"Will not pay for mandated permanent solution for PSH", insist G33
Published in SUNS #8535 dated 20 September 2017

Geneva, 19 Sep (D. Ravi Kanth) - Indonesia, India, China, and other members of the G33 group made clear categorically on Friday (15 September) that they will not pay for the mandated permanent solution for public stockholding programs for food security in the developing countries at the upcoming World Trade Organization's eleventh ministerial meeting in Buenos Aires, several trade envoys told SUNS. 

The G33 group along with a large majority of developing and poorest countries made it clear to the European Union, Brazil, Argentina, Australia, Paraguay, Pakistan, and Thailand among others that there is no linkage between the mandated permanent solution for public stockholding (PSH) programs and the proposed outcomes in the domestic support programs, said trade envoys who asked not to be cited.

In their restrictive Job document (Job/AG/99), the EU, Brazil, Peru, Colombia, and Uruguay have included the mandated permanent solution along with their demand for an agreement on overall trade-distorting domestic support (OTDS).

The EU and its partners suggested that public stockholding programs for food security be exempt from the overall trade-distorting domestic support.

Significantly, Norway raised several concerns over a proposal from the EU to exempt public stockholding programs for food security from the proposed OTDS, said a trade envoy who asked not to be quoted.

Norway is one of the major beneficiaries of the continued current trade-distorting domestic support programs and remains opposed to any comprehensive reform of domestic subsides or the elimination of aggregate measurement of support (AMS).

During an informal open-ended meeting of the Doha agriculture negotiating body last Friday (15 September), Norway along with Argentina, Australia, Paraguay, and Pakistan severely questioned the EU's proposal, arguing that it will create a new exemption outside the current rules.

Norway said the EU's proposal posed problems from a "systemic" point of view.

In a one-page restricted proposal (Job/AG/110) issued last week, Norway raised the following questions:

1. Article 1 (a) of the AoA (Agreement on Agriculture) defines AMS as support other than that exempted through Annex 2 to the Agreement. In other words, AMS and Annex 2 make up a categorization of support that is exhaustive.

2. Job/AG/99, however, appears to create a new unaccounted-for category of support in addition to this exhaustive definition. Could the proponents (the EU, Brazil, Peru, Colombia, and Uruguay) confirm or clarify the intention and consequence of the provision that stipulates that relevant market price support does not have to be accounted for in "the AMS", "including de minimis"?

3. How would market price support to staples in the public stockholding programs under the proposal for a ministerial decision be accounted for in the domestic support notifications? Is there a need for a new annex to the AoA?

4. What are the legal implications of the proposal for footnote 5 of Annex 2 in the Agreement on Agriculture? Is there a conflict between the proposal for a ministerial decision and footnote 5 of the AoA?

5. According to the proposal, for existing programs as of the date of the Bali ministerial decision, they do not need to be accounted for in "the AMS" or in the new OTDS. Is the total entitlement for trade-distorting support corrected downwards with the value of production of staples covered by PSH programs or is the total value of production maintained, thus eventually in the future leaving more room to subsidize other agricultural products?

6. If a member for instance has 30% of domestic wheat production covered by public stockholding, is all of domestic wheat production exempt from "the AMS" and OTDS or only the 30%?

7. For new programs, there is a new 10% de minimis in percentage of value of production. Does this mean that in addition to providing this de minimis support without accounting for it in the AMS and the new OTDS, members may still provide a market price support up to 10% of value of production for the crop in question according to the AoA?

Argentina, Australia, Paraguay and Pakistan among others joined Norway to challenge the EU for proposing a new carve-out for PSH (public stockholding programs) for food security.

Argentina, which is going to host the ministerial meeting, had raised several legal issues on the EU's proposal, including the Korea beef case.

Argentina, however, suggested that it can consider an outcome on PSH programs with considerable safeguards along with an outcome on domestic support programs for food security, said trade envoys who took part in the meeting.

The EU said that it proposed "a compromise approach which could provide the way forward for this difficult and important issue," suggesting that such outcomes were reached in the past.

The EU said that it took into account all the concerns raised by both the demandeurs and the opponents to the permanent solution for PSH programs.

Brazil suggested that its joint proposal with the EU, Peru, Colombia, and Uruguay will make the 2013 interim solution permanent under clear rules with enhanced transparency and safeguards.

Brazil said the proposal on PSH programs will also allow new programs that would allow developing countries to pursue PSH programs subject to specific criteria of conditions.

