TWN Info Service on WTO and Trade Issues (Mar19/11)
25 March 2019
Third World Network

Brazil’s tectonic shift in foregoing S&DT at WTO

Published in SUNS #8871 dated 21 March 2019

Geneva, 20 Mar (D. Ravi Kanth) – Brazil has made a tectonic shift in its hitherto developing country positions, announcing that it will forego the special and differential treatment (S&DT) at the World Trade Organization.

In a sudden and surprising development, Brazilian President Jair Bolsonaro announced on Tuesday (19 March), in the presence of the US President Donald Trump, that Brazil will begin to forego S&DT at the WTO.

With this shift, Brazil is set to join the United States, Australia, and so me other Cairns Group members for erasing the Doha agriculture mandates.

The Brazilian leader’s pronouncement on S&DT (during his trip to the White House) was a signal to the US that it should press ahead with its demand to eliminate the S&DT once and for all, said a South American trade envoy, who asked not to be quoted.

Effectively, Brazil concurred with the US that there cannot be any self-designation by developing countries for availing S&DT during negotiations at the WTO, including the fisheries subsidies negotiations.

For many developing countries led by China and India, who have categorically opposed the US draft General Council decision to do away with the S&DT in the ongoing negotiations in all areas at the WTO, Brazil’s decision to junk the S&DT has come as a historic betrayal against the backdrop of the consistent positions held hitherto by Brasilia on the Doha agriculture mandates.

Brazil along with India, China, and South Africa among others had established the G-20 coalition in August 2003 as a response to the US and EU joining hands, on the eve of the Cancun WTO Ministerial, to put aside their differences in the agriculture sector and mount a joint assault on the markets of developing countries.

The Brazil-India-led G20 coalition was aimed to bring a development dimension into the global farm trade by addressing the historical inequities and asymmetries.

Although the G20 developing-country group exists on paper, it remains paralysed after former Brazil’s trade envoy Ambassador Roberto Azevedo became the director-general of the WTO in September 2013. Since then, Brazil has divorced from the positions it had held as the G20 coordinator.

Brazil’s rupture with the December 2008 draft agriculture modalities and its subsequent alliance with Australia and the US on farm trade issues was all over the place at the WTO, the South American envoy said.

Brasilia has also filed a trade dispute at the WTO last month against India’s alleged minimum support price for sugar.

During the technical meetings of the Doha agriculture negotiating body last week, Brazil, Australia and other Cairns Group members adopted almost identical positions on domestic support.

It remains to be seen whether Brazil, which will now forego S&DT at the WTO , will formally join the US, Australia and several other developed countries and demand the elimination of Article 6.2 of the Agreement on Agriculture (AoA) that provides S&DT to developing countries.

The US, Australia, and other Cairns Group members want to eliminate input subsidies that developing countries can provide under Article 6.2 of AoA. The US had made the elimination of this specific S&DT entitlement to developing countries in agriculture as its core demand in the run-up to the WTO’s tent h ministerial conference in Nairobi.

According to Article 6.2 of the AoA, “In accordance with the Mid-Term Revie w Agreement that government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries, investment subsidies which are generally available to agriculture in developing country Members and agricultural input subsidies generally available to low-income or resource- poor producers in developing country Members shall be exempt from domestic support reduction commitments that would otherwise be applicable to such measures, as shall domestic support to producers in developing country Members to encourage diversification from growing illicit narcotic crops. Domestic support meeting the criteria of this paragraph shall not be required to be included in a Member’s calculation of its Current Total AMS.”

The US and several Cairns Group countries brought the elimination of S&DT as one of their priority issues in the current Doha agriculture meetings being convened by the chair, Ambassador John Deep Ford of Guyana.

Further, the US and Australia have also targeted the de minimis provision that enables governments in developing countries to provide support to their farmers in the absence of any entitlement to avail aggregate measurement of support (AMS).

During the consultations held by Ambassador Ford, the cuts in de minimis was raised by Australia and several other farm exporting countries.

As the United States and its Cairns Group allies led by Australia and Brazil intensified their efforts to erase the Doha agriculture negotiating mandates, China, India, and South Africa on behalf of the ACP (Africa, Caribbean and Pacific) countries, have demanded the elimination of the Amber Box domestic farm subsidies as a pre-requisite for addressing the reduction commitments in domestic support for agriculture, during the meetings held by the chair last week.

The developing countries led by China and India among others have also called for extending the proposed permanent solution for public stockholding programs for food security to all developing and least-developed countries.

Indonesia, which is the coordinator for the G-33 countries, categorically said that public stockholding programs and the mandated permanent solution must cover all developing countries.

During the dedicated session of the Doha agriculture negotiating body on 14 March, Indonesia reminded the opponents to the permanent solution such as Paraguay, Canada and Australia among others that the Nairobi Decision of December 2015 made it clear that the permanent solution should cover existing and future programs, including all developing members without exception.

Adopting stonewalling tactics, the opponents to the permanent solution for public stockholding (PSH) programs for food security led by Australia and Canada among others insisted that the users of the PSH programs must demonstrate why the Bali interim solution is inadequate for the PSH programs.

In sharp responses, Indonesia, India and China said there is a consistent attempt to deny the permanent solution even though it is one of the core UN Sustainable Development Goals.

Last week’s dedicated sessions on the permanent solution and the special safeguard mechanism, as well as on cotton revealed that major developed countries are not in any mood to resolve the three issues.

“There is not much change in the positions even though the chair Ambassador Ford is trying hard to zero in on some options during the period between July to September so as to arrive at some limited outcomes during the WTO’s 12th ministerial meeting in Astana,” said a trade envoy from an Asian country.

On market access, which is the core priority for the United States, many members, particularly the farm defensive countries of the Group of 10 led by Switzerland, insisted that any discussion on outcomes on market access for the 12th
ministerial conference must be comprehensive and not based on cherry-picking, said a trade envoy.

All issues in market access such as tariff-reduction, tariff peaks, tariff escalation, tariff quotas, and special safeguards (SSG) must be dealt along with market access for industrial goods and services, farm trade negotiators from the G10 said during last week’s meetings.

The US, which hardly intervened during the meetings last week, demanded that members must submit data first before addressing the issues in agriculture.

The Cotton-four countries – Benin, Burkina Faso, Mali, and Chad – had provided data on all forms of support to cotton and demanded that green box support for cotton must be addressed along with the AMS and blue box payments.

[The Appellate Body, in a dispute raised by Brazil against the US, has ruled that the so-called “green box” support provided by the US to its cotton farmers was in fact domestic support that enabled export of this subsidised cotton production with adverse effect on world cotton markets. The US never implemented the ruling, merely compensating Brazil for an initial period. SUNS]

In conclusion, it is clear that there is not going to be much progress in agriculture talks before the 12th ministerial conference in Astana next year. But the sudden change in Brazil’s positions could galvanize the US and Australia-led Cairns Group to demand outcomes centered around the elimination of Article 6.2 of the AoA and sharp cuts in the de minimis support.