TWN Info Service on WTO and Trade Issues (Feb20/10)
21 February 2020
Third World Network

Chair suggests incremental outcomes on SSM & PSH at MC12
Published in SUNS #9070 dated 18 February 2020

Geneva, 17 Feb (D. Ravi Kanth) -- The chair of the Doha agriculture negotiations envisages outcomes on the mandated issues of special safeguard mechanism (SSM) for developing countries and the permanent solution for public stockholding purposes (PSH) to largely remain incremental at the WTO's 12th ministerial conference (MC12) in Nur Sultan, Kazakhstan, in June.

The Chair, Ambassador John Deep Ford of Guyana, also ruled out any likely deliverable on "ambitious, expeditious, and specific" reductions in the trade-distorting domestic support for cotton, an area of existential concern for the four West African countries of Benin, Burkina Faso, Mali, and Chad.

In his restricted Job document (Job/Ag/180) circulated on Friday (14 February), the chair has almost ruled out the permanent solution on PSH as demanded by the G33 group of developing and least developed countries on grounds that "members' positions on this issue have not evolved significantly since the deadline was missed at MC11 (the WTO's 11th ministerial conference in Buenos Aires, in December 2017)" and "the ideas on the table and the positions remain broadly the same, so do the concerns from both sides."

As regards the SSM which remains an unresolved issue since the WTO's 10th ministerial conference in Nairobi, Kenya, in December 2015, Ambassador Deep Ford ruled out any outcome due to continued differences among members. He suggested that more work needs to be done in the post-MC12 meeting on this issue.

Significantly, the chair did not include the joint proposal from China and India for the elimination of amber box subsidies or the Aggregate Measurement of Support.

However, he urged members to settle for "an incremental, balanced, and forward-looking outcome for MC12."

The chair also said that an outcome on market access is unlikely at MC12 due to divergent positions, suggesting that more work needs to be done in this area after the Nur Sultan meeting.

He underscored the need for securing an agreement at Nur Sultan on "elements and process for a possible outcome" in seven areas of global farm trade. The seven areas include (a) domestic support, (b) market access, (c) export competition, (d) export prohibitions and restrictions, (e) cotton, (f) special safeguard mechanism, and (g) public stockholding for food security purposes.

Ambassador Deep Ford said that the report is being circulated under his own responsibility, following his consultations with members on their proposals based on different approaches.

The "main purpose" of the report, he said, "is to search for incremental, balanced and meaningful elements and processes that reflect movement forward towards continuing the agricultural reform".

"There is no hierarchy between the elements and processes, there are only differences in levels of engagement, their maturity and time period of processes," the chair emphasized.

Based on members' engagement over the next three months and their "collective reflection", the chair hoped a draft text can be prepared that "forms the basis of an incremental, balanced and meaningful outcome at MC12".

"Success would be agreed elements that advance the fair and efficient functioning of agricultural markets," the chair argued.

Even though he draws his mandate from the Doha work program that was agreed among WTO members in 2001, the chair did not even remotely suggest that the substantial work was already done in all the seven areas of agriculture, which was often claimed as the engine of the Doha negotiations, said a trade envoy, who asked not to be quoted.

Instead, Ambassador Deep Ford took recourse to the objectives of Article 20 of the Uruguay Round's Agreement on Agriculture (AoA) for laying out the roadmap.

On the two mandated issues - the SSM and PSH - the job document suggested various doable elements at this juncture.

On SSM, for example, the chair said that "considering the wide divergences in Members' positions, the only realistic option at this time appears to be to promote further engagement to clarify and fully understand each other's positions and concerns."

He made the following observations on SSM for developing countries:

i. Some proponents emphasize that an agreement on SSM is indispensable for them to undertake agricultural Market Access liberalization. I do not necessarily see this position as limiting progress on an SSM, as non-proponents appear not to oppose an SSM if it could facilitate Market Access reforms. The challenge rather arises from the fact that the Market Access discussions are at an early stage and there is still a reluctance on the part of Members to launch negotiations on a tariff reduction modality.

ii. In recent discussions, the proponents have argued that the challenges, sought to be addressed through an SSM, originate principally in trade distortions and heavy agricultural subsidization. Non-proponents have responded by expressing their willingness to engage in technical discussions on how to remedy or address distortions/ subsidized trade without negatively affecting Market Access of Members who do not contribute to such distorting subsidization.

iii. The proponents from the G33 group have also alluded to the current situation where only a select group of Members have access to special agricultural safeguards (SSGs) and have considered it as a symbol of an imbalance in existing AoA rules. Some other Members have simultaneously reminded the proponents about the negotiating balance of the Uruguay Round (UR) where Members could negotiate the SSG rights on specific agricultural products as a part of the tariffication package. I am aware of the discussions in the past, including during the SSM Working Group process in 2019, where Members deliberated on how the UR modality of SSG could possibly inspire the SSM negotiations.

