TWN Info Service on WTO and Trade Issues (Dec13/08)
13 December 2013
Third World Network
 
US, EU unveil post-Bali assault plans on Third World
Published in SUNS #7714 dated 10 December 2013
 
Bali, 8 Dec (Kanaga Raja) -- At separate media briefings here, following the closing of the WTO Bali Ministerial Conference (MC9), the US and EU set out their plans for a post-Bali agenda, that they would be pursuing in Geneva.
 
At its media briefing Saturday, the United States identified industrial tariff reduction, multilateral services liberalization and agricultural market access as the issues that it wants to pursue "very aggressively" as part of the post-Bali agenda.
 
The EU, at its media briefing following that of the US's, said that trade facilitation is the attractive centerpiece of the Bali package (see below).
 
The US briefing was by its WTO Ambassador, Michael Punke, while the EU's was by three Commissioners.
 
Speaking at the US briefing, Punke said: "There is an awful lot of satisfaction that comes to all of us, I think, from having reached a very significant result this week."
 
Asked if the US will refocus its resources to the WTO after having been a leader in bilateral and regional initiatives, Punke said that "I have a pretty good sense that if you talk to anybody who has been in Geneva for the last 3 or 4 years that one thing they wouldn't tell you is that the US has given up on the WTO."
 
Punke was proud of the fact that the US was able to play a very strong leadership role "in driving towards a very historic result here in Bali this week... I think we as the United States see all of these different fora for international negotiations as complementary. Multilateralism is the ultimate way obviously of reaching the largest number of countries, and we saw that this week with the Bali package."
 
The fact that the trade facilitation agreement, for example, creates a common set of standards for 159 countries is something that is extremely significant for traders who are looking at participating in a global economy and it is especially significant, for example, for small and medium sized enterprises, who for the first time now, for example, will be able to use their home computer to look up a sort of how to do exporting to 159 countries, he said.
 
That is part of the trade facilitation agreement, the ability to get trading documents downloaded off the internet, he said.
 
"So, wherever we can use multilateralism to get that broad sweep, it's a good thing. We can always do that. And where we can't, I think plurilateralists provide another very useful tool. We've seen that, for example, in the area of services, (and) in the area of information technology. And of course, with bilaterals we have the opportunity to go truly deep in terms of something like US-EU where we're looking very much at regulatory issues, for example."
 
"So, I think all of these different tools have a place, and we'll continue to use all of them very aggressively," stressed Ambassador Punke.
 
On the post-Bali agenda and the most important issues for the US, he said that there is a huge amount of unfinished business when it comes to the Doha Round. For the US, some of the most important issues were not a part of the Bali discussion at all, for example, industrial tariffs, multilateral services liberalization and agriculture market access.
 
"Those were issues that we collectively in the WTO decided that we would not be likely to have success in grappling with in the space between the last Ministerial and this one, which is what caused us to focus more on areas where we thought we might have greater success, namely trade facilitation and the areas in agriculture and development that went along with the Bali package."
 
So, those issues that are left over from Doha - that he had just mentioned - will certainly be among those that the US wants to pursue "very aggressively" as part of the post-Bali agenda, said Ambassador Punke.
 
Asked if he would see the negotiations that are going to take place on finding a permanent solution to the food security issue as part of the revived Doha agriculture negotiations or whether that would be separate, the US trade envoy said he thought that it was very hard to separate out the various negotiations in Geneva very much.
 
"And so we would see certainly the issue of food security being a one important priority and that's a commitment that we made in the context of the food security agreement here at Bali. But I would also see us as being sort of nimble enough as an institution to be able to walk and chew gum at the same time to address other agriculture issues including (agriculture) market access and also to include that broader set of issues that I just mentioned in terms of industrial tariffs, services etc."
 
Asked whether the issue of the US's trade-distorting agriculture subsidies can be brought back into focus in the discussion on food security, Ambassador Punke said that agriculture subsidies is one of the important issues that the WTO membership has placed on the agenda for all of them to focus on.
 
But he said that "it's actually very interesting if you look at the issue of domestic subsidies or export subsidies for that matter."
 
