Argentina’s “authoritarian” approach to MC11 agenda riles South nations

The host country of the coming Ministerial Conference, Argentina, has reportedly caused a stir at the WTO by suggesting that a joint China-India proposal to scrap trade-distorting farm subsidies in developed countries be dropped.

by D. Ravi Kanth

GENEVA: Argentina, which is hosting the WTO’s eleventh Ministerial Conference in Buenos Aires from 10 December, has warned members to drop proposals for MC11 such as the elimination of the most trade-distorting agricultural domestic subsidies – the Aggregate Measurement of Support (AMS) – proposed by China and India, on grounds that it will lead to the breakdown of the conference, sources told the South-North Development Monitor (SUNS).

“Argentina, which is the chair of the WTO’s eleventh Ministerial Conference, is behaving in an authoritarian manner by telling countries to remove their proposals so as to ensure a successful ministerial meeting,” said a source who asked not to be quoted.

“For some time now, Argentina is setting markers as to what is feasible and what must be removed,” the source maintained.

Argentina’s comments on proposals tabled by members came into the open on 13 September at an informal open-ended meeting of the Doha agriculture negotiating body.

Support for joint proposal

A large majority of developing countries – the African Group, the Africa, Caribbean and Pacific (ACP) Group, South Africa, Zimbabwe, the Philippines and Venezuela – supported the joint proposal from China and India for eliminating the AMS, the most trade-distorting domestic subsidies in the industrialized countries, as a prerequisite for commencing the stalled reform in the area of domestic agricultural support.

In their joint proposal (see TWE No. 645), China and India argued that “in the Uruguay Round AMS entitlements were made available in the Agreement on Agriculture to developed Members and some developing Members.”

“Developed Members have more than 90% of global AMS entitlements amounting to nearly $160 billion,” the two largest developing countries maintained. “As a result developed Members have access to huge amount of AMS beyond their de minimis”, while “most developing Members have access only to de minimis resulting in a major asymmetry in the rules on agricultural trade”.

Against this backdrop, China and India said “in order to achieve the long outstanding reforms in agriculture subsidies the AMS entitlements of developed Members must be eliminated as a prerequisite for consideration of other reforms in domestic support negotiations.”

“Only in this way will it help reduce some of the inequities built into the WTO rules in favour of the developed Members,” the two countries pointed out.

Egypt on behalf of the African Group, Botswana on behalf of the ACP Group, South Africa and Zimbabwe supported the joint proposal from China and India, saying it offers a proper direction for reforming domestic farm subsidies.

China maintained that the agriculture negotiations must remain consistent with the Doha Work Programme, including the 2008 revised draft agriculture modalities that were constructed on the basis of the development dimension.

China said the joint proposal with India showed how the developed countries enjoyed “exorbitant privilege” for continuing their trade-distorting domestic subsidies while curtailing minimum flexibilities for developing countries, said a person who took part in the 13 September meeting.

India maintained that the current WTO Agreement on Agriculture, premised on the Uruguay Round deal, is “imbalanced” and replete with “asymmetrical rules.”

India suggested the subsidies provided in developing countries seem like a drop in the ocean as compared to the AMS and other trade-distorting subsidies granted by the developed countries.

In sharp opposition, the EU and Brazil said the joint proposal from China and India will maintain inequality between members as some developing countries would have AMS and others would not. “Such a narrow focus on just one accounting mechanism of trade-distorting support represents a highly inaccurate picture of the realities of agricultural subsidies in major countries.”

[It may be recalled that in 2003, as a counter to a US-EU bilateral deal (on the eve of the Cancun Ministerial Conference) not to touch on each other’s agricultural subsidies but focus on developing-country markets, Brazil had reached out to China and India and created the G20 group of developing countries to bring developmental reform in global farm trade. The EU is on record at the WTO at the time as hitting out at Brazil and others for their move to counter the US-EU deal. Now, however, Brazil has jettisoned the G20 to join hands with the EU against them. – SUNS]

Recipe for disaster

Argentina went well beyond the EU and other critics of the China-India joint proposal by suggesting that the proposal is a recipe for disaster at Buenos Aires. It said the proposal does not merit any attention, and urged members not to make such proposals at this juncture, said a participant who asked not to be quoted.

The unusual statement from Argentina caused a flutter at the meeting, raising the hackles of developing countries, because the MC11 host has started fixing the markers for the conference, the participant said.

The US, which does not want any reform of the AMS and other trade-distorting domestic subsidies at this juncture because of the ongoing preparation for its new domestic farm bill, said there are far too many divergences.

The US expressed skepticism that members can find a solution to issues that have remained unresolved for many years. It urged members to use MC11 for “reflection” and not enter into any substantive outcomes.

Even on the issue of cotton subsidies, the industrialized countries remain evasive and reluctant to address the subsidies “ambitiously, expeditiously and specifically”, the participant said.

The EU and Brazil, as well as Australia, New Zealand and Canada from the Cairns Group of farm-exporting countries, drove home a strong message for an outcome/agreement on domestic support at Buenos Aires.

Australia said that it would be presenting a revised proposal with two or three options for a nominal ceiling for domestic support.

The EU and Brazil made a case for an outcome based on their proposal of a floating limit for Overall Trade-Distorting Domestic Support (OTDS) expressed as a percentage of the value of production.

Australia, Canada, New Zealand and Paraguay, however, called for a fixed limit on OTDS in nominal terms.

The chair of the Doha agriculture negotiations, Ambassador Stephen Karau of Kenya, had said, in a report on the state of play of the talks, that “a key question is whether this limit should be fixed or floating” and “what type of support such a limit should apply to.”

Australia said at the 13 September meeting that it is working on a proposal to bridge positions on these two issues.

With regard to another pillar of the agriculture negotiations, market access, WTO members also remained divided. The Philippines said any future work programme must advance the unresolved issues in the Doha market access pillar, while Paraguay and Peru suggested a work programme without any linkage to the Doha Work Programme.

Russia called for the elimination of special safeguards but several members including the EU, Korea and the Philippines said it is impractical to address the issue at this juncture.

On export restrictions, many members supported a proposal from Singapore for enhanced transparency notifications. India, however, maintained that Singapore’s proposal will impose burdensome requirements on developing countries.

In sum, ominous signs have emerged for the upcoming ministerial meeting in Buenos Aires, with the host country suggesting what should be decided during the four-day meeting, sources said. (SUNS8533)                       

Third World Economics, Issue No. 646, 1-15 August 2017, pp10-11