US, EU block permanent solution on food security public stockholding

The US and the EU have come out against a proposal in the WTO aimed at enabling developing countries to maintain public food stocks for food security purposes.

by D. Ravi Kanth

GENEVA: Major developed countries, particularly the United States and the European Union, have vehemently opposed a proposal from the G33 coalition for a permanent solution on public stockholding programmes for food security in the developing countries, several trade envoys told the South-North Development Monitor (SUNS).

The US and the EU blocked a G33 proposal that calls for “transferring” market price support for public stockholding programmes for food security in developing countries into the “Green Box” under the WTO’s Agreement on Agriculture (AoA), several trade envoys told SUNS.

Programmes included for coverage in the Green Box are exempted from reduction commitments and thereby remain beyond any legal challenge at the WTO.

G33 proposal

During a meeting of select trade envoys convened by the chair of the Doha Round agriculture negotiations Ambassador John Adank of New Zealand on 25 June, Indonesia, on behalf of the G33 developing-country coalition, proposed transferring market price support for the public stockholding programmes for food security to the Green Box and said this will not change the structure of the AoA.

Trade envoys from the US, the EU, China, India, Indonesia, Australia, Norway, the Philippines and Brazil were among those who took part in the meeting.

Indonesia, which is the coordinator for the 46-member developing-country coalition, argued that the public stockholding programmes for food security are already contained in the Green Box.

The Green Box programmes were constructed by the US and the EU in the Uruguay Round agreement to exempt such programmes from any reduction commitments.

In Annex 2 of the AoA, public stockholding programmes for food security are covered in paragraph 3: “Expenditures (or revenue foregone) in relation to the accumulation and holding of stocks of products which form an integral part of a food security programme identified in national legislation.” However, this provision in the Green Box on public stockholding programmes for food security is further subjected to calculation of Aggregate Measurement of Support (AMS) in the Amber Box in terms of footnote 5 of Annex 2.

Indonesia said the existing ambiguity can be addressed without any change in the structure of the Green Box by including market price support for public stockholding programmes.

A solution can be designed without changing the structure of the AoA while addressing the legitimate objectives of the G33 proposal, Indonesia persuasively argued, according to participants familiar with the meeting.

The G33 expressed sharp concern over diversionary tactics adopted by some members who refuse to engage on the basis of its proposal.

Indonesia challenged the claims made by some countries such as Australia and Pakistan that there would be unintended consequences on trade and food security of other countries. The G33 also challenged a claim made by the developed countries that it would have a “systemic” impact of market price support in the Green Box.

Indonesia said these two claims are unscientific and without evidence, said a trade official who was present at the meeting.

The most productive way to find a permanent solution on public stockholding programmes is to have other members come up with a “clear, text-based counter-proposal on how the stated concerns might be addressed ... Simply general comments or utter rejections will not help”, Indonesia said.

In response to Indonesia’s statement, the US expressed disappointment that the G33 is seeking a permanent solution by transferring market price support into the Green Box.

The US, the EU and Australia claimed that the edifice for the Green Box was constructed over many years. The developed countries repeatedly spoke about the “integrity” of the Green Box and how it would be compromised and affected because of transferring market price support for public stockholding programmes.

The EU flatly rejected the call for any Green Box exemption for public stockholding programmes for food security.

Australia maintained that such a treatment under the Green Box for public stockholding programmes would have far-reaching consequences on the global trade for farm products, a concern that was also shared by Pakistan.

In sharp response, India ridiculed the claim that the edifice and the integrity of the Green Box will be affected because of market price support for public stockholding programmes for food security. India challenged the hyperbolic claims about the sanctity of the Green Box measures.

India maintained that the public stockholding programmes are very much covered in the Green Box of the AoA negotiated during the Uruguay Round of trade negotiations. After including the programmes in the Green Box, India asked, why are the same programmes subjected to reduction commitments under the AMS?

India said if the sanctity of the Green Box is undermined, then it is time to review all the Green Box support programmes of every country. It said that there cannot be double standards involving one set of norms for some programmes and another set for developing countries.

Green Box review

In his article “Why WTO needs a Hypocrisy Clause”, Timothy Wise, an academic at the Global Development and Environment Institute at Tufts University in the US, has argued that “the WTO’s ‘Green Box’, which is meant to hold non-trade-distorting subsidies, is now home to about $120 billion of the $130 billion in nutrition programmes and farm supports.”

Several other studies have also conclusively proved that several of the schemes now included in the Green Box are trade-distorting and affect global trade.

In Brazil’s cotton dispute against the US, the WTO Appellate Body has pointed to the possible adverse effect of the US’ Green Box measures.

The US and the EU, which specially constructed the Green Box in the AoA with specific carve-outs for their agricultural support during the Uruguay Round, have systematically moved their subsidy programmes to the Green Box because of their current exemptions.

In the Doha Round negotiations, the G20 farm coalition led by Brazil, India, China and South Africa have underscored the need to review the Green Box measures.

In the draft negotiating text sent to the failed Cancun Ministerial Conference, the chair of the WTO General Council had proposed on 23 August 2003, in bullet point 1.5, that “Green Box criteria remain under negotiation.”

The July 2004 Framework agreement and the 2005 Hong Kong Ministerial Declaration mandated the review of Green Box measures.

The review of the Green Box also figured during several closed-door meetings between the chair and select trade envoys in which the EU and Canada fiercely opposed the proposal for examining Green Box programmes.

Against this backdrop, the opposition from the US, the EU and Australia to including the market price support for public stockholding programmes is not only disingenuous but smacks of “hypocrisy” and “double standards”.

In one go, it proves that the trans-Atlantic trade partners are willing to avail themselves of all Green Box schemes to cover up their hundreds of billions in market-incentive programmes for their farmers but will not allow the public stockholding programmes to be exempted from reduction commitments in the Green Box.

Effectively, the two countries are sending a message that they are not willing to allow Green Box coverage of public stockholding programmes meant to address livelihood and food security needs of hundreds of millions of poor people in the developing world.

The US has, however, audaciously suggested that the G33 will block an agreement at the 10th Ministerial Conference in Nairobi, Kenya, later in the year even if there is an agreement on all other issues of the Doha Round package, said a trade envoy.

If the developed countries are determined to close the Doha Round without conceding minimal gains for the developing and the poorest countries, said a trade envoy from South America, then the developing countries must follow what Brazil’s former trade minister Celso Amorim had advised when he said, “No deal is better than a bad and flawed agreement.” (SUNS8051)                       

Third World Economics, Issue No. 596, 1-15 July 2015, pp11, 16