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Info Service on WTO and Trade Issues (Sept21/04) Washington DC, 3 Sep (D. Ravi Kanth) – The chair of the Doha agriculture negotiating body, Ambassador Gloria Abraham Peralta from Costa Rica, has acknowledged that her draft text “is not an ideal solution,” claiming that “it lays out possible options for compromises and landing zones.” At a press conference held on 2 September, the chair spoke in the Spanish language and her remarks were simultaneously issued in English. Ambassador Peralta touted that the 27-page draft text (Job/AG/215) issued on 29 July “reflects and builds on the collective work undertaken so far, including the valuable work of the Facilitators on their respective negotiating topics, as well as numerous submissions, comments and reflections by Members in different negotiation sessions.” Yet, she did not elaborate on the central features of the draft text. However, she maintained that “this text acknowledges differences between Members and reflects the complexity and the sense of the issues at stake – including in particular the topics of domestic support and public stockholding for food security purposes.” Ambassador Peralta said that she is “fully aware of all these concerns and sensitivities,” adding that she does not underestimate them, “as they are directly related to critical challenges such as food security, poverty alleviation or economic development.” She insisted that “the issues at stake are so fundamental that the status quo is not an option”, without clarifying the issues and how the draft text would break any new ground. Q&A SESSION Responding to questions from the reporters, a Geneva-based trade official defended the importance attached to the transparency provisions as well as the changing ground on trade-distorting domestic support and on tariffs, among other issues. Since the official spoke in Spanish, it was difficult to decipher the official’s replies. For example, this writer posed questions to the official on several issues. They include: (1) packing the draft text with transparency provisions; (2) the draft ministerial decision on domestic support being lifted from the Cairns Group proposal; (3) the manner in which the draft ministerial decision on the mandated issue of concluding a permanent solution on public stockholding programs for food security at the WTO’s 12th ministerial conference (MC12) to be held from end-November in Geneva is seemingly being eroded by the chair’s proposals; (4) why proposals from the African Group were not being incorporated into the draft text; and (5) why would members have any trust over the manner in which the chair’s draft text was set out and whether it is dead on arrival? In response, the Geneva-based trade official provided a short answer in Spanish, which when checked through Google’s Spanish to English translation, meant that the questions were “reckless”, and that all the proposals from members were incorporated in the draft text. The official, however, did not reply as to why the questions posed were considered as “reckless”. After the press conference, the writer reached several trade envoys on these questions. Speaking on background, the envoys said they were alarmed over the draft text being “one-sided” and biased in favour of the Cairns Group. CAIRNS GROUP TO DRUM UP SUPPORT FOR DRAFT TEXT Apparently, the Cairns Group held a meeting recently in which Australia, the coordinator of the Group, pressed the Group’s members to support the draft text at a Doha special session to be held on 7-8 September, said people familiar with the development. The Cairns Group also seems to be seeking the support of the G-10 group of farm-defensive countries led by Switzerland to support the draft text, said people, who asked not to be quoted. It remains to be seen whether the United States and the European Union will go beyond the proposed transparency decision to support the draft text, said people, who preferred not to be quoted. It appears safe to say that the chair has chosen to make the draft text as a Cairns Group text, said people, who asked not to be quoted. Unlike any of her illustrious predecessors such as Ambassador Crawford Falconer from New Zealand, who wrote the 2008 draft agriculture modalities, or Ambassador Vangelis Vitalis also from New Zealand, who prepared the draft proposals on the permanent solution on public stockholding (PSH) programs for food security for the WTO’s 10th ministerial conference held in Nairobi, Kenya, in December 2015, the current chair has apparently chosen to openly align herself with what the Cairns Group is seeking, said people, who preferred not to be quoted. DRAFT AGRICULTURE TEXT Trade envoys told the SUNS that the developing countries are the net sufferers because of the draft proposals on domestic support, PSH programs, and extremely burdensome transparency provisions, which they will not be able to implement. It is an open secret that the draft text is excessively packed with transparency provisions, including a specific decision on transparency and notification requirements, apparently proposed by the United States and the European Union. The chair’s proposed draft ministerial decisions are on: (1) domestic support; (2) elements for the continuation of work on market access after MC12; (3) export competition; (4) export prohibitions and restrictions; (5) cotton; (6) special safeguard for developing countries; (7) public stockholding (PSH) programs for food security purposes; (8) another draft ministerial decision on PSH programs; and (9) transparency and notification requirements. These draft decisions such as on proposed disciplines on domestic support, market access, and public stockholding programs for food security make them appear to be largely aimed at preventing the developing and least-developed countries from pursuing their development-related measures in agriculture, and without recourse to policy space, said people, who asked not to be quoted. DRAFT DECISION ON DOMESTIC SUPPORT On domestic support, the chair appears to have lifted the textual proposals made by the Cairns Group in their draft ministerial statement (Job/AG/177) issued on 15 July. However, she has