As regards the PSH (public stockholding programs for food security purposes), the chair argued that the proponents such as the G33 group led by Indonesia, India, and China "see the Permanent Solution as an important tool to guarantee their food security, while the non-proponents remain concerned about potential trade distortions and an opening for unlimited market price support (MPS)."

The African Group recently suggested the need to "ensure that stocks procured do not distort trade or adversely affect the food security of other Members". In addition, the African Group suggested that "no exports are made from products benefiting from this provision".

Consequently, the chair argued that "several trade-offs have been suggested to break the impasse on this issue."

The trade-offs include:

* nature of requirements and a cap on programmes (e. g. less stringent requirements if programmes are capped and vice versa);

* flexibilities for new programmes and nature of safeguards (e. g. more flexible requirements if the safeguards are made stronger and vice versa); and

* products coverage and the nature of safeguards (e. g. the broader the programme's coverage, the stronger the safeguards and (vice versa).

Against this background, and not ruling out consideration of other initiatives being deliberated, the chair said he would like to propose the following elements for a Permanent Solution that Members may work on with a view to achieving an outcome at MC12:

-- Core provision: Bali-type solution (i. e. a commitment by Members not to challenge through the WTO Dispute Settlement Mechanism compliance of a developing Member with its obligations under Articles 6.3 and 7.2(b) of the AoA);

-- Product coverage: traditional staple food crops;

-- Programme coverage: limited extension to new programmes;

-- Transparency: the Bali transparency provisions, amended to ensure that they are not too onerous by over-straining the already limited capacity of developing Members;

-- Anti-circumvention and safeguards: Bali anti-circumvention and safeguards provisions, amended to address the concerns of the non-proponents regarding exports from stocks; and

-- Monitoring: periodic examination by the CoA (Committee on Agriculture) Regular.

Effectively, the chair reproduced what was proposed by Ms Amina Mohamed of Kenya, who was the chair for the "green room" discussions on agriculture at MC11 in Buenos Aires, said a trade envoy, who asked not to be quoted.

Instead of a permanent solution as mandated by trade ministers in Bali (the WTO's ninth ministerial conference in Bali, Indonesia, in December 2013), the chair has offered only an incremental blueprint over and above the Bali decision, the envoy suggested.

On cotton, which impinges on the lives of tens of millions of farmers in four West African countries, the chair expressed grief that "despite tireless efforts in recent months, including in the Cotton Quad (the United States, the European Union, Brazil, and the Cotton-four countries - Benin, Burkina Faso, Mali, and Chad) Plus configuration, there has been at best minimal engagement by Members on Cotton."

"Thus, there have been no signs of convergence, as some delegations have expressed the view that reaching a substantive outcome on Cotton trade-distorting support might be out of reach by MC12, bearing in mind the limited engagement on Cotton and the situation of the overall negotiations on Domestic Support," the chair said.

On the domestic support pillar that includes various categories of domestic support, the chair said it is "a high priority" area for most of the WTO members, especially Brazil and Australia of the Cairns Group of farm exporting countries, and also an area of urgent reform for making progress so as to achieve the United Nations Sustainable Development Goals on poverty and food security.

Following the recent meeting in Davos on 23 January of the Cairns Group trade ministers, the chair appears to have included their proposals in the roadmap, said a trade envoy, who asked not to be quoted.

The chair said that there "is a level of convergence" among members "on some elements as evidenced in the circulated submissions and proposals to address TD DS (trade-distorting domestic support)".

The items of a level of convergence listed by the chair are:

* Approach: any approach should aim at harmonizing support levels in the future, reducing imbalances and taking into account characteristics of Members' agricultural sectors, non-trade concerns and levels of development. All Members are to gain from a fairer playing field that would allow them to address the most pressing challenges, including food security and environmental protection.

* Broad objective: overall TD DS (trade-distorting domestic support) should be capped and reduced, starting with a commitment to further limit TD DS entitlements by a certain percentage over a specific period of time. This is a long-standing objective and considered long overdue.

