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TWN
Info Service on WTO and Trade Issues (Nov23/14) Geneva, 21 Nov (D. Ravi Kanth) — Members of the World Trade Organization on 21 November apparently remained sharply divided on several key issues in the agriculture negotiations, dimming the prospects for any outcome on this issue at the upcoming WTO’s 13th ministerial conference (MC13), to be held in Abu Dhabi in February 2024, said people familiar with the discussions. During the last two days of discussions at the Doha negotiating body on agriculture that ended on 21 November, several rather unusual developments that took place amidst the charged discussions on mandated issues like the permanent solution for public stockholding (PSH) programs for food security, the special safeguard mechanism (SSM), reform of domestic support in agriculture, and on the need to update the fixed external reference price that is currently based on 1986-88 prices, could prove costly for MC13, said people familiar with the development. If the current differences continue to persist in the next three months on the mandated issues as well as on the “holistic” reform of agriculture, the chances of any outcome on agriculture are highly unlikely at MC13, just like at the WTO’s 11th ministerial conference (MC11) that was held in Buenos Aires in December 2017 and the 12th ministerial conference (MC12) that was held in Geneva last June, said people familiar with the discussions. Brazil, which led the Group of 20 (G20) developing countries in the past on agriculture, apparently dropped a proverbial gauntlet at the meeting on 21 November, saying that if there is no outcome on agriculture, there will be no outcome on anything else at MC13, said people familiar with the discussions. Significantly, the developments at the Doha negotiating body on agriculture come days before the WTO Director-General, Ms Ngozi Okonjo-Iweala, convenes a virtual mini-ministerial meeting on 28 November. As previously reported in the SUNS, the DG, under alleged pressure from the Cairns Group of farm-exporting countries and the Latin American Group, has apparently changed the focus of the mini-ministerial meeting from discussing the PSH issue on its own merits to all issues in agriculture. AN “UGLY” TURN On the first day of the Doha agriculture negotiations on 20 November, discussions apparently took an ugly turn when several members of the Cairns Group led by Australia took the floor to discuss their proposal (Job/Ag/243/ Rev.1) under the pretext of discussing the PSH issue as contained in their paper. While the discussions were supposed to be held on the dedicated issues like the permanent solution for PSH programs for food security and the special safeguard mechanism (SSM) for developing countries, the manner in which several members of the Cairns Group, namely, Costa Rica, Australia, Thailand, and Canada tried to upstage the proponents of the mandated issues of PSH and SSM allegedly led to bedlam, said people familiar with the discussions. Instead of focusing the discussions on the PSH issue that was mentioned in the Cairns Group’s proposal, the members of the Cairns Group apparently shifted the focus of the discussions to comprehensive reform of domestic support, said people familiar with the discussions. The Cairns Group’s proposal titled, “Towards a strengthened negotiation framework in the domestic support pillar – building a comprehensive approach to negotiations on domestic support,” highlighted several issues. In its proposal, the Cairns Group said that it is “committed to achieving greater fairness and a levelling of the playing field in agriculture through comprehensive agriculture trade reform in line with Article 20 of the Agreement on Agriculture. Such reform is essential for addressing global challenges relating to food security, development and livelihoods, and the environment.” The Cairns Group claimed that “consistent with our view that the pathway with the best prospects for success in agriculture is through a holistic reform process, the Cairns Group believes that JOB/AG/243 circulated by Costa Rica on 9 June 2023, should be the basis of domestic support negotiations. As such, we submit the following revision of Section B of JOB/AG/243 as the basis for a text-based modalities discussion on domestic support and a permanent solution for the issue of public stockholding for food security purposes (PSH).” It argued: “To ensure a robust and significant reform package, further negotiations among WTO Members could expand on the design and implementation of the overall modalities, including on the levels at which certain thresholds and limits are set; scope and product coverage; product aggregation in Annex II in the context of addressing product-specific support concentration issues; the design and application of a domestic support triggering mechanism; and Annex 2 of the AoA (Agreement on Agriculture).” The Cairns Group said, “In line with our commitment to the reform process, the three developed country WTO Members of the Cairns Group (Australia, Canada and New Zealand) commit, at the implementation phase, to schedule their Final Cap for domestic support at the lowest calculated level of either the starting Baseline, the Base Cap or the Final Cap.” It maintained that, “Since the Agreement on Agriculture is currently subject to negotiations, we reserve the right to submit further revisions to this proposal, including on any additional text that may be required to ensure full legal certainty in the context of final modalities.” It further said: “The Cairns Group remains committed to working on all pillars and with all interested WTO Members to integrate the key elements of different proposals in a way that is balanced, pragmatic, viable and transparent, and which supports continued progress in the negotiations.” At the meeting, the United States spoke in support of the Cairns Group proposal, saying that the Agreement on Agriculture already strikes a good balance. The US apparently said that if members seek to change the rules, it must be done within a broader framework of domestic support reform, said people familiar with the proceedings. SILENCE ON GREEN BOX SUBSIDIES Surprisingly, for the first time, the Cairns Group proposal suggested the reform of Article 6.2 of the WTO’s Agreement on Agriculture, which is viewed as the “development box” for developing countries. However, the Cairns Group proposal remained silent on the need to reform the “Green Box” subsidies worth hundreds of billions of dollars provided by the US and the European Union among others. The Cairns Group’s proposal allegedly undermined its own credibility by not including the need to discipline the “Green Box” subsidies, which, according to the UN Conference on Trade and Development (UNCTAD)’s Trade and Development Report 2023, is proven to be trade-distorting. In its Trade and Development Report 2023, UNCTAD said somewhat emphatically: “Apart from the Aggregate [Measurement] of Support, advanced countries are also able to provide billions of dollars of subsidies to their farmers under the “green box” subsidy, which should be non-trade-distorting. However, a stream of independent studies has shown that green box subsidies shift the global production of food towards uncompetitive producers in advanced countries, which have the financial resources to provide these subsidies, thereby adversely impacting the incomes of farmers in developing countries. These subsidies distort production and international trade through various effects, such as “risks, land prices, credits, and labour participation”.” “Hence, there is a need to discipline green box subsidies to ensure more equitable distribution of gains from production and trade in food. The African Group and Pakistan propose disciplining the green box subsidies at the WTO,” the UNCTAD report argued