Several other farm-exporting countries - Argentina, Australia, Paraguay, and Pakistan among others - also joined Norway in raising "systemic" issues on the EU's proposal while suggesting that the permanent solution on PSH programs must contain stringent safeguards.

During the to-and-fro exchanges between the EU on the one side, and Norway and the Cairns Group members on the other on the permanent solution, the G-33 members stated their opposition to the EU's joint proposal on grounds that it is linked to commitments on domestic support.

On behalf of the G33 members, Indonesia expressed sharp concern over the EU's proposal on the linkage between the issue of PSH and Domestic Support.

"The G33 strongly opposes and will not accept the linkage between the issues of PSH and Domestic Support," Indonesia said.

"The G33 would like to reiterate that the mandate on finding permanent solution on Public Stockholding for Food Security Purposes is distinct and on an independent track and G33 believes there should be no linkage between PSH with other issues," Indonesia said.

Indonesia said that the G33 proposal on permanent solution called for amending the WTO's Agreement on Agriculture by inserting a new annex 6 to exempt programs for the acquisition of foodstuffs that are going to be distributed at subsidized prices from any AMS reduction commitments.

The G33, said Indonesia, "firmly believes that the best solution for the PSH issues is the one that includes new and current programs of all developing members who are facing food security challenges but are constrained by inequitable Uruguay Round disciplines."

It argued that existing provisions on public stockholding for food security purposes 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.

Indonesia explained that "the Interim solution which was agreed in Bali and modified by the General Council decision of 2014, was meant as an interim solution and will not sufficiently address the real needs."

Consequently, the G33 proposed an amendment of the Agreement on Agriculture (AoA) for a permanent solution, Indonesia said.

"In this regard, the Group specifically proposes the insertion of a new annex (as Annex 6) to the AoA, where programme for public stockholding for food security purposes shall not be required to be accounted for in the Aggregate Measurement of Support (AMS)," Indonesia argued.

The G33, according to Indonesia, will agree to transparency elements in the permanent solution. The transparency elements include notifying the Committee on Agriculture on an annual basis.

However, the G33 will not accept "onerous and cumbersome" transparency provisions which will defeat "the purpose for which the permanent solution is intended, namely, food security in developing countries. Too many onerous and cumbersome requirements or conditions precedent will come in the way of the use of this mechanism by developing countries. For example, the ex-ante transparency requirements as conditions for invoking the PSH would be onerous for developing countries."

India said that it will not pay for the mandated solution for PSH programs, nor accept onerous transparency conditions as set out in the EU's proposal.

China also reminded that the permanent solution is essential to address food security problems in the developing countries.

A large majority of developing and poorest countries - Botswana on behalf of the ACP (Africa, Caribbean, and Pacific) group, Egypt on behalf of the African Group, South Africa, Kenya, Zimbabwe, and Cameroon among others - strongly supported the G33 proposal.

The G33 also called for a decision at Buenos Aires on its proposal for a special safeguard mechanism (SSM) for developing countries for curbing unforeseen surges in the imports of farm products.

Indonesia, on behalf of the G33 members, said "SSM has been denied for long, the debilitating effects of import surges and price depressions continue to wreak havoc on developing Members' agriculture."

It called for legally-binding amendment in the AoA to enable the developing countries to use volume-based and price-based SSM.

In its latest proposal on SSM (Job/Ag/111), the G33 group had called for "a concrete and operational SSM shall be established at MC11 in Buenos Aires."

It proposed a draft legal text as well as an annex for establishing the SSM. The G33 proposal contained "Annex A" for the volume-based SSM; and "Annex B" for the price-based SSM.

"While the WTO ministerial mandate is for establishing both volume-based SSM and price-based SSM, the G-33 is open to issuance of either of the mechanisms at MC11 in the interim period, provided that a decision agreement contains -- at the minimum -- a concrete and operational SSM for use by developing country Members that effectively addresses either import surges or price depressions from day one of the decision," it argued.

Since there is no proposal on the table yet on SSM, the G-33 said it "expects that the G-33 newest submission shall be the basis of our discussions from now."

A large majority of developing and least-developed countries supported the G33 proposal on SSM.

But, the opponents to the SSM such as the United States, Australia and other Cairns Group members remained conspicuously silent during the discussion, said trade envoys after the meeting.

With less than two-and-half months left for the Buenos Aires meeting, the developing and poorest countries face a herculean battle for securing a credible and effective permanent solution for PSH programs and an instrument for SSM.

Unless the large majority of developing and poorest countries remain united at Buenos Aires they could face an ugly outcome that will deny them forever a permanent solution for PSH programs and a simple and effective instrument for SSM, trade envoys said.