* Differences among Domestic Support categories: different categories of Domestic Support are generally considered as having different levels of trade-distorting potential and this should be taken into consideration.

* Improved implementation of current disciplines: Members should ensure that less TD DS measures remain as envisaged and that they are used in accordance with the prescribed criteria. Strengthening the monitoring, together with enhancing transparency (see below) and/or clarifying the existing disciplines are some of the options put forward.

* Transparency: enhanced transparency is critical for successful negotiations and should be pursued in all components under the Domestic Support pillar, taking into consideration the concerns expressed by many developing Members regarding the assumption of burdensome obligations that would put a further strain on their already limited capacity. It has been suggested that providing more complete information on different components of Domestic Support and reporting additional data such as the value of production (VoP) data for all products for which support is provided (under the Amber Box or any other Box below) and for the agricultural sector in general even where the de minimis provision is not invoked would be a step in the right direction.

Ambassador Deep Ford admitted that "there is a divergence in Members' views on which kinds of Domestic Support should be addressed (all Article 6 support or some of its sub-categories only) and how this should be done."

The United States as well as the Cairns Group of farm exporting countries led by Australia want to include Article 6.2 of the AoA on special and differential treatment in future negotiations on trade-distorting domestic support, said a trade envoy, who asked not to be quoted.

Against this backdrop, the chair said members must strive for "an incremental, balanced and forward-looking outcome for MC12 [12th ministerial conference in Nur Sultan]."

He said that "there is a need for continued engagement and compromise on the overall framework and on components within the Domestic Support pillar," suggesting that "the importance of special and differential treatment (S&DT) remains essential and thus the need for flexibilities that recognize and take into account different conditions that Members face."

"Most Members seem to share the view that no further commitment would be required from LDCs (least- developed countries)," he suggested.

Commenting on market access, which is the priority area for the United States and the Cairns Group of farm exporting countries, the chair said "there is a general recognition among Members that the prevalence of high tariffs and other trade-restrictive instruments continue to impede Agricultural Market Access and that effecting Market Access reforms continues to be important."

Ambassador Deep Ford said his consultations with members in various formats revealed that "members are not yet ready to launch discussions on the core issue of a tariff reduction modality" probably due to high political sensitivity for the vast majority of WTO Members.

However, he suggested few areas in market access where progress can be made. They include addressing issues such as the "water" between bound tariffs and applied tariffs, tariff simplification by converting all the specific and opaque tariffs into ad valorem equivalents, and improving the delivery of tariff rate quotas.

"The issue of linkage and balance invoked in the Market Access negotiations also manifests in frequent cautionary messages against any cherry-picking of elements within the Market Access dossier," Ambassador Deep Ford argued.

Consequently, the chair suggested the following elements for achieving an outcome at MC12:

A. Changes in applied tariffs and treatment of consignments en route;

B. Tariff simplification;

C. Transparency of TRQ administration;

D. Framework and process towards Market Access reforms: MC12 may also be an important opportunity for Members to agree on a broad framework and principles to guide the Market Access negotiations after the Conference.

Significantly, the chair informed that "the limited engagement on Market Access reforms multilaterally is Members' increasing reliance on free trade agreements (FTAs) for furthering their Market Access objectives."

"It may be a useful and revealing exercise for Members to delve deeper into the linkage between multilateral Market Access commitments and autonomous reforms undertaken especially within the setting of the FTAs with a view to holistically dealing with the "water" in Members' tariff profiles," Ambassador Deep Ford suggested.

This exercise may also serve to provide meaningful insights that could help to advance the Market Access negotiations generally.

Commenting on export competition pillar, the chair said "the best doable option in this area would be to develop a process forward building upon the elements."

The Elements include "export credits, export credit guarantees or insurance programmes, agricultural exporting state trading enterprises and international food aid, with due consideration of the specific situation of LDCs and Net Food Importing Developing Country Members (NFIDCs)."

As regards export restrictions, the chair said "there seems to be broad agreement among the membership that the exemption of foodstuffs purchased for non-commercial humanitarian purposes by the World Food Programme from the application of Export Restrictions could be one of the elements to be considered for agreement at MC12."

"It is my considered view that a pathway could be found to achieve agreement on this first element, bearing in mind some concerns expressed in relation to the fact that an unconditional exemption could potentially compromise domestic food security during periods of very critical shortages," the chair said.

The chair indicated a work program for meetings before Nur Sultan, including special session meetings on 24 and 25 February and tentatively on 23 and 24 March, 27 and 28 April, and 27 and 28 May 2020. +