TWN Info Service on WTO and Trade Issues (Jul17/11)
17 July 2017
Third World Network

South nations for ending AMS, cuts in "green box" in agriculture
Published in SUNS #8503 dated 17 July 2017

Geneva, 14 Jul (D. Ravi Kanth) -- Major developing countries on Wednesday (12 July) called for the elimination of Aggregate Measurement of Support (AMS) as well as significant reduction commitments of minimally trade-distorting green box programs in the developed countries in the ongoing Doha agriculture negotiations at the World Trade Organization, trade envoys told SUNS.

China, India, Egypt, and other developing countries also emphatically rejected calls for curtailing their de minimis support and the flexibilities accorded to them in Article 6.2 of the WTO's Agreement on Agriculture (AoA).

The United States, the European Union, Australia, and Brazil among others are calling for cutting down de minimis support as well as doing away with Article 6.2 of the AoA that accords special flexibilities to developing countries for agriculture and rural development.

The developing countries opposed attempts to impose an overall trade-distorting domestic support (OTDS) as a percentage of overall production.

Significantly, major farm producing countries such as Australia, New Zealand, and Argentina among others also called for sharp reduction commitments in blue box and green box measures as provided by the US, the EU, and several other industrialized countries because of their continued trade-distorting effects.

At a meeting of trade envoys from select countries convened by the chair for the Doha agriculture negotiations, Ambassador Stephen Karau of Kenya, the differences on proposals for reducing trade-distorting domestic support came into the open between major developing countries such as China, India, Egypt, and the Dominican Republic on the one side, and the US, the EU, Australia, Brazil, and other farm exporting countries on the other, according to trade envoys present at the meeting.

Ahead of the meeting on 12 July, the chair posed two questions to the invited members for eliciting their views.

Ambassador Karau sought to know whether the existing Agreement on Agriculture, which was negotiated in the Uruguay Round, can be retained for limiting the overall trade-distorting support, and second, how to calculate the limit on the overall trade-distorting domestic support (OTDS).

Australia, which took the floor first during the meeting, said the OTDS should be nominally fixed instead of calculating as a percentage of the overall production.

Australia called for sharp reduction commitments in the AMS, including product-specific subsidies, de minimis support, and blue box direct payments under production-limiting programs. Australia also called for tackling the green box programs involving government service programs in the Annex 2 of the AoA.

The European Union insisted that the AoA should be left untouched at this juncture given the paucity of time for the eleventh ministerial meeting in Buenos Aires in December. The EU, however, said members can construct an additional layer of fixing OTDS to the AoA. It argued that the OTDS can be capped as a percentage of the value of overall production.

Significantly, Brazil, the EU's new partner-in-arms in the current agriculture negotiations, supported fixing an overall OTDS in percentage terms of the overall value of product.

In the past, Brazil was responsible for creating the coalition of G20 developing countries before the WTO's fifth ministerial meeting in Cancun (2003) to fight the US-EU accord to sidestep their own subsidy programs and commitments to cut them, but focus on opening up developing country markets through the reduction commitments in domestic support.

Now, Brazil has joined hands with its erstwhile foe to circulate a controversial proposal that will curtail the flexibilities accorded to developing countries, said a trade envoy who is familiar with the Brazilian proposal.

The EU-Brazil proposal is yet to be circulated officially to members but it will meet the same fate as the US-EU proposal in August 2003, the envoy said.

The EU opposed any changes in the blue box and green box support programs as suggested by Australia, New Zealand, and Argentina among others.

Brazil supported the EU's proposal for fixing the OTDS as a percentage of the value of total production. Brazil and Colombia also called for fixing the OTDS in relation to the value of overall production.

Brazil's shifting stands in the Doha agriculture negotiations remains a source of mystery because in the past, Brazil said the revised draft modalities of 2008 are the ultimate basis for any reform of the Doha agriculture negotiations.

The former Brazilian trade envoy Ambassador Roberto Azevedo, before becoming the WTO's director-general, said in 2011: "The December 2008 draft modalities are the basis for negotiations and represent the end-game in terms of the 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."

After becoming the director-general in September 2013, Azevedo changed his tune and said "if any of you insist that those (2008 draft modalities texts) are cast in stone and unalterable, then you have made a choice; a choice that irreparably condemn our efforts to a failure."

In 2015, Brazil joined hands with the EU to propose disciplines in the export competition pillar in which the two sheltered the US from undertaking any commitments in export credits and food aid.

Against this, the joint proposal by Brazil and the EU on domestic support which will be circulated in a day or two will fail to garner support, the envoy suggested.

During the discussion on Wednesday, China said the biggest item of trade-distorting domestic support is AMS that requires it to be eliminated altogether. China said the AoA based on the Uruguay Round negotiations is replete with inequities.

Therefore, it cannot continue with the AMS and without the elimination of AMS the AoA will continue to perpetuate the historical inequities in global farm trade. China said the AoA has to be reformed by eliminating the AMS.

More important, China said it will not accept any attempt to reduce the de minimis in the AoA. China also severely questioned fixing the OTDS without addressing the inequities.

India said it will fiercely oppose any attempt to touch Article 6.2 emphasising it is a red line. India also called for elimination of AMS. It said the time has come for reforming the green box support programs that are provided by the US and the EU.

New Zealand and Argentina among others supported Australia's proposal for fixing OTDS at a nominal figure instead of limiting it in percentage terms of the overall value of production.

New Zealand said it prefers an elimination of AMS while suggesting that the existing AoA could be continued.

Argentina raised sharp concern over the continued increase in all forms of trade-distorting support, including blue box measures as well as green box support programs.

Egypt said that the major trade-distorting programs are AMS and green box support programs. It opposed attempts to reform Article 6.2 of AoA involving special and differential treatment flexibilities for developing countries.

Egypt pointed out that the industrialized countries continue to use unconstrained support for the green box while suggesting that the developing countries must not have any flexibilities.

The G10 farm defensive countries such as Norway, Switzerland, and Japan suggested that they would like to continue with the existing AoA along with their amber box support programs. Norway opposed attempts to fix OTDS based on a percentage of the value of overall production.

The United States said that it is not prepared to negotiate in darkness suggesting that some major developing countries have not even tabled their notifications. The US said all members must undertake commitments in all forms of trade-distorting support.

In conclusion, the major developed countries along with Brazil are reversing the progress made in the Doha agriculture negotiations, particularly the 2008 revised draft modalities, just to ensure that China and India are forced to undertake commitments to reduce their de minimis and curtail Article 6.2 flexibilities, said trade envoys who asked not to be quoted.

Trade observers noted that in the Uruguay Round culminating in the Marrakesh Treaty and its annexed agreements, developing countries undertook a range of new commitments on trade in goods, trade in services and in intellectual property protection, thus paying an advance price in return for commitments of the EU, US and other industrialised countries to reverse course on global agriculture trade, and over time reduce and eliminate their various subsidy programs (domestic support, border protection and export support).

Their current stance means going back on their commitments on reform of their agriculture sectors. +