Moves for permanent solution for PSH for MC11 ministers
Published in SUNS #8559 dated 24 October 2017

Geneva, 23 Oct (D. Ravi Kanth) - With about seven weeks to go for the eleventh Ministerial conference (MC11) in Buenos Aires, attempts appear to be currently under way at the WTO to push the major unresolved issues of the mandated permanent solution for public stockholding (PSH) programs for developing countries to the wire and for trade ministers of major nations to finalise an outcome at MC11.

The intent appears to be to do so tying in the unresolved issues for a permanent solution on PSH to other issues on domestic support in agriculture, according to trade envoys familiar with the development.

A large majority of developing and poorest countries have repeatedly demanded that major mandated outcomes for the WTO's eleventh ministerial conference be decided in Geneva before members proceed to Buenos Aires so as to avoid last minute surprises as happened at Nairobi during the WTO's tenth ministerial conference in December 2015.

More importantly, major decisions, including the Nairobi ministerial declaration, were decided at MC10 by five countries - the United States, the European Union, China, India, and Brazil - while the rest of the WTO members were excluded.

Many members have consistently demanded that the outcomes for the Buenos Aires meeting be finalized at Geneva so that there is a sense of ownership which was lacking in the Nairobi outcomes, said a person familiar with the ongoing consultations.

Despite these repeated calls made at almost every General Council meeting since the Nairobi meeting, renewed attempts are being made to push the mandated solution for the public stockholding programs for food security and even other issues outside the mandate such as improvements in the domestic regulation for services to Buenos Aires.

In the mandated solution for the public stockholding programs for food security, for example, attempts are being made to decide issues such as strong safeguards as demanded by the US and Cairns Group members, and language on commitments for leakage of stocks procured for PSH programs into the international market to be decided by key ministers at the eleventh hour during the Buenos Aires meeting, the sources said.

The underlying rationale for pushing issues such as the mandated permanent solution for PSH programs on to key trade ministers at Buenos Aires is to force the developing countries such as India, China, Indonesia, and other countries to pay for the outcome in other areas such as domestic support work program that is not based on the Doha Development Agenda, particularly the revised draft modalities of 2008.

Effectively, linkages are going to be foisted on the large majority of developing countries at Buenos Aires, the trade envoy who did not want to be identified said.

In a similar vein, there are attempts to launch plurilateral negotiations in relation to domestic regulations on services, as well as decide outcomes through the plurilateral route in the face of opposition from a large majority of countries.

During his address to the global coalition on trade in services in Washington last week, the WTO director-general Roberto Azevedo said, according to a report in Inside US Trade on 18 October, that "some WTO members could pursue a plurilateral on domestic regulation in services at the body's 11th ministerial in December."

During the Coalition of Services Industries' Global Services Summit, Azevedo said that depending on the outcome of the ongoing talks at the WTO, "members who are negotiating this should consider some flexibility with the geometry" because it's possible that "not every member will be participating but those who are in a position to do that, will," Azevedo said, according to the report in the Inside US Trade.

"Proponents of an outcome on domestic services regulation are expected to make a major push for a multilateral deal, but likely are also considering a pact involving a subset of WTO members," Azevedo said, according to Inside US Trade. (See SUNS #8538 dated 25 September 2017.)

The negotiations on improvements in domestic regulation for trade in services as sought by a group of industrialized and developing countries have little in common to what was proposed in 2009 and 2011 draft texts issued by the chairs of the Working Party on Domestic Regulation.

If anything, the proposals on the table come close to what was negotiated in the failed Trade in Services Agreement (TiSA) and many developing countries remain opposed to the proposals.

[Arguably, post-Marrakesh, it was multilaterally agreed in relation to GATS to enable some sector-specific plurilateral negotiations, subject to any benefits being extended unconditionally to all members on an MFN basis. However, behind this was the fact of mandated post-Marrakesh negotiations under GATS on Article VI.4 domestic regulations, and pending that the stipulations under Art. VI.5.

[The United States from the outset resisted the mandatory Art VI:4 negotiations, so as to leave itself freedom to discriminate against developing countries and deny them market access in services to its own domestic market via mode 4. In fact, in raising visa fees for H1B visas under their scheduled GATS commitments (in order to raise resources for better monitoring of migration from Latin American countries, which they did a few years back) was plainly violative of GATS, since visa fees should not exceed the cost of providing the service.

[Now, its efforts, along with a few other developed countries, appear to be to have plurilateral negotiations on domestic regulations, and schedule them using Art XVIII as "additional commitments" in an attempt to nullify the mandated Art VI:4 negotiations on domestic regulations, an outcome that would be applicable to all members and not selectively.

