.
On domestic support, Karau said that most of the members he consulted with considered curbing domestic support as the priority for MC11. However, members were “clearly aware of the contextual difficulties surrounding this issue”. Therefore, they have “revised their expectations about what could be achievable by MC11.”
Acknowledging the obstacles to achieving a substantial outcome in Buenos Aires, several members raised the issue of how to ensure that work will continue on domestic support after MC11. “There is an emerging consensus that whatever the outcome at MC11, it should not be considered as a final outcome on domestic support,” the chair said.
He also reported that an overwhelming majority of members support a meaningful and specific outcome on addressing subsidies in cotton, and that an outcome on cotton should go “one step further than for domestic support in general”.
On market access, the chair reported that in his consultations, “many members expressed the view that an outcome in agriculture market access was a lower priority.”
He noted that some members consider that an outcome to address higher trade barriers in agriculture would be difficult this year in the absence of outcomes in other areas. Nonetheless, other members continue to stress the importance of achieving commercially meaningful results.
“Members acknowledged the difficulty of achieving outcome in this pillar [of market access] given the current negotiating context, but several members insisted on the need to ensure the work continues after MC11,” the chair said.
On other issues such as export restrictions and food safety standards, the chair said: “The issue of export restrictions emerged as being of particular interest to a number of members which have been seeking to strengthen disciplines in this area.”
As for the way forward, Karau said that the situation today is still characterized by a wide range of expectations amongst members on the prospects for MC11.
He urged members that have not yet tabled a submission to do so before the summer break.
“Although many positions on the negotiating issues remain entrenched, let me remind you that (in Swahili) palipo na nia pana njia – where there is a will, there is a way,” the chair concluded. (SUNS8476)
Third World Economics, Issue No. 640, 1-15 May 2017, pp3-5