Food Security - PSH a priority, but several caveats need solutions
Published in SUNS #8528 dated 11 September 2017

Geneva, 6 Sep (D. Ravi Kanth) -- The chair for Doha agriculture negotiations, Ambassador Stephen Karau of Kenya, has said that the permanent solution for public stockholding programs for food security purposes (PSH) in developing countries remains "a priority issue" for the World Trade Organization's eleventh ministerial meeting in Buenos Aires beginning on 10 December.

However, he listed several caveats such as country coverage, product coverage, program coverage, safeguards and anti-circumvention provisions, and transparency provisions that need to be resolved before arriving at the "legal shield" for the mandated permanent solution for PSH programs.

In his 11-page restricted Job/Ag/109 document on the "state of play in the agriculture negotiations" issued on Tuesday, Ambassador Karau - who draws his mandate for overseeing the agriculture negotiations from the 2001 Doha Work Program - did not even mention the progress made on the three pillars - domestic support, market access, and export competition - in the Doha agriculture negotiations, including the 2008 revised draft modalities.

In the section on domestic support, he said, "it should also [be] acknowledged [that] several Members would still prefer an outcome in Domestic Support based on the provisions of the latest draft modalities [the 2008 revised draft modalities]."

As regards the outcomes on domestic support, Karau merely listed several proposals made by members with varying levels of ambition, including the proposal by China and India for the elimination of Aggregate Measurement of Support (AMS) or the most trade-distorting amber box subsidies.

He avoided suggesting that an outcome on domestic support will remain a priority issue like the permanent solution for PSH.

On cotton, Karau said "most members support a meaningful and specific outcome on Cotton Domestic Support, but a couple of delegations have cast doubts about the possibility of achieving an outcome at MC11 [eleventh ministerial conference in Buenos Aires] taking the overall negotiating environment."

Effectively, he thus suggested that an outcome on reducing domestic subsidies for cotton in the United States and the European Union is unlikely at the Buenos Aires meeting because of the "overall negotiating environment."

Commenting on the special safeguard mechanism (SSM) demanded by the G33 group of developing countries, the chair stated positions of various members, including a demand from a few members who said "the only feasible outcome on SSM at MC11 would be a decision on the continuation of SSM negotiations post MC11."

The chair said his document "is intended to assist members in preparation of future discussions in the lead up to the Eleventh Session of the Ministerial conference."

The document is "a supporting tool to help Members assess in a structured way what may realistically be expected as possible outcomes at MC11 and what remains to be done to incrementally develop options likely to attract consensus among the Membership," the chair said.

In short, the chair has prioritized issues even before discussing all the proposals made by members in the domestic support, including the elimination of AMS by developed countries.

As regards the permanent solution for PSH programs, he said there are two proposals - one by the EU and Brazil along with Colombia, Peru, and Uruguay, and the second proposal submitted by the G33 group of developing countries led by Indonesia.

Ambassador Karau said "the two proposals on the table suggest exempting the support provided under public stockholding programmes from the Aggregate Measurement of Support (AMS) calculation."

However, he said "the attached conditions [in the two proposals] differ significantly".

The chair mentioned that "several Members have expressed their opposition to the idea of an unlimited exemption."

"There seems to be nevertheless a convergence of views on some key elements to be included in the solution, such as safeguards and transparency requirements," he emphasized.

But, "the scope and content of these elements are yet to be agreed upon," the chair said, arguing that "many other elements would also require an agreement such as the country coverage, product coverage, and programme coverage."

The chair listed the views expressed by members in respect of the "core provision" of the PSH.

The views include:

i. exempting the support provided under PSH programmes for food security purposes from the AMS calculation (as proposed by the G33);

ii. exempting this support from both AMS calculation and a new overall limit to Trade-Distorting Domestic Support (as proposed by the EU and Brazil);

iii. exempting certain programmes from the AMS calculation; and providing a legal shield against challenges under the Agreement on Agriculture. In addition, a few Members have suggested updating the reference prices.

Significantly, the chair did not mention about an amendment to be incorporated into the Agreement on Agriculture for creating a new annex as proposed by the G33 in the run-up to the Nairobi ministerial meeting in December 2015.

The chair said there are divergences on country coverage between the two proposals.

Brazil and the EU, for example, suggested three categories of members to be eligible for the coverage.