[Developing countries would be within their rights to resist this, and deny any multilateral consensus to enable such plurilateral negotiations. SUNS]

As regards the permanent solution for public stockholding programs, the chair for Doha agriculture negotiations Ambassador Stephen Karau of Kenya constituted a small group of seven countries that is heavily tilted in favour of the opponents to a credible and an effective mechanism. So far, the group includes the United States, the European Union, China, India, Brazil, Australia, and Canada.

During a meeting of the small group on 13 October, the opponents - the US, Australia, and Canada - merely stuck to their entrenched positions without offering credible proposals to buttress their case. The opponents, for example, want that the mandated solution cannot undermine the interim solution, that it must include a regime of strong safeguards, and a commitment from the developing countries to ensure that stocks procured for PSH programs do not leak into international market.

Significantly, there are no such conditions for the US, the EU, and other major developed countries which are availing more than hundreds of billions of dollars of green box programs that are found to be trade-distorting, nor there are conditions for blue box programs on which the Rev.4 text of 2008 contained strong commitments.

Instead of addressing the permanent solution for PSH programs during round-the-clock open sessions as was the case with the Trade Facilitation Agreement before the WTO's ninth ministerial conference in December 2013, the chair has opted for a small group which in all probability will push the issues to Buenos Aires.

During the informal open-ended meeting of the Doha negotiating body on agriculture on 20 October, Indonesia, which coordinates the G-33 group, strongly rebutted the demands made by the opponents to the permanent solution.

Indonesia asked the opponents to "faithfully respect and follow the negotiation mandate as stipulated in the Nairobi and Bali Ministerial Decisions, as well as General Council Decision of 27 November 2014."

Indonesia expressed sharp concern over "the linkage (sought to be) created by some Members between the issues of PSH and the Domestic Support."

Such linkage, Indonesia argued, "is against existing mandates, the G33 has failed to understand why the G33 has to take into consideration issues that are beyond its control."

Indonesia warned that "linking negotiation of permanent solution for the PSH with the negotiation of other issues will further prevent Members from achieving any credible and concrete outcomes in Buenos Aires."

Indonesia reiterated that "the envisaged permanent solution must work for all developing Members who are facing food security challenges but are constrained by inequitable Uruguay Round disciplines."

It maintained that the G33 had presented credible proposals to break the impasse. Indonesia highlighted the following points:

a. The best permanent solution for the PSH 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.

b. Interim solution that 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 of developing Members to effectively support their low-income or resource-poor farmers, nor to fight hunger and rural poverty.

c. The amendment of the Agreement on Agriculture (AoA) for a permanent solution, by inserting 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 Support (AMS).

d. On transparency elements, the G33 supports the need to have such mechanism in the permanent solution. However, transparency requirements should not be so onerous and cumbersome that they defeat the purpose for which the permanent solution is intended, namely, food security in developing countries. For example, the ex-ante transparency requirements as conditions for invoking the PSH would be onerous for developing countries.

e. The G33 also concurs that it is obligation of Members benefiting from this program to notify to the Committee on Agriculture on annual basis. In this context, the Group has proposed a format of notification - as annexed to the proposed permanent solution for the PSH, which consists some relevant information that need to be understood by all Members.

f. On safeguard, the G33 is mindful of the questions posed by some members concerning this issue, to prevent the unintended consequences of the PSH program. The Group is ready to openly discuss with non-proponents, including any textual suggestion, on this issue that could improve the proposed solution, so as to make it work more effectively for all developing members.

On the unresolved issue of special safeguard mechanism (SSM) for developing countries, Indonesia said: "the SSM issue has been discussed by Members over the span of a decade with a view to agreeing a pro-development and balanced SSM that ensures its accessibility and effectiveness in addressing import surges and price depressions."

"While access to the SSM has been denied since the July Framework in 2004, our hundreds of millions of small-scale and subsistence farmers have been also facing the debilitating effects of import surges and price depressions in various magnitudes and depths, which undermine food security, livelihood security and rural development," Indonesia maintained.

Indonesia said the G33 "is seeking for no less than a concrete and operational outcome on SSM in Buenos Aires and therefore the call of some (members) for another work programme on SSM in MC11 is not and can never be an option."

"The strong and consistent call for the establishment of SSM at MC11 is not only from the G33 and its 47 WTO members, but also from other developing Members and groups, which overall comprise a majority of the WTO membership," Indonesia said.

"The SSM, therefore, could not be declared secondary in the negotiations and must land for concrete decision in Buenos Aires."

Indonesia told the chair that "while positions of Members remain divergent and entrenched on SSM, this situation is also true in other areas of the negotiations."

With less than seven weeks left for the Buenos Aires meeting, the developing countries now face a defining moment on these two issues - the permanent solution for PSH programs and SSM. If they fail to secure credible outcomes on these two issues, they might as well forget them forever given the attempts to bury the Doha work program at Buenos Aires, according to people familiar with the negotiations.