"There's been a decided trend-line downward in developed economies when it comes to (agriculture) subsidization and what we've seen over the years is the emergence of other types of measures with the equivalent effect of subsidies such as state trading enterprises having a very distortive effect on global markets, and so that issue was discussed very directly in the context of the export competition decision that was arrived at here at Bali," he said.
 
[Punke's remarks about the ‘downward trend line in developed countries on agricultural subsidies' is in contrast to both WTO data and the annual reports of the OECD  on agricultural subsidies. see ( www:solidarite.asso.fr, Jacques Berthelot, 2013 and 2012 papers).
 
[A recent South Centre Report, ‘The WTO's Bali Ministerial and Food Security for Developing Countries: Need for Equity and Justice in the Rules on Agricultural Subsidies,' citing WTO data said that "in fact the total domestic support of the United States grew from US$61 billion in 1995 (of which $46 billion was in the Green Box) to US$130 billion in 2010 ($120 billion in the Green Box).  Similarly, (the South Centre said) the European Union's domestic support went down from 90 billion euro in 1995 (19 billion in the Green Box) to 75 billion euro in 2002 and then went up again to 90 billion in 2006 and 79 billion in 2009 (of which 64 billion euro was in the Green Box).
 
[The report added that according to a broader measure of farm protection, known as total support estimate, used by the OECD in its reports on agricultural subsidies, "the OECD countries' agriculture subsidies soared from US$350 billion in 1996 to US$406 billion in 2011." (Kanaga Raja, ‘Experts stress importance of public stockholding for food security' SUNS #7697, 15 Nov 2013). SUNS]
 
With respect to the post-Bali work programme at Geneva, Punke added: "And the way that work plan is structured with regard to that issue is that we'll look at all of those issues together - not just export subsidies, not just export credits, not just food aid - but also the issue of state trading enterprises. And I think that if we're going to be successful in addressing global distortions to agricultural markets, it'll be important to look at all of those."
 
In response to another question on food security, Ambassador Punke said that it was a very complex and tough negotiation and "I feel extremely comfortable about where we ended up at the end of the day in terms of balancing on the one hand the desire to be able to accommodate legitimate food security programmes put in place by developing countries on the one hand with on the other hand making sure that those programmes don't distort global markets."
 
The reason for the need for that balance is that if those programmes distort global markets they can have the very pernicious effect of actually harming the food security of other countries and that's why one of the reasons why this debate was so complex and one of the reasons why there were a significant number of developing countries that had concerns about this proposal, he claimed.
 
For example, at various junctures, "we saw opposition to this proposal from countries like Uruguay, Paraguay, Thailand, Ecuador, and so we had to find a balance; and the reason that I'm comfortable with the balance is because there are very clear protections in the agreement to ensure that markets are not distorted."
 
He said that there is a very strict test that the foods that are stockpiled under the agreement cannot distort markets, and if they do, the 'peace clause' goes away. There is a very strict limitation that only existing food security programmes are covered by the peace clause so as to not create what the US views as potentially an "inappropriate" incentive for moving programmes too much in this direction.
 
There is the maintenance under the mechanism of the ability to access the Agreement on Subsidies and Countervailing Measures (SCM), which is another very important protection, he said.
 
"So I think all in all we've been able to balance out the two things that I mentioned."
 
The US briefing was followed by that of the EU, by Trade Commissioner Karel De Gucht, Agriculture Commissioner Dacian Ciolos and Customs Commissioner Algirdas Semeta.
 
De Gucht, at the EU briefing, said that "we have very good news today. I think we don't overstate (it) when we say that today we have safety at the WTO. And I am delighted that compromise has been found over the issue of food security for India. That we have been able to all agree a full Bali package on trade facilitation, development issues and agriculture."
 
"I admit that I am even very relieved because this Bali package will benefit all of us but particularly millions of poor people across the globe in the least developed countries. That has been the objective of the European Union from the outset and I am also relieved because today marks the return of the WTO from the darkness of multilateral irrelevance into the light of multilateral action and success."
 
He added: "Today we have saved the WTO and the Bali package and we have avoided throwing away the potential benefits that this package of measures will have for all of us but notably the developing world."
 
