TWN Info Service on WTO and Trade Issues (Nov17/19)
21 November 2017
Third World Network

US cherry-picking MC11 outcomes, holds Members hostage
Published in SUNS #8578 dated 20 November 2017

Geneva, 17 Nov (D. Ravi Kanth) - The United States continues to cherry-pick outcomes for the World Trade Organization's eleventh ministerial meeting in Buenos Aires next month.

The US has indicated its willingness to negotiate a deliverable for prohibiting subsidies to vessels that contribute to IUU (illegal, unreported, and unregulated) fishing while ruling out categorically a work program on domestic farm subsidies, trade envoys told SUNS.

The US also remained sharply opposed to any enhanced flexibilities as demanded by a large number of countries from Africa. It has discarded an outcome on the domestic regulation for trade in services.

It has adopted an ambiguous position for retaining the transparency and safeguard provisions in the Bali interim decision on public stockholding programs for food security, according to trade envoys familiar with the development.

The diametrically opposite positions adopted by the US came into full display during two meetings on the domestic support reduction commitments for farm products and the fisheries subsidies this week.

The US also remained somewhat silent for enhancing special and differential flexibilities as demanded by African countries.

On Tuesday (14 November), the chair for Doha agriculture negotiations, Ambassador Stephen Karau of Kenya, held a meeting on domestic support with 15 countries.

The meeting was specifically convened to accelerate discussions on the so-called compromise proposal issued by Argentina.

The proposal, which aims to forge "convergence for an outcome at MC11 [eleventh ministerial meeting in Buenos Aires]" has suggested an overall "limit" (cap) on overall trade-distorting support with several elements.

The elements include:

Members shall not provide trade-distorting domestic support which taken in aggregate exceeds a monetary limit (hereafter "base cap"), in accordance with the following commitments.

The base cap shall be no greater than the larger of:

Option A: Double the Member's de minimis percentage of its average value of total agricultural production in the period [2011-2015];

Option B: [110%] of the average Articles 6.3 and 6.4 support notified by the Member for [the most recent three notified years at the date of adoption]; or

Option C: For developing country Members, [US$2.0bn] or equivalent in local currency.

Argentina said "the base cap shall apply to trade-distorting domestic support referred to in Articles 6.3 and 6.4 of the Agreement on Agriculture."

It maintained that "Members that do not notify their preferred option under paragraph 2 above within one year of this Decision shall be considered to have chosen "Option C" in the case of developing country Members and "Option B" in the case of developed country Members."

In an attempt to satisfy China and India which demanded the elimination of Aggregate Measurement of Support (AMS) or the most trade-distorting domestic support, Argentina also proposed a tiered formula for "final bound total AMS".

The formula suggests that:

i. where the Final Bound Total AMS is greater than US$40 billion, or the equivalent in the monetary terms in which the binding is expressed, the reduction shall be [30]%;

ii. where the Final Bound Total AMS is greater than US$15 billion and less than or equal to US$40 billion, or the equivalent in the monetary terms in which the binding is expressed, the reduction shall be [21]%;

iii. where the Final Bound Total AMS is less than or equal to US$15 billion, or the equivalent in the monetary terms in which the binding is expressed, the rate of reduction shall be [15]%.

Argentina said developed countries will be required to reduce their Final Bound Total AMS in three equal installments over two years, commencing on the first day of implementation.

For developing countries, Argentina said the "reduction in Final Bound Total AMS applicable to developing country Members shall be two-thirds of the reduction applicable for developed country Members."

It suggested the developing countries will reduce their Final Bound Total AMS in five equal annual instalments over four years, commencing on the first day of implementation.

"However, developing country Members with Final Bound Total AMS levels at or below US$100 million shall not be required to undertake reductions," Argentina maintained.

Argentina, which is hosting the ministerial meeting, proposed in its draft decision that members "agree to establish a work programme with the objectives of reducing the Overall Trade-Distorting Support limit (i.e. base cap) as set out in this Decision, including Blue Box support (Article 6.5)," and "addressing subsidy concentration, with negotiations to be held in dedicated sessions of the Committee on Agriculture in Special Session with outcomes to be adopted by the [twelfth] Ministerial Conference."

Even though the Special Sessions on agriculture are conducted under the mandate of the Doha work program, the chair and the proponents have shied away from mentioning the Doha Development Agenda, particularly the revised 2008 draft modalities, because of the fear that it would be opposed by the United States.

During the small group meeting convened by the chair on Tuesday, the US fiercely opposed the Argentinean proposal, insisting that it will not agree to any outcome on domestic support at the Buenos Aires meeting.

The US stand on domestic support created a serious impasse, said one trade envoy who asked not to be quoted.

The US said that its opposition to any outcome on domestic support at Buenos Aires is due to the continued divergences among members, including on the so-called Argentinean convergence proposal.

The US maintained that enhanced transparency and notification requirements are essential before commencing work on domestic support.

