Developed countries turn their backs on permanent solution for PSH
Published in SUNS #8759 dated 25 September 2018

Geneva, 24 Sep (D. Ravi Kanth) -- Major developed countries on Friday turned their backs on the mandated permanent solution for public stockholding (PSH) programs for food security at the World Trade Organization, insisting that developing countries must first prove that they need such an instrument, trade envoys told SUNS.

Close on the heels of their concerted campaign to do away with special and differential flexibilities for developing countries, several major developed countries led by Australia on Friday asked the developing countries to prove why they would need the mandated permanent solution for public stockholding programs for food security, trade envoys told SUNS.

Australia, joined by Brazil, which has already electrocuted the G-20 developing country coalition for fighting the continued inequities and asymmetries in the WTO's Agreement on Agriculture (AoA) based on the Uruguay Round negotiations, argued that the special and differential flexibilities in the AoA under Article 6.2 formed part of what is called "trade and production distorting subsidies".

These two developments marked the proceedings at the Doha agriculture negotiating body meeting at the WTO on 20-21 September.

China, India, South Africa, and Indonesia among others severely opposed the new "evangelical" positions of the major developed countries for concluding the permanent solution for public stockholding programs for food security by the WTO's 12th ministerial conference in Astana, Kazakhstan (to be held in 2020), said trade envoys familiar with the development.

The permanent solution for PSH programs ought to have been concluded by the eleventh ministerial meeting in Buenos Aires, Argentina, last December.

But the US had pulled the plug on the draft agriculture outcome prepared by the chair Ms Amina Mohamed, then Kenya's permanent secretary for foreign affairs. Subsequently, the outcome on the permanent solution for PSH contained in the Chair's draft remained unresolved.

On Friday (21 September), the chair for the Doha agriculture negotiations, Ambassador John Deep Ford of Guyana, convened the special session to discuss the permanent solution for the public stockholding programs for food security.

During the meeting, several major developed countries as well as farm exporting countries led by Australia, Canada, and Paraguay among others objected to negotiating the permanent solution as mandated by trade ministers at the WTO's tenth ministerial meeting in Nairobi, Kenya, in December 2015, said participants familiar with the meeting.

In a unified position, the developed countries said that members seeking the permanent solution for public stockholding programs for food security must justify why they need it.

After almost four years of to-and-fro negotiations that began at the WTO's ninth ministerial meeting in Bali, Indonesia, and further clarified by the WTO's General Council decision, the opponents now struck a diametrically-opposite position, saying that there is no need for the permanent solution unless those wanting it must first justify/prove why they would need such an instrument, said a participant after the meeting.

The position adopted by Australia and others reflected what the European Union and Canada proposed in their separate proposals for bringing new rules for availing special and differential flexibilities for all developing countries, including the case-by-case justification as outlined by the EU in its concept paper, the participant said.

India, China, and South Africa among others flatly rejected the position adopted by the major developed countries for negotiating the permanent solution as required by the Nairobi ministerial mandate.

It is a telling commentary on the developments at the WTO, that addressing hunger, which requires a permanent solution for the public stockholding programs in the developing and poorest countries, is not important as compared to negotiating binding disciplines for fisheries subsidies as demanded by the US and a group of countries called the "Friends of Fish", said a trade envoy, who asked not to be quoted.

During the meeting on domestic support, Australia, Brazil, and other members of the Cairns Group of farm exporting countries turned the tables by proposing a new definition for "trade and production distorting subsidies" that does not exist in the WTO's rule book.

In a paper (Job/Ag/138) on "domestic support in the WTO Agreement on Agriculture" circulated on 5 July, Australia along with Canada, New Zealand, Argentina, Guatemala, Paraguay, Peru and Uruguay argued that there is a sea change in the domestic support spending programs since the launch of the Doha trade negotiations in 2001.

By clubbing various support programs availed by members under Article 6 of the Agreement on Agriculture, Australia and its allies argued that trade and production distorting domestic support under Article 6 of the AoA relative to the value of production is decreasing for "Brazil, Canada, the European Union and the United States".

"Since 2001, in nominal terms, several developing Members such as India, China, Indonesia, and Brazil recorded large increases in spending in this category, while developed Members such as the US and the EU have significantly reduced their use," Australia and its allies maintained.

"The list of the main users of Article 6 has significantly evolved since 2001. In 2001, the top five users were, in order, the EU, the US, India, Japan and Norway. In 2010, the top five largest users were, in order, India, China, the EU, Japan and the US," the Australian joint paper argued.

Targeting the special and differential treatment flexibility in Article 6.2, which is available to 124 developing countries, the sponsors of the Job document maintained that "much of this support is concentrated to only a few members" such as India ($24.8 billion), Brazil ($1.8 billion), Thailand ($1.2 billion), and Korea ($1 billion) among others.

Australia, however, did not say a word about the manner in which the EU and the US resorted to box-shifting of tens of billions of trade-distorting subsidies to what is called the green box programmes, which are currently exempted under the Agreement on Agriculture (AoA) rules, said a trade envoy, requesting anonymity.

"After the Doha Round of trade negotiations began in 2001, the EU and the US have shifted more than $100 billion [in] trade-distorting subsidies to the green box."

The Doha Round is nearly put to bed by the US, the EU, Australia, and other countries, the envoy added.

Clearly targeting India, China, and Indonesia, among others, Australia and its allies chose to include support for investment and input subsidies which is permitted under the AoA in the "trade and production distorting subsidies."

Governments in developing countries are allowed to provide input subsidies that are "exempt from domestic support reduction commitments that would otherwise be applicable to such measures", under Article 6.2 of the AoA.

Over the past four years, the US has been campaigning for removing the Article 6.2 exemption, which provides special and differential flexibility aimed at assisting the resource-poor farmers in India and other developing countries.

But several countries led by India had fiercely opposed the US demand, saying that under no circumstance will they allow attempts to do away with the exemptions under Article 6.2, said several trade envoys, who asked not to be identified.

Taking a cue from the US, its closest trade ally Australia, along with other members, has now intensified the campaign against India, China, and other developing countries, which have hundreds of millions of resource-poor farmers with less than $200 per capita support as compared to about $50,000 in the US.

At the special negotiating session on Thursday, India's trade envoy J. S. Deepak flatly rejected the Australian proposal, saying it was based on dubious grounds.

He argued that the per-capita farm support that farmers receive in India was much lower in comparison to the levels of support in industrialized countries.

Several countries, including China, South Africa, Indonesia, and the Philippines, supported India in rejecting the Australian proposal.

The US, however, welcomed Australia's move, saying that it has repeatedly raised this issue.

The US had also filed a counter-notification against India's subsidies to rice and wheat, saying they breached New Delhi's de minimis commitments, a charge India had categorically dismissed.

Besides, Australia and its allies, who had argued in the past for negotiating new disciplines for green box subsidies which were found to be trade-distorting in the US upland cotton dispute, remained silent about the need to look into the green box subsidies.

In conclusion, it seems there is a new diabolical wave to eliminate the special and differential flexibilities and the consensus principle at the global trade body by the countries of the North.

Even though some developing countries are part of this new diabolical wave, it is clear that the countries of the North seem determined to achieve their goal in an attempt to appease the US.

[The Uruguay Round accords are a single undertaking, both in terms of the Punta del Este declaration and everyone signing on to all agreements at Marrakesh. Now, if the US, EU and other industrialised countries want to go back on some parts, then in terms of international law, there is no reason for China, India, South Africa etc to abide by the TRIPS Agreement, or other such accords. It is time they make it clear at the WTO and in other fora. - SUNS] +