US launches assault on resource-poor farmers of South
Published in SUNS #8095 dated 18 September 2015
Geneva, 17 Sep (D. Ravi Kanth) -- The United States has signalled
its intention to dismantle the special and differential treatment
(S&DT) accorded to resource-poor farmers of the developing countries
in the Agreement on Agriculture (AoA) ahead of the World Trade Organization's
tenth ministerial conference in Nairobi, several authoritative people
told the SUNS.
At a closed door meeting of capital-based senior trade officials from
seven major developed and developing countries held at the Australian
mission on September 15, the US circulated a non-paper called "proposal
on domestic support" in which it has proposed a decision to be
taken at the Nairobi ministerial meeting.
Senior trade officials from the US, the European Union, China, India,
Brazil, Australia, and Japan, along with the WTO director-general
Roberto Azevedo discussed the possible package of decisions that would
be taken at the Nairobi ministerial meeting commencing on December
Over one-and-half days of intense discussions, including a dinner
meeting on Tuesday, the seven plus the DG spent considerable time
on the most contentious area of agriculture and the fate of all unresolved
issues in the Doha Development Agenda by the tenth ministerial meeting.
After having failed to arrive at a post-Bali work program, clearly
mandated in the ministerial declaration at the ninth Ministerial Conference
at Bali, Indonesia, in December 2013, the seven countries and the
DG have sought to prepare for possible outcomes that they can agree
in the next 90 days.
During the meeting on Tuesday, there was a fierce standoff on agriculture,
particularly in the domestic support pillar, in which the US is required
to suggest what Washington is going to do given the limit of US$14.5
billion that was proposed in the 2008 revised draft modalities.
The three major developing country participants - China, India, and
Brazil - strongly demanded "credible" outcomes based on
the 2008 revised draft modalities. The modalities of the revised fourth
version of draft text proposed clear reduction commitments of subsidies
in the domestic and export competition pillars, and market access
for developing and the developed countries.
It also proposed special flexibilities for small and vulnerable economies
and least-developed countries. More importantly, the 2008 revised
draft was based on the previous ministerial decisions since the launch
of the Doha negotiations in 2001.
However, at the meeting, the US chose to wage an unprecedented assault
on the S&DT provisions as set out in the Uruguay Round Agreement
Without suggesting what it is prepared to agree upon for reducing
its amber box, de minimis, and new blue box farm payments, the US
tabled a two-page non-paper targeting the market price support (MPS)
programs and the input subsidies that developing countries are allowed
to provide to their resource-poor farmers under the S&DT provisions
in the Agreement on Agriculture.
The US paper has called for "standstill" commitments in
MPS and input subsidies despite Article 6.2 of the AoA which was concluded
in the Uruguay Round Agreement.
This provision in the AoA says: "In accordance with the Mid-Term
Review Agreement that government measures of assistance, whether direct
or indirect, to encourage agricultural and rural development are an
integral part of the development programmes of developing countries,
investment subsidies which are generally available to agriculture
in developing country Members and agricultural input subsidies generally
available to low-income or resource-poor producers in developing country
Members shall be exempt from domestic support reduction commitments
that would otherwise be applicable to such measures, as shall domestic
support to producers in developing country Members to encourage diversification
from growing illicit narcotic crops. Domestic support meeting the
criteria of this paragraph shall not be required to be included in
a Member's calculation of its Current Total AMS."
Despite this provision in the AoA, the US non-paper explicitly says,
"Without prejudice to Members' rights and obligations under the
WTO Agreement on Agriculture, including Article 6.2, each Member should
avoid using market price support and input subsidies for agricultural
The US said that "each member undertakes the commitments in Annex
A (of the non-paper)."
The Annex A, as proposed by the US, says categorically: "Each
Member shall, with respect to agricultural products, undertake each
commitment set forth in its schedule to this Annex, which shall include:
a) not increasing either the applied administered price for any agricultural
product receiving market price support or the number of agricultural
products to which the Member provides market price support; or b)
not increasing its budgetary outlays for, or the scope of, product-specific
input subsidies for agricultural products above the level in effect
as on the date of this Ministerial decision".
Washington specifically provided examples in its paper as to what
each member is required to do.
"[Member X - Member X shall not provide support for any agricultural
product for which market price support is not authorized under its
domestic law as of the date of this Ministerial Decision.]
[Member X - For any agricultural product for which market price support
is authorized under the domestic law of Member X as of the date of
this Ministerial Decision, Member X shall not maintain an applied
administered price higher than the applied administered price as of
the date of this Ministerial Decision.]
[Member X - Member shall not provide any product-specific input subsidy
for any agricultural product not eligible under its domestic law to
receive a product-specific input subsidy as of the date of this Ministerial
[Member X - Member X shall not increase, above levels for the last
full year preceding the date of this Ministerial Decision, budgetary
outlays for the subsidization of any agricultural product effectuated
by means of product-specific input subsidies on the following inputs:
fertilizer, seeds, electricity, or diesel fuel.]"