The US called for an outcome on its proposal on transparency and notification requirements at the Buenos Aires meeting.

The US stand also created confusion even on the next steps as it insisted categorically that there should be a one line statement at Buenos Aires for continuing work after the eleventh ministerial conference without any specific agenda, said a participant who took part in the meeting.

The Argentinean "convergence" proposal for nominal cuts in the Overall Trade Distorting Domestic Support (OTDS) was also opposed by China, India, and the coordinators of the African Group and the ACP (African, Caribbean, Pacific) group.

The four participants said their proposal to eliminate the most trade distorting domestic support or the Aggregate Measurement of Support is the starting point for any discussion on domestic support and not the OTDS as demanded by Argentina.

Even farm defensive countries - Japan, Switzerland, and Mexico - adopted a nuanced position demanding "proportionality" in the domestic support reduction commitments.

The three countries said that the only way to commence work on domestic support is to start from the scheduled commitments and not existing levels of support.

The G10 farm defensive countries - Norway, Switzerland, and Japan - said that they are not demandeurs for an outcome on domestic support but they are willing to do their bit only if it doesn't result in cutting their existing support programs.

In short, the meeting ended in disarray without any clarity as to what Argentina is planning to do given the opposition from its ally in Washington.

As the chair of the Doha negotiating group on rules Ambassador Wayne McCook of Jamaica concludes a crucial round of meetings on Friday on fisheries subsides, the prospects for a landing zone to prohibit subsidies to vessels engaged in the IUU (illegal, unreported, and unregulated) fishing appeared bright after the US suggested compromised textual language.

During a small group meeting on Wednesday among ten countries, the US apparently provided some textual language for addressing the concerns raised by the South American proponents for an outcome to prohibit subsidies for vessels that contribute to IUU fishing on the high seas.

However, there are other big issues involving overfishing and overfished stocks to be addressed, according to a negotiator familiar with the consultations.

For example, the proposed language on these two issues remain in square brackets. The language on "overfished discipline" suggests that:

"Subsidies for fishing [and fishing related activities] [outside the territorial sea] [that negatively affect]/[of] [targeted] fish stocks that are in an overfished condition.

"[The negative effect of such subsidies shall be determined] [by the subsidizing Member] based on the [best] scientific evidence [available to] [recognized by][that Member.]]"

Similarly, "[a fish stock is overfished if

[ALT1: it has not been assessed or has been assessed to be in an overfished condition. NZ/ICE/PAK]

[ALT2: it is recognized as such by the Member in whose national jurisdiction the fishing is taking place or by a Regional Fisheries Management Organization [or Arrangement][after taking due account of the objections, if any, of the concerned Member] based on [best] scientific evidence available to [and recognized by] them.]

[ALT3: the stock is at such a low level that mortality from fishing needs to be restricted to allow the stock to rebuild to a level that produces maximum sustainable yield or [alternative][other] reference points based on the [best] scientific evidence available [to the Member within its jurisdiction or to the relevant RFMO] [and with no effective management plan in place] [.][[Fish stocks that are][as] recognized [as overfished] by the national jurisdiction where the fishing is taking place or by a relevant fisheries management organization or arrangement [shall also be considered overfished.]][In the cases of straddling and highly migratory fish stocks, shared among Members, the evaluation related to the fish stocks in the fishery for which the subsidy is provided shall be made pursuant cooperation of the Members involved.]]

[In the absence of sufficient data to make such a determination, the stock shall be presumed to be in an overfished condition. EU]."

"There is a slim chance and some light at the end of the tunnel," the negotiator said, suggesting that three elements are coming together.

The three elements involve a down payment at the Buenos Aires meeting for prohibiting fisheries subsidies for vessels that contribute to IUU fishing, a work program for addressing issues concerning overfishing and overcapacity, and the chair's vertical text remaining as the basis for work between the eleventh and 12th ministerial conference.

"It is too early to suggest a clear outcome but the US language is bridging the gaps," said another negotiator.

However, the US suggestions, if linked with the transparency and notification requirements for fisheries subsidies, could pose problems, the negotiator added.

The US also remained silent on the special and differential treatment provisions as demanded by many developing countries, including India for its artisanal fishermen.

There is also an issue stemming from China's demand to exclude disputed areas on high seas not to be brought under any disciplines.

Meanwhile, the Philippines yesterday circulated a draft ministerial decision in which it stated that "a member shall not provide subsidies to fishing and related activities in waters and areas that are claimed by more than one member at the time of this decision, unless the member involved have agreed inter se to do so through a joint notification to the WTO. For purposes of this provision, the Member shall cease from providing subsidies not later than [2020]."

In crux, the outcomes for the eleventh ministerial meeting in Buenos Aires are sought to be determined by the United States while the remaining 163 countries are being held hostage to the demands made by Washington, said a trade envoy who asked not to be quoted.