TWN Info Service on WTO and Trade Issues (May16/12)
17 May 2016
Third World Network

Developing countries stress on importance of SSM
Published in SUNS #8240 dated 13 May 2016

Geneva, 12 May (Kanaga Raja) -- A large number of developing countries at the World Trade Organisation (WTO) have strongly underlined the need for a Special Safeguard Mechanism (SSM) in agriculture in order to protect themselves from sudden import surges and/or price declines.

They also argued that such a mechanism should be simple and effective to use, and that the issue of SSM should not be linked to other areas of the negotiations, in particular market access.

The views of these developing countries came at the first session of the Committee on Agriculture in Special Session since the Nairobi Ministerial Conference last December dedicated to discussing the issue of SSM.

The Nairobi Ministerial Decision on the Special Safeguard Mechanism for developing country Members states:

"1. The developing country Members will have the right to have recourse to a special safeguard mechanism (SSM) as envisaged under paragraph 7 of the Hong Kong Ministerial Declaration.

"2. To pursue negotiations on an SSM for developing country Members in dedicated sessions of the Committee on Agriculture in Special Session ("CoA SS").

"3. The General Council shall regularly review progress in these negotiations."

In his statement at the dedicated session held on Wednesday (11 May), the Chair of the Agriculture Committee in Special Session, Ambassador Vangelis Vitalis of New Zealand, said that since 8 March, he has had 44 bilateral consultations, and these were supplemented by meetings with many negotiating Groups.

Based on these consultations, the Chair said that it is clear to him that the basic positions of Members on the SSM have not changed from the pre- and during Nairobi meetings, and that these positions reflect the underlying concerns on both sides that have remained unchanged.

According to the Chair, the proponents continue to emphasize the importance that they attach to this issue. Since they consider the SSM to be a stand-alone issue, they do not see a linkage with market access negotiations.

Some Members have stressed that an outcome on SSM is necessary for MC11 (in 2017) and that without an outcome in this area it would be hard to envisage broader outcomes.

Other Members consider that it would be difficult to achieve convergence on the SSM in the absence of outcomes on market access more generally.

"We can't deny these persistent gaps between Members' fundamental positions. At the same time, we shouldn't disregard ideas from the past that may hint at pragmatic ways forward to bridge these gaps," said the Chair.

He reiterated that there is a clear mandate from the Ministers and he intends to make all the necessary efforts to facilitate discussions on the SSM.

VIEWS OF MEMBERS

According to trade officials, Indonesia, on behalf of the G33, said that the WTO agreement on safeguards is very cumbersome to apply, hence there is need for a special safeguard mechanism for agricultural products, specifically for developing countries, which would be easier and faster to apply.

Ministers affirmed in Nairobi that developing countries will have recourse to the SSM, it said, noting that WTO members have also agreed to work on the SSM in the 2004 July framework agreement and in the 2005 Hong King Ministerial Declaration.

The SSM is of utmost importance to developing country members as a whole, said Indonesia, expressing hope that the discussion today will further (the effort) in finding solutions on this issue.

It highlighted that the agreement on safeguards is not tailored to adjust import surges in an abrupt manner for developing countries. Import surges and price falls need to be addressed immediately as they occur.

Indonesia urged work on an agreement that will be meaningful in establishing such a mechanism.

The G33 had been constructively engaging in the discussion in the lead up to Nairobi, and had submitted numerous proposals to the Agriculture Committee in Special Session.

The G33 said it has shown flexibility, and in its proposal, it has provided special treatment for least developed countries and small and vulnerable economies. It also has limited product coverage and addressed the issue of predictability.

Despite all these efforts however, some members have rejected the idea and have lingered around a political debate.

Trying to link the SSM with other issues will be counter-productive, Indonesia cautioned, adding that there should be no preconditions for negotiations.

India said that it does not have access to the safeguards that is already allowed in the agriculture agreement.

It cited an example of tapioca production in the country, saying that it used to have tapioca production but the industry got wiped out due to import surges. By the time it could use the safeguards according to the WTO agreement, it was already too late, with tapioca cultivation being wiped out.

India used this example to underscore why developing countries would need a special safeguard mechanism.

China, supporting the G33 statement, said that the SSM is a stand-alone issue. Unlike the special safeguard that is already in the agriculture agreement, SSM is anticipated to be an instrument for developing countries to address import surges.

It called upon all members to implement the Nairobi decision to actively respond to the G33 proposals.

Botswana, on behalf of the African, Caribbean and Pacific (ACP) group, said that it supports the affirmation at Nairobi that developing countries should have the right to use the SSM. It appreciated the fact that the negotiations will be undertaken in dedicated sessions. It also emphasised that the SSM must be simple and effective to use.

According to trade officials, Turkey, South Africa, Sri Lanka, the Philippines, Bolivia and Korea supported the G33 statement.

South Africa said that as a developing country, it has access to special safeguards under Article V of the Agreement on Agriculture, but is unable to use it as it is too complicated.

The SSM is of great interest to many developing countries and South Africa is ready to work constructively towards such an outcome.

Bolivia said that the G33 has shown considerable flexibility to take into account the concerns of members. The need to have a SSM is on account of the imbalanced outcome of the Uruguay Round. So, the use of the SSM should not be exceptional, it added.

Turkey said that it has read the Nairobi decision very carefully which states that developing country members have a mandate to have recourse to SSM. Our mandate is not to discuss whether to talk about SSM - the objective is to design an operational mechanism.

The July 2015 paper submitted by the G33 is a good basis for work, it said, adding that it is ready to discuss concrete proposals.

The European Union said that it has heard very different views today. The SSM as designed in the Rev. 4 text (2008 draft agriculture modalities text) was linked to significant tariff cuts.

It was an exceptional measure used in exceptional circumstances. SSM should be designed as a specific instrument, it said.

According to trade officials, Australia submitted two questions on the issue beforehand and introduced it at the meeting:

1. What is the experience of members using safeguards in Free Trade Agreements (FTAs) and in the WTO?

2. What has changed in agriculture market access since SSM was proposed sometime ago?

Norway said that there is need to address the issue of free trade agreements (FTAs) with regards to the SSM. If we exclude everyone, what is the point of it, it asked.

According to trade officials, India said that the issue of FTAs keeps coming up. The free trade agreements do not feed into the multilateral system, it pointed out.

Bolivia underlined that FTAs are not a subject in this house.

According to trade officials, several large agricultural exporters including Paraguay, Mexico, Uruguay, Brazil, Argentina, Colombia and Chile expressed concerns over the SSM as it limits their exports to the markets of developing countries. This mechanism could have a negative impact on South-South trade, they said.

According to trade officials, the United States did not speak on this issue.

According to trade officials, in his concluding remarks, the Chair said that it was a good ‘throat-clearing' session.

There is a clear message from the G33 that there is no link of the SSM with market access, and price decline is a real problem.

He welcomed the fact that no one has opposed the discussion on SSM. You are all very faithful to the ministerial decision, he said, adding that many of you want to see movement elsewhere in order to calibrate the engagement.

He also said that there is no clear division between developing and developed countries. You all seem to have shared concerns on price decline and import surges, but you draw different conclusions, said the Chair.

A lot of countries who are for the SSM say that this is a mechansim to counter-balance the fact that rich countries are subsidising their farmers.

Members also have an interest in the other part of the negotiations, whether it is market access or domestic support. Now, the homework is to follow up, said the Chair. +