Public Stockholding for Food Security Purposes Must Cover All Developing Countries, Not Country-Specific
Published in SUNS #8426 dated 21 March 2017

Geneva, 20 Mar (D. Ravi Kanth) - The G33 farm coalition led by Indonesia has called for a permanent solution for public stockholding programs to address the concerns of all developing countries, instead of any one country-specific solution, at the World Trade Organization's eleventh ministerial meeting (MC11) in Buenos Aires later this year, trade envoys told SUNS.

As attempts to arrive at a permanent solution are intensified, several members of the G33 seem concerned that a country-specific solution is being talked about behind the scenes by some powerful deal brokers at the WTO on the lines of what was done on export subsidies at the tenth ministerial meeting in Nairobi, said several trade envoys who asked not to be quoted.

India, which is a leading member of the G33 farm coalition, has demanded that the permanent solution must cover the food security programs implemented by all developing countries in a covered agreement that would provide legal certainty as was the case with the Trade Facilitation Agreement.

During a meeting convened by the WTO Director-General Roberto Azevedo with trade envoys from 27 countries on Friday (17 March), Indonesia delivered an unambiguous message on behalf of the G33 coalition that the permanent solution for Public Stockholding for Food Security Purpose (PSH) "shall take into account elements contained in our proposal dated 17 July 2014, as they provide Members with a reasonable way in addressing the food security issue faced by not only G33 members, but also other developing countries."

In the Job/AG/27 document issued on 17 July 2014, the G33 proposed amendments to Annex 2 of the Agreement on Agriculture (AoA) on the basis of three elements.

They include:

(i) To add new sub-paragraph (h) to the existing Paragraph 2 of Annex 2 of the Agreement on Agriculture with a view to include certain policies and services designed to promote rural development and poverty alleviation adopted in developing countries;

(ii) To modify the existing footnote 5 of Annex 2 of the Agreement on Agriculture so as to provide that acquisition of stocks of foodstuffs by developing country Members with objective of supporting low-income or resource-poor producers shall not be required to be accounted for in the AMS [calculation of amber box measures];

(iii) To modify the existing footnote 5 and 6 of Annex 2 of the Agreement on Agriculture with a view to reinforce and supplement the proposed modification to footnote 5 and also strengthen the existing footnote 5 and 6 further so as also to cover the programs designed to lowering prices to more reasonable levels [as compared to the 1986-88 reference period prices for AMS calculation].

Indonesia also said "the existing provisions on public stockholding for food security purpose under the current WTO rules will not be able to address the real need of developing members to effectively support their low- income or resource-poor farmers, nor to fight hunger and rural poverty."

More important, the AoA does not provide "adequate policy space" for developing countries to implement their justifiable food security programs.

This is more so in the context of "higher inflation and increasing wages in developing countries that have been building up over the years - which are eroding and inundating the flexibility," Indonesia said.

Therefore, the envisaged permanent solution "must work for all developing countries who are facing food security challenges but are constrained by the current inequitable Uruguay Round disciplines," Indonesia emphasised.

In his introductory remarks at the meeting, Azevedo said that the permanent solution is neither an Indian issue, nor an issue of the G33 farm coalition, said a trade envoy present at the meeting.

He acknowledged that it is a "collective members' issue" and therefore, every member has to work hard to find the permanent solution given the short time before the eleventh ministerial meeting.

Azevedo also suggested that the permanent solution must be found between the G33 proposal and the interim solution agreed by the trade ministers at the WTO's ninth ministerial meeting in Bali.

But the moot issue is whether he can convince Brazil, the United States, Canada, the European Union, Paraguay, Pakistan, Thailand, and Australia among others who repeatedly have stonewalled attempts to engage in a serious conversation based on the G33 proposal on grounds that it would undermine the AoA agreement.

At a time when major developed countries shifted all their amber box subsidy payments to the green box which now provides US$150 billion subsidies for the food stamps program in the US, it has become easy to frustrate the G33's efforts in finding a credible permanent solution, said a former trade envoy from an industrialized country.

In response to Azevedo's remarks on Friday, Canada, Pakistan, Paraguay, the European Union, and Thailand among others stuck to their inflexible positions all over again.

Canada, for example, said that the G33 proposal for the permanent solution for PSH offers a "carte blanche" - implying unrestricted policy space to developing countries.

Further, market price support programs underlying the PSH cannot be included in the green box and such a scheme is a red line and not politically viable, Canada said, according to trade envoys present at the meeting.

Canada suggested rhetorically that if the Indian Food Corporation procures wheat at prices double the market prices, it would have an impact on the international market.

Therefore, the permanent solution must take into consideration the systemic/export impact of the permanent solution on the Agreement on Agriculture, Canada maintained.

Canada also said the permanent solution for PSH could have potential impact on import displacement. It sought to know why no developing country had notified the market purchase programs.

Therefore, Canada vehemently argued at the meeting, the interim solution for PSH which was agreed at Bali offered a fine balance between food security and potential distortions, suggesting that members need to go back to the original proposal.

Pakistan said that it doesn't deny the importance of food security.

However, food security cannot be equated with stockholding programs, Pakistan said, suggesting that members need transparency about their public stockholding programs.

Further, the permanent solution must include adequate safeguards to ensure that it doesn't contribute to unsustainable production and gains for middle men, it argued.

Paraguay said the permanent solution must not lead to trade-distorting support.

The European Union said there are two sides to the issue of permanent solution for PSH. The EU said the carte blanche approach for including market price support programs in the green box would not work.

The EU suggested that it is possible to work on the basis of a permanent solution based on the interim solution.

The other side is if members want a much broader solution of changing the rules then it can be possible only in the context of broader negotiations of domestic support, the EU maintained.

Norway said the interim solution is a good basis and it has to be implemented in toto while Japan asked the G33 proponents to provide data and information about their current programs.

The US said it does not have political guidance yet but argued that the proposed permanent solution must not take things backwards, implying that more flexibilities cannot be added to the existing interim solution.

India maintained that the G33 had already offered the options for finalizing the permanent solution.

It maintained that there has to be legal certainty to the permanent solution as and when it is finalized before the eleventh ministerial meeting.

In short, the G-33 members face a Herculean battle in the next nine months for ensuring an outcome that would provide a credible and legally-sound permanent solution for PSH for all developing countries at the Buenos Aires meeting later this year, trade envoys said.