As to what the Bali package means, De Gucht said just to take trade facilitation, which he underlined, is essentially a way to help many countries cut red tape at their borders to become more efficient and effective traders.
 
"This deal will help developing countries save around 325 billion euros per year," he claimed. Mature economies are winners too, reducing their trade costs by about 10 per cent. "So, everybody wins". The EU, he said, will also cover a significant share of the funding needs of developing countries to implement the agreement - some 400 million euros have been earmarked.
 
"Let me be crystal clear: the European Union is committed to helping developing countries be able to help themselves. That's the success story of the Bali package today."
 
[The income and employment gains, at global and country levels, based on a ‘study' published by the International Chamber of Commerce (ICC), and repeatedly cited and recited by the US, EU, and WTO, have been debunked as largely fact-free results by Tufts Univ academic Geronim Capaldo, in a GDAE Policy brief No. 13 of 2 Dec ( http://ase.tufts.edu/gdae ). In the policy brief, Capaldo has brought that the ICC claims are derived from notoriously unreliable CGE models and the questionable assumptions fed into the models, and accumulation of errors at every stage of the calculations. The unreliable estimates of future gains, Capaldo notes, is outweighed by immediate upfront monetary and budgetary costs for developing countries; see ‘The uncertain gains of Trade Facilitation', #SUNS 7713 of 9 Dec 2013. SUNS]
 
On the issue of food security, De Gucht said that he had already stated several times this week that the European Union fully supports food security measures to ensure the world's poor can eat. People everywhere must have enough to eat - this is a fundamental human right.
 
He noted that the EU is the "world's largest donor of food security and agricultural development assistance providing around 1 billion euros for food security each year."
 
"So, I am very pleased that a compromise has been found with India and the developing world to meet their concerns. And I fully support this solution," he said.
 
EU Agriculture Commissioner Ciolos said that on the issue of export competition, the EU had the opportunity to renew its commitment to eliminate export refunds and this is in parallel with disciplines on all other measures with equivalent effect.
 
He added that the EU is very committed in this chapter of the Bali package, especially taking into account the fact that inside the EU, in the last three to four months with the Common Agricultural Policy, the EU decided to put at zero the utilization of export refunds.
 
"So for the European Union, export refunds is not an essential element in the management of our market."
 
It was also very important for the EU to have a deal on public stockholding for food security purposes, he said, adding that for the EU, food security in the developing and least developed countries is a very important chapter.
 
"No one and certainly not the European Union has ever questioned the right of a country to provide food for free or (at) low price" for the needy citizens. "Our only concern was to find a way in order to do this in a manner to not affect the right and the possibility of other countries to develop their production or to affect the trade with these kind of products."
 
According to EU Customs Commissioner Semeta, trade facilitation is the attractive centerpiece of the Bali package.
 
In practice, it means less complex procedures, border bureaucracy and costs. It means more transparency in rules, duties, rates and fees. It means greater certainty for traders and greater ease in trading, he added, going on to provide several examples.
 
He said that the developing world has much to gain from trade facilitation too, and thanks to this package, they will.
 
As to what comes next and how to tackle the Doha Round, De Gucht said that the General Council has been asked to come forward with a programme within the next 12 months.
 
"I think it's a good idea to make a smaller package but then you have to be able to make a smaller package that is balanced. And one of the difficulties that we have been encountering here is that a number of members felt that it was not completely balanced. On the one hand, you had the legally binding text of trade facilitation, which by the way - and that is certainly true - is beneficial to everybody, but that on a number of other issues, like for example, LDCs, the legal obligations are less clear."
 
"So, I believe that then you come to the next, let's say, small package or medium package, we will have to pay attention to the internal balance of the package that we are putting forward," he added.
 
On the top three issues for the EU post-Bali, he said that "once we want to attack, say the broader issues, then there will need to be a balance between agriculture, NAMA (non-agricultural market access) and services. Obviously so, and that's also reflected in the text, by the way."
 
On the twenty-first century issues, he mentioned subsidies, where much more has to be done, and everything that has a subsidy element in it, and some more order on local content rules. He also referred to non-tariff barriers (NTBs), and for an effective barrier to NTBs, such as a standstill clause.
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