US addressing outcome on PSH at MC11
Published in SUNS #8572 dated 10 November 2017

Geneva, 9 Nov (D. Ravi Kanth) - The United States has begun to address an outcome for the permanent solution for public stockholding programs for food security at the upcoming World Trade Organization ministerial meeting in Buenos Aires (MC11).

While beginning to focus on PSH for food security, it however rejected any deliverable at MC11 based on the Argentinean proposal on domestic support reduction commitment, trade officials told SUNS.

On Tuesday (7 November), the chair for Doha agriculture negotiations, Ambassador Stephen Karau of Kenya, held two separate meetings in different configurations on the permanent solution for public stockholding (PSH) programs for food security and domestic support respectively.

For the meeting on the permanent solution for PSH programs, Karau invited trade envoys from around 10 countries such as the United States, the European Union, China, India, Brazil, Australia, Norway, Argentina, and Russia among others.

A day prior to the meeting, the chair had circulated pointed questions on two issues - transparency and safeguards.

Until now, the US has either remained silent during most of the other meetings of different negotiating groups or refused to engage on issues such as transparency and due process to improve anti-dumping and countervailing measures or trade-distorting domestic support.

However, at the 7 November meeting, the US engaged gingerly, but point by point on the permanent solution for PSH programs, on both transparency and safeguards. The US focused its comments more on safeguards than transparency, said a trade official who asked not to be quoted.

Further, there is general understanding that any breach occurring in the implementation of the permanent solution can be reported on an ex-ante (post-breach) basis as demanded by India.

On the sensitive issue of safeguards, India maintained that while the current language on safeguards in the interim Bali decision of December 2013 is overarching, it doesn't have any political space to accept any additional conditions beyond that in the interim decision.

The language on "anti-circumvention/safeguards" in the Bali ministerial decision states that "any developing Member seeking coverage of programmes" shall "ensure that stocks procured under such programmes do not distort trade or adversely affect the food security of other Members."

It also says the interim decision "shall not be used in a manner that results in an increase of the support subject to the Member's Bound Total AMS or the de minimis limits provided under programmes other than those notified" for the PSH programs.

Over the past several weeks, Russia, Australia, Pakistan, the European Union, and the US among others insisted on more conditions on the safeguards (see SUNS #8565 dated 1 November 2017).

Therefore, the issue is what additional conditions will be attached to anti-circumvention/safeguard provisions, said a trade official who asked not to be quoted.

While participants at the meeting suggested strong safeguards, the US said that the current language on the safeguards is already covered in the interim decision.

The US maintained that it would prefer specific language to prevent the likely leakages of PSH stocks into exports. The US wants language that no direct export from the stocks shall occur upon the release of products from the stocks.

The US said while it appreciates India's concerns, the language on safeguards was negotiated very carefully at Bali. However, the US still wants a fix on issues concerning the permanent solution and exports.

Clearly, it has emerged that there will be additional language on safeguards to satisfy the US concerns, said another trade official who asked not to be quoted.

As regards India's demand for language on the coverage of production in the permanent solution to be based on the Agreement on Agriculture, Argentina suggested that the Bali agreement covers both grains and cereals.

Argentina said there is no room for expanding the language on the coverage of products beyond food grains and cereals, the trade official said.

Brazil also suggested that some of the demands on the safeguards are difficult to implement, pointing out that members should not be engaged in over-engineering at this juncture.

More importantly, there is still no clarity on the issue of legal guarantee or an amendment in the Agreement on Agriculture to ensure its legal permanence like what was done on the Trade Facilitation Agreement.

At the meeting on the permanent solution there was no specific discussion on the legal/institutional provisions for the permanent solution and it remains to be seen how the G33 group of developing countries will deal with the issue, the trade official said.

After the meeting on the permanent solution, the chair held a meeting with 40 countries to discuss finalizing an outcome on the domestic support, particularly the Argentinean proposal.

The US said categorically that in the current climate they have no option but to reject the Argentinean proposal because it omitted issues concerning the elimination of Article 6.2 of the Agreement on Agriculture which provides special and differential flexibilities for developing countries, and de minimis where China is entitled to spend over US$100 billion.

Norway, Japan, and Switzerland also opposed the Argentinean proposal because it is not proportional and raises the burden of reduction commitments disproportionately on them.

The EU also did not support the Argentinean proposal while Brazil raised specific concerns on the parameters.

China and India also opposed the Argentinean proposal because of its specific failure to address product-specific support as well as on aggregate measurement of support.

Meanwhile, in a restricted job document Job/Ag/122 circulated on 9 November, five countries - Argentina, Brazil, Paraguay, Thailand and Uruguay - proposed a work program to discuss market access without mentioning the Doha Development Agenda.

The one page proposal says the Buenos Aires ministerial meeting must adopt a work program on market access for agricultural products based on the following conditions:

a. Having regard to paragraph 2 of Article III and paragraph 1 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization;

b. Recognizing the long term objective of substantial progressive reduction in support and protection resulting in fundamental reform in Agriculture, as envisaged in Article 20 of the Agreement on Agriculture (AoA);

c. Taking into account that the implementation period of the Uruguay Round has ended in 2001;

d. Seeking to strengthen the negotiating function of the World Trade Organization;

[Art. III para 2 of WTO treaty requires WTO to be the forum among its members on matters covered by WTO agreements. Art. IX para 1 provides for decision-making by consensus, but also for voting where decision cannot be arrived at by consensus. SUNS]

The five countries want that ministers must clinch a decision to direct members "to reinvigorate negotiations on agricultural market access in order to reduce the level of protection and create meaningful market access opportunities."

The proposal says that "members shall strive towards achieving tangible market access outcomes at MC12 and beyond through incremental steps. Clear and measurable parameters for assessing progress in the negotiations need to be agreed on."

It calls for enhancing "transparency and monitoring in the area of agricultural market access. To this end, the Committee on Agriculture shall examine developments in the field of agricultural market access on a yearly basis."

The language on transparency is close to what the US demanded in its proposal on transparency provisions.

The five countries want "negotiations on agricultural market access in dedicated sessions of the Committee on Agriculture in Special Session (CoA-SS)".

In short, Brazil which created the G20 developing country coalition to rectify the historical imbalances in the global agriculture in 2003 is now calling for negotiations on market access without any reference to the Doha Round. Effectively, the proposal amounts to burying the Doha Round at Buenos Aires.