Azevedo pressure on members to amend export subsidy schedules

WTO chief Roberto Azevedo’s move to get member states to amend their schedules of commitments on farm export subsidies has thrown up question marks among some trade envoys.

by D. Ravi Kanth

GENEVA: The World Trade Organization Director-General Roberto Azevedo, in closed-door, one-on-one meetings with 16 countries, has been attempting to drive home his message that they must amend their schedules on agriculture export subsidy commitments as agreed at the tenth Ministerial Conference in Nairobi, according to trade envoys.

This initiative of the WTO chief, on what is just one of the Nairobi Ministerial Decisions, has raised “systemic” concerns, several trade envoys told the South-North Development Monitor (SUNS).

Although the Nairobi ministerial decision on export subsidies doesn’t say that members have to amend their schedules, the Director-General is creating an unusual situation in which he is asking those countries that have scheduled commitments on export subsidies to amend their schedules in which export subsidy entitlements are brought to zero, according to a trade envoy who asked not to be quoted.

[In a comment on this issue, Chakravarthi Raghavan, Editor Emeritus of SUNS, notes that in 1994, when the Uruguay Round talks were concluded and the WTO treaty was signed at Marrakesh, members were required to submit schedules of their export subsidy reduction commitments (volume and value) over a six-year reform period beginning in 1995. These schedules were multilaterally scrutinized before incorporation to become an integral part of the WTO accords, and made a binding multilateral commitment of the member concerned.

[The modification of schedules in accordance with the Nairobi ministerial decision has to be in respect of these commitments. Unlike specific provisions in the General Agreement on Tariffs and Trade (GATT) for modifications of tariff schedule commitments, and procedures laid down for such modifications, there are no analogous provisions in the Agreement on Agriculture (AoA). In terms of the GATT, members can voluntarily reduce their tariffs and file reduced “commitments”, but there have been some questions as to whether these can be effected under the AoA as a binding multilateral commitment by the member on its own, in the absence of a specific protocol incorporating the results of the Nairobi ministerial decision into the WTO framework.

[As in the case of applied tariffs on imports of goods, members can no doubt voluntarily act on their own in reducing or ending their export subsidies to effectuate the Nairobi decision. However, it is difficult to see how they can be made to do so (in terms of the Director-General’s efforts) and, for that matter, under what AoA provision. – SUNS]

The Nairobi ministerial decision on export subsidies says in paragraph 6: “Developed Members shall immediately eliminate their remaining scheduled export subsidy entitlements as of the date of adoption of this Decision.”

Further, this paragraph is clarified in footnotes 3 and 4:

“3. This paragraph shall not cover quantities counted against export subsidy reduction commitments found to exist by the Dispute Settlement Body in its recommendations and rulings adopted in disputes DS265, DS266, and DS283, with respect to the existing programme, which expires on 30 September 2017, for the product concerned by those disputes.

“4. This paragraph shall not cover processed products, dairy products, and swine meat of a developed Member that agrees to eliminate as of 1 January 2016 all export subsidies on products destined for least developed countries, and that has notified export subsidies for such products or categories of products in one of its three latest export subsidy notifications examined by the Committee on Agriculture before the date of adoption of this Decision. For these products, scheduled export subsidies shall be eliminated by the end of 2020, and quantity commitment levels shall be applied as a standstill until the end of 2020 at the actual average of quantity levels of the 2003-05 base period. Furthermore, there shall be no export subsidies applied either to new markets or to new products.”

As regards the developing countries, the Nairobi decision says in paragraph 7: “Developing country Members shall eliminate their export subsidy entitlements by the end of 2018.” And it is further clarified in footnote 5 that they can eliminate the export subsidies by 2022 due to Article 9.4 of the AoA.

Other decisions

The moot issue is, “Why is the Director-General not adopting the same course on other issues that are there in the Nairobi or Bali ministerial decisions?” the envoy asked.

And “why is he hosting closed-door meetings instead of convening a Room W meeting for the sake of transparency?” the envoy added.

“What about the market access decision on cotton and why can’t [it] be included in the scheduled commitments of members?” asked a South American envoy.

The Nairobi ministerial decision on cotton market access says, “Developed country members, and developing country members declaring themselves in a position to do so, shall grant, to the extent provided for in their respective preferential trade agreements in favour of LDCs, as from 1 January 2016, duty-free and quota-free market access for cotton produced and exported by LDCs.”

It further says in paragraph 4: “Developed country members, and developing country members declaring themselves in a position to do so, shall grant, to the extent provided for in their respective preferential trade arrangements in favour of LDCs, as from 1 January 2016, duty-free and quota-free market access for exports by LDCs of relevant cotton-related products included in the list annexed to this Decision and covered by Annex 1 of the Agreement on Agriculture.”

Clearly, these two provisions on cotton market access can also be included in the scheduled commitments, but the Director-General has not raised this, the envoy said.

“Why did the DG not hold meetings with members to include the Bali decision as well as the modified decision on public stockholding programmes for food security in the schedules?” asked an African envoy.

India had already raised the issue at the last meeting of the Doha negotiating body on agriculture, saying that all ministerial decisions pertaining to Bali and Nairobi must be included in the schedule instead of only export subsidies, according to negotiators familiar with the meeting.

The Director-General must address these issues in an open forum instead of holding unusual closed-door meetings, the envoy said. “Otherwise, they raise systemic issues,” the envoy suggested.

Meanwhile, the chair of the Doha agriculture negotiations, Ambassador Vangelis Vitalis of New Zealand, told trade envoys of the informal group of developing countries on 28 April that an overwhelming majority of countries want domestic support to be addressed on a strong footing, according to an envoy present at the meeting.

Vitalis, who held some 50 bilateral meetings, said many major developed and developing countries have not notified their latest domestic support programmes, the envoy said.

Around 24 members have to notify their latest domestic support payments, including the US, China and India, the envoy suggested.

The least-developed and African countries have urged the chair to accelerate the negotiations on domestic support. (SUNS8233)                                 

Third World Economics, Issue No. 615, 16-30 April 2016, pp8-9