TWN Info Service on WTO and Trade Issues (Jun15/02)
1 June 2015
Third World Network
 
DG "green room" meet on SSM raises questions
Published in SUNS #8029 dated 28 May 2015
 
Geneva, 27 May (D. Ravi Kanth) -- The Director-General of the World Trade Organisation (WTO) has convened a "green room" meeting on 28 May to discuss the issue of the Special Safeguard Mechanism (SSM) that the large majority of developing countries have called for incorporation in the Agreement on Agriculture (AoA), as part of the negotiated outcome on Agriculture in the Doha Development Round talks launched at Doha, Qatar, in 2001.
 
The DG's decision to convene the green room meeting (28 May) specifically on the special safeguard mechanism has raised serious questions about the underlying rationale to discuss an issue so vital for developing countries while remaining silent on the existing egregious anomaly in the AoA called the special safeguard (SSG) for developed countries, trade envoys told SUNS.
 
[The developed countries have indicated their willingness to discuss a modified SSG which they had successfully built into the Uruguay Round agriculture agreement. See SUNS #8005 dated 20 April 2015.]
 
In the consultations he has held on the post-Bali work programme, and evolving a package with which to conclude the Doha negotiations by the time of the Nairobi Ministerial Conference this December, DG Roberto Azevedo has avoided any discussions on two of the three pillars of the agriculture negotiations - talks on reducing domestic support/subsidy in agriculture in the developed countries, as well as on export competition through various export subsidy, credits etc, focussing only on market access and reduction in tariffs to enable exports into developing countries. (See #SUNS #8023 dated 19 May 2015.)
 
Also, Azevedo's decision to convene an informal heads of delegation meeting on Monday (1 June) has brought to the fore another set of questions on the need to come clean on the growing attempts to impose the so-called average formula framework in the market access for agriculture and industrial products by replacing the 2008 revised draft modalities, trade envoys said.
 
For the sake of transparency, envoys said, Azevedo, as Trade Negotiations Committee (TNC) chair, must inform members whether he is going to present the average formula framework in the market access for industrial and agriculture products to the trade ministers at next week's informal meeting being hosted by Australia on the margins of the Organization for Economic Cooperation and Development (OECD) annual summit.
 
Until now, a large majority of developing and least-developed countries have rejected the average formula with variations as introduced by major industrialized countries and the Director-General during the closed-door meetings with the United States, the European Union, China, India, Brazil, Australia, and Japan a fortnight ago. (See SUNS #8023 dated 19 May 2015.)
 
To start with, Azevedo's decision to focus solely on SSM without discussing other central issues, particularly the outstanding issues in the trade-distorting domestic support and export competition pillars as well as the continuation of the SSG, has given some clues as to what is being cobbled in the Doha agriculture package, said a trade envoy familiar with the negotiations.
 
For some time now, major industrialized countries have privately made suggestions for dropping the demands for an effective and credible SSM on the ground that the overall level of ambition in the Doha market access pillar is being drastically reduced and thereby, mitigating the need for the SSM, several trade envoys said.
 
The developed countries also maintained that the use of SSM duties would enable the developing countries to go beyond their Uruguay Round ceiling as and when it is applied.
 
Instead of SSM, the DG and major industrialized countries have subtly indicated that they can consider a small number of special products (SPs) for China and other developing countries but not SSM, trade envoys suggested.
 
If the argument for considering only SPs but not SSM is valid because of the lowered level of ambition following the "re-calibration" approach, the same logic must then be applied for the SSG.
 
A former Brazilian trade official had described the SSG as one of the "grotesque" carve-outs of spoils between the US and the EU in the Uruguay Round agriculture agreement.
 
Since 2010, the SSG was used by the US on 29 tariff lines at the HS 6-digit level, the EU on 15 tariff lines, and Japan on 16 tariff lines; and Chinese Taipei on 57 tariff lines at the HS 6-digit and 7-digit levels. These are based on their notifications.
 
The continuation of the SSG without addressing the SSM will signal the reverse special and differential treatment being extended to the developed countries in a round that was launched primarily to correct the distortions and inequities in the existing Agreement on Agriculture, said a former trade envoy from an industrialized country.
 