added a few controversial elements and has seemingly created more confusion, particularly in regard to Article 6.2 of the WTO’s Agreement on Agriculture (AoA), which is commonly referred to as the “development box” for developing countries. Ambassador Peralta proposed in square brackets that “[Developing countries shall be accorded special and differential treatment, including for domestic support provided by them to low-income or resource poor farmers under Article 6.2.]” For example, it is not clear whether she is referring only to low-income or resource poor farmers in regard to investment or input subsidies, which are exempt from reduction commitments. The draft text omitted the third element in Article 6.2 concerning “diversification from growing illicit narcotic crops” by developing countries. A large majority of developing countries have consistently opposed any change in Article 6.2 on grounds that both investment and input subsidies are at the heart of their development programs, said people familiar with the development. Similarly, the chair alluded to Amber Box measures by suggesting that “[Members agree to address AMS [aggregate measurement of support] above de minimis entitlements with the aim of reducing subsidy concentration and to level the playing field”, but did not call for any reduction commitments in the AMS that signifies the most trade-distorting subsidies. When asked about the elimination of the most trade-distorting domestic support as proposed by several countries, there was no response from the Geneva-based trade official at the press conference on 2 September. All the developed countries and some developing countries have an entitlement for AMS (aggregate measurement of support or Amber Box subsidies) – the US has close to $19 billion, the EU has more than $70 billion, as well as billions of dollars of AMS support by Japan and other farm-defensive countries. The Chair’s draft ministerial decision on domestic support contains the following principles: 1. Members commit to capping and reducing the sum of current global agricultural trade- and production-distorting domestic support entitlements by at least half by 2030 [alternatively: Members commit to a substantial reduction of trade- and production-distorting domestic support entitlements] according to modalities to be negotiated. 2. To this end, these negotiations shall take into consideration all forms of trade- and production-distorting domestic support under Article 6 of the Agreement on Agriculture [taking into account the different potential of each category to distort production and trade]. [Developing countries shall be accorded special and differential treatment, including for domestic support provided by them to low-income or resource poor farmers under Article 6.2.] [Members agree to address AMS above de minimis entitlements with the aim of reducing subsidy concentration and to level the playing field.] 3. The contributions by individual Members in these reductions will need to be proportionate to the size of those Members’ current entitlements and their potential impact on global markets, taking into account the individual circumstances and development needs of Members, [to ensure the global target is reached by 2030]. 4. LDCs will not be required to undertake any new reduction commitments. 5. Members note the importance of the implementation of existing notification obligations under Article 18 of the Agreement on Agriculture and undertake to make the necessary efforts to provide all outstanding DS:1 notifications to enhance transparency with respect to existing domestic support commitments. [Members undertake to provide the value of production data as part of their DS:1 notifications.] 6. [Members shall consider reviewing and clarifying Annex 2 criteria and related transparency requirements, where necessary, to ensure that relevant domestic support measures have no, or at most minimal trade-distorting effects or effects on production.] 7. [Members also commit to simplifying and updating the current transparency requirements in G/AG/2, taking due account of the capacity constraints of some Members.] The Cairns Group’s draft ministerial decision submitted by Australia, Argentina, Brazil, and several other countries contains new disciplines on domestic support. They include: 1. The Members shall commit to cap and reduce the sum of current global agricultural trade- and production- distorting domestic support entitlements by at least half by 2030. 2. To this end, Members shall negotiate an agreement to cap and reduce trade- and production-distorting domestic support entitlements. Such negotiations shall take into consideration all forms of trade- and production-distorting domestic support under Article 6 of the Agreement on Agriculture. 3. The contributions by individual Members in these reductions will need to be proportionate to the size of those Members’ current entitlements and their potential impact on global markets, taking into account the individual development needs of Members, to ensure the global target is reached by 2030. 4. The implementation of existing notification obligations under Article 18 of the Agreement on Agriculture, thus strengthening transparency with respect to existing domestic support commitments, is imperative, and that utmost effort must be made to provide all outstanding DS:1 notifications. TWO DRAFT MINISTERIAL DECISIONS ON PSH PROGRAMS On the most fundamental issue of the mandated decision on the permanent solution for public stockholding programs for food security, the chair offered two alternative draft ministerial decisions that appear to ensure that the permanent solution is not delivered at MC12, as demanded by the US, Australia on behalf of the Cairns Group, and the EU. The chair’s first draft alternative text is based on the Buenos Aires draft ministerial decision that was blocked by the United States in December 2017. Perhaps, this first alternative would have been largely acceptable to a majority of developing countries and LDCs, said people familiar with the development. However, in an apparent move to deny an outcome on the permanent solution, the chair proposed her second draft alternative text that would be acceptable to the Cairns Group of countries, the United States, and the EU. The second draft alternative text, which emphasizes on a work program, states: 1. Pursuant to the Nairobi Ministerial Decision (WT/MIN(15)/44 – WT/L/979), Members shall continue to pursue negotiations and make all concerted efforts to agree and adopt a permanent solution to the issue of public stockholding for food security purposes in dedicated sessions of the Committee on Agriculture in Special Session (CoA-SS). 