Incidentally, both the US and the EU do not have to undertake any
commitments in MPS and input subsidies.
The US, for example, does not provide MPS except for sugar. Effectively,
the two trade majors are exempt from undertaking any commitments on
MPS and input subsidies.
But all developing countries, particularly countries that provide
public distribution programs for which they procure from resource-poor
farmers at market prices and offload at reduced prices for vulnerable
sections of the society, are most affected by the American proposal
to do away with S&DT flexibilities.
Senior officials from China, India, and Brazil dismissed the US non-paper,
saying it is unacceptable under any circumstances. China and India
said the aim of the US proposal is to kill S&DT provisions once
and for all.
The three developing country participants asked whether the outcomes
in the domestic support will be decided on the basis of the 2008 modalities.
The DG, who was present at the meeting, remained silent on the US
proposal, said people familiar with the meeting.
"He did not take any positions this time around and navigated
himself well," said a negotiator present at the meeting.
More importantly, the US paper did not mention any of the existing
Doha mandates beginning with the 2001 Doha Ministerial Declaration,
the July 2004 ministerial decision on the Framework Agreement, the
2005 Hong Kong Ministerial Declaration, and the unresolved 2008 revised
Like the infamous deal between the US and the EU on 20 August 2003
prior to the WTO's third ministerial conference in Cancun, Mexico,
in which the two trade elephants neatly worked out an arrangement
to protect their overlapping concerns in the domestic support and
market access, the latest US non-paper also ensured that both Washington
and Brussels need not undertake any commitments, said people familiar
with the meeting.
[That pre-Cancun deal of the US and EU resulted in the formation of
the G-20 coalition on agriculture, and ultimately wrecked the Cancun
Ministerial Conference itself. SUNS]
A South American trade official said the US paper will never fly and
it has zero chance of acceptability. At the meetings earlier this
week, the three developing countries maintained that without credible
outcomes in the domestic support pillar, there will be no progress
at the Nairobi meeting.
However, the US has insisted that its non-paper has offered "a
new idea" under which all subsidisers would be expected to make
In an article titled "Farm Program Elections, Budget Costs, and
the WTO," published in Choices Magazine in the US, the former
US chief trade negotiator Joseph Glauber along with Patrick Westhoff,
and Scott Gerit wrote that the latest US farm bill enacted last year
goes beyond the proposed commitments in the 2008 modalities.
"Because of the shift to a much more extensive reliance on amber
box [most trade distorting] subsidies and other less direct forms
of income transfers to farmers, the 2014 farm bill has complicated
trade negotiations by making compliance issues more problematic, especially
in the context of the 2008 DDA proposal for substantially lower limits
on farm subsidies," Westhoff, Gerit, and Glauber wrote in their
Despite continued disagreements, the four industrialized country participants
- the US, the EU, Australia, and Japan - pushed hard at the meeting
for a small package of outcomes at the Nairobi meeting. Their small
package includes issues in the export competition pillar, the package
of concessions for the least-developed countries, liberalized accession
requirements for new members, and ratification of the Trade Facilitation
Even in the export competition pillar, the US said it will not accept
the disciplines for export credits and food aid as laid out in the
2008 revised draft modalities. The term of 180 days for export credits
and monetization provisions in the revised modalities are not acceptable
to the US.
On the LDC package, the four major industrialized countries maintained
that they have already addressed most of the issues but did not clearly
offer any assurance for binding outcomes at the Nairobi meeting, said
people familiar with the meeting.
In sharp opposition, China, India, and Brazil called for credible
outcomes at Nairobi while continuing the negotiations on all unresolved
Doha issues after the tenth ministerial conference. The three developing
countries also adopted a common stand for the end of the Doha Round.
During the meeting, the US said somewhat bluntly that Doha is like
a "patient" which is dead but needs a doctor to certify
the death. The EU maintained that the Doha negotiations cannot continue
endlessly while Australia and Japan also agreed that Nairobi should
be the last point, according to people familiar with the meeting.
China sharply disagreed with the US, maintaining that Beijing doesn't
agree that Nairobi is the last point. China said all remaining issues
which could not be addressed due to paucity of time must be taken
up after the Nairobi meeting. India said the Doha negotiations shall
continue until all issues on the table are addressed. Brazil said
it doesn't believe that Doha is dead as all the issues in the DDA
remain alive, according to people familiar with the meeting.
In short, the US along with the major developed countries has set
the ground for taking the life out of the Doha negotiations at Nairobi.
The US also launched a war-like campaign against S&DT provisions
for the developing countries which could come into effect after the
It remains to be seen how developing countries will come to terms
with an outcome that has hollowed out the developmental goals set
out in the DDA. +