"If the SSG can continue without any change, how would you justify your argument that the developing countries must give up SSM and only avail SPs," the envoy asked.
 
"Clearly, this is a reverse special and differential treatment for industrialized countries wherein they can retain SSG while the developing countries must keep silent on SSM," said a South American trade envoy.
 
Moreover, why is the DG silent on all the outstanding issues in the trade-distorting domestic support such as the cuts in the aggregate measurement of support (AMS) in the amber box and the blue box disciplines in which the United States is required to indicate whether it is going to reduce its overall AMS below US$14.5 billion, the South American trade envoy asked.
 
"We have heard from the reports that both domestic support and export competition were not discussed at all in the DG's meetings with the seven countries [the United States, the European Union, China, India, Brazil, Australia, and Japan]," the envoy said.
 
Azevedo repeatedly maintained that he would hold "horizontal" discussions on the difficult issues in agriculture and industrial goods but till now there is no meeting in any configuration on cross-cutting issues where countries could get into a give-and-take discussion based on the mercantile framework.
 
"Is it the intention of the director-general to discuss only market access issues based on the average formula framework at this juncture while deciding all other difficult issues in the domestic support pillar and the developmental issues like cotton, duty-free and quota-free market access for LDCs in the eleventh hour by presenting a take-it-or-leave-it package as he did at the ninth ministerial meeting in Bali, Indonesia, in December, 2013," an African LDC trade envoy asked.
 
"We are sure that the LDC issues such as the cotton subsidies or the DFQF mechanism or the simplification of preferential rules of origin for LDCs or the services waiver will never be fully addressed as part of a binding framework," the envoy maintained.
 
Another African trade official said "the Doha Round is the last round and if it is concluded without meaningful changes in the agriculture rules, then, there will never be another Round that will address these issues."
 
In their proposal on SSM, the G-33 developing countries led by Indonesia have consistently advanced a credible and simple approach for arriving at the SSM.
 
Indonesia, on behalf of the 47 developing and least developed countries in the G-33, gave two reasons as to why the developing countries need SSM.
 
First, developed countries have the largest percentage of tariff lines of entitlements and invocations in the existing SSG while only a few developing countries have access to this escape clause in Agricultural disciplines.
 
And second, "of the few developing countries with SSG, the mechanism is hardly accessible and is ineffective in addressing import surges or price depressions due to its complicated and outdated design and assumptions."
 
Indonesia has showed that "low and often subsidized exports would hardly breach price triggers that are based on a fixed reference prices of 1986-1988. Second, calculating domestic consumption data on tariff line basis for triggering the volume SSG has been a formidable if not impossible task. And third, availability of quality customs infrastructure and data collection that are critical for implementing an effective SSG regime is hardly the case in most developing countries."
 
Therefore, the developing countries, said Indonesia in its proposal presented before the chair of the agriculture negotiations Ambassador John Adank of New Zealand last month, "we need an improved, not a worse one, that is attuned to the needs and conditions of developing countries."
 
"A more simple, operable, and effective safeguard mechanism is needed by all developing countries to better manage ourselves against world prices and supply which are becoming increasingly volatile due to increased climate change-induced disturbances and persistently high subsidization, and to respond to import surges and price declines that threatens small, subsistence farmers who overwhelmingly reside in the rural areas and food security," Indonesia had argued.
 
The G33 had reminded the industrialized countries time and time again that "SSM is an integral part of the agriculture negotiations under the Doha Development Agenda. There should be no questions on the mandate to advance the proposal as it was captured in Para 42 of the Doha Work Programme and Para 7 of the Hong Kong Ministerial Declaration."
 
While a significant number of conditionalities are introduced in the SSM in the 2008 revised draft, the SSG doesn't have the same or similar conditions.
 
"The SSM was and is always intended to be a more simple, accessible and effective instrument than the SSG, which for the G-33 is a key operationalization of the development mandate of Doha," Indonesia maintained.
 
In short, the ongoing attempts to knock SSM off from the final Doha agriculture package pose a major challenge to developing countries whether they would be able to secure any measurable gains in a round they had invested all their negotiating capital over the last 14 years. +