They include (i) Least Developed Countries (LDCs), (ii) any developing country Member if the value of the stocks procured does not exceed a certain threshold of the average value of production (VoP); and (iii) Members with existing programmes (at the time of the Bali Ministerial Decision) in respect of support provided under these programmes, provided the requirements of the Bali Ministerial Decision (BMD) are fulfilled.

The G33 called for "a wider coverage that would include all developing country Members and LDCs."

Without naming the country, the chair said "one Member has suggested limiting the coverage to net importers of relevant products with a volume of production that does not exceed a certain level."

There are also differing views on product coverage "ranging from the BMD [Bali Ministerial Decision] to major staple foods or major diet staple crops only (e. g. wheat and rice), and to "wider" product coverage," the chair said.

On program coverage, the chair said "views range from programmes existing at the time of the BMD, to new programmes implemented by LDCs and other developing country Members with a low share in international markets and to all programmes ("existing" and "new")."

Some members even suggested "that in the case of new programmes, the support should be limited," the chair said.

The G33 called for "coverage of programmes for the acquisition of foodstuffs at administered prices by Governments with the objective of supporting low income or resource poor producers, and programmes for the acquisition of foodstuffs at administered prices and their subsequent distribution at subsidized prices with the objective of meeting food security requirements of urban and rural poor, and of maintaining adequate availability of foodstuffs and/or ensuring food price stability."

Additionally, according to the chair, "some Members have suggested that the permanent solution should apply only to non-commercial activities, including ensuring that stocks are constituted for a bona fide food assistance programme only or only to support rural development and for the benefits of resource poor farmers."

Some members suggested "that significant exporters should be excluded and that the eligibility of a Member should be forfeited should exports from stocks take place," the chair said.

Without listing countries that called for safeguards and anti-circumvention provisions, the chair misleadingly said "many Members seem to be of the view that safeguards are needed to ensure that the stocks do not distort trade or adversely affect the food security of other Members."

Except for the US, Australia, Pakistan, Paraguay, and a couple of other countries who called for strong safeguard and anti-circumvention provisions, a large majority of developing and least developed countries have said repeatedly that the proposed permanent solution should not be burdened with conditionalities.

The chair admitted that "views differ on how these safeguards should be formulated" as "some Members see the safeguards in the BMD as a necessary minimum, while others have asked for "strengthened" safeguards."

The G33 called for "more functional" safeguards than those contained in the BMD.

"It was also suggested that neither direct exports nor any release from stocks on the condition it should be exported should be allowed," the chair said.

"Several Members have called for a general prohibition on exports - both direct and indirect," Ambassador Karau argued.

"Others have also called for price or volume-based safeguards, and a cap on the support expressed as a percentage of the VoP of the product in question or otherwise," the chair mentioned.

On transparency provisions, the chair said "several Members are of the view that the transparency provisions in the BMD are a necessary minimum."

One proposal, according to the chair, includes transparency provisions as well as "a notification of the VoP [value of production] and value of acquired stock prior to the implementation of the PSH programme as well as on an annual basis."

The G33 suggested "a narrower set of transparency requirements that include information on the programme and description of its functioning and statistical information on domestic activities, and on exports and imports."

The Cairns group of countries led by Australia also "suggested including a mandatory notification of the targets, and data demonstrating that PSH programmes are not distorting trade or commercial markets."

"Several Members have called for "additional information" on the programmes, without however giving details on the information sought," the chair said.

But, "many developing country Members have cautioned against cumbersome requirements such as ex ante notification obligations," the chair admitted.

Some members also suggested holding an annual dedicated discussion based on available data and with the assistance by the Secretariat for examining the PSH programmes in the dedicated discussions on an annual basis, as well as reviewing or assessing the situation by the Committee on Agriculture (CoA), the chair said.

Surprisingly, these stringent transparency provisions are not even remotely suggested for examining over USD 200 billion green box programs in the United States and the European Union that are found to be distorting global trade, according to several analysts.

In crux, the proposed permanent solution for PSH programs is going to contain conditions that would make it almost un-implementable.

Also, there is no guarantee that it will involve an amendment to the Agreement on Agriculture like the creation of a brand new agreement on Trade Facilitation in the WTO's rulebook.

The developing and poorest countries must ensure that they secure a credible and effective legal instrument for PSH programs at Buenos Aires than falling prey to an outcome replete with conditions. +