2. [In the interim, Members agree to extend the Interim Solution established by the Ministerial Decision of 7 December 2013 (WT/MIN(13)/38 – WT/L/913) and the General Council Decision of 27 November 2014 (WT/L/939) to public stockholding programmes for food security purposes of least developed countries enacted after 7 December 2013.] 3. The General Council shall regularly review progress in these negotiations. The chair’s apparent bias towards the Cairns Group, the United States, and the European Union is clearly exposed, said several negotiators. TRANSPARENCY PROVISIONS After proposing transparency and notification requirements in the first eight draft ministerial decisions, the chair has created a specific draft ministerial decision on transparency, which seems to be made at the behest of the US and the European Union. The specific draft ministerial decision on transparency proposes the following disciplines: 1. Further to the provisions in Article 18 of the Agreement on Agriculture and in document G/AG/2 of 30 June 1995 on “Notification requirements and formats”, Members commit to enhancing transparency to improve monitoring in all areas of agriculture. 2. The WTO Secretariat is directed to provide information on a regular basis to the Committee on Agriculture on available technical assistance, including examples of recent cooperation, in an effort to assist Members in preparing notifications pursuant to document G/AG/2 and fulfilling other relevant transparency and monitoring requirements. 3. Members welcome the development of information technology (IT) tools through the Agriculture Informational Management System (Ag-IMS) to facilitate data processing and on-line data submission by Members in implementing their notifications obligations pursuant to document G/AG/2 and other relevant transparency and monitoring requirements. 4. [Members agree to establish a work programme under the auspices of the Committee on Agriculture to implement all revisions and additions to document G/AG/2 that Members agreed to explore in other Ministerial Decisions adopted as part of the outcome on agriculture at the Twelfth Ministerial Conference by [date].] DRAFT DECISION ON MARKET ACCESS In a similar vein, the draft decision on market access excessively focuses on transparency and notification requirements while ignoring crucial issues such as tariffication based on ad valorem equivalents, as they are anathema to the European Union, and the G10 farm-defensive countries, said people familiar with the text. On market access, the chair has resorted to a proposal from Australia, the US and the EU. The EU does not wish to enter into market access negotiations, while Australia and the US want greater transparency and legal certainty over the application of applied tariffs. The chair’s draft ministerial decision on market access states: Scope: 1. This Decision applies to changes in MFN applied tariffs in respect of both agricultural and non-agricultural goods. Best practices in the application of changes to MFN applied tariff rates: 2. In order to promote predictability in the application of changes to MFN applied tariff rates, whilst recognizing that Members have different domestic frameworks and customs administration practices, Members agree that the options presented in Annex 1 to this Decision represent best practices in the application of such changes. 3. Members also agree to examine options to inform the WTO as soon as practicable of MFN applied tariff changes as part of broader efforts to improve transparency in the WTO. Application of Best Practices: 4. Recognizing that Members have different domestic frameworks and customs administration practices, Members [shall][should] apply at least one of the best practices listed in Annex 1 of this Decision. 5. Least Developed Country (LDC) Members in a position to do so should apply [at least] one of the best practices listed in Annex 1 of this Decision. Ongoing Development of Best Practices: 6. Members recognize that additional best practices may be developed to improve predictability and transparency when an MFN applied tariff rate changes. 7. To this end, Members are encouraged to present additional best practices to the Committee on Market Access (CMA), which will be responsible for an annual review of this Decision. If no objections are raised in the annual review, the best practice(s) shall be added to the list in Annex 1 to this Decision. Notification: 8. Members [shall] [are encouraged to] notify to the CMA the best practice(s) they use, outlined in Annex 1 to this Decision, no later than [12] [6] months after the adoption of this Decision. Members [shall] [should] notify to the CMA of subsequent changes to their practices. 9. If a Member is not in a position to implement one of the best practices presented in Annex 1 to this Decision, the Member [shall][should] notify to the CMA its current practice in this matter. 10. Members [should][shall] use the template in Annex 2 to this Decision to notify their practice(s) to the WTO. 11. The WTO Secretariat shall maintain a list of practices notified by Members. 12. Members facing resource constraints in meeting this notification shall, upon request from another Member, provide information on the current practice(s) used by them. Technical Assistance: 13. Upon request, the WTO Secretariat shall provide technical assistance to [developing] Members who encounter challenges in applying a best practice presented in Annex 1 to this Decision. In addition, [developing] Members and LDCs are encouraged to reach out to Members to discuss how to apply the best practice(s) or develop a best practice that fits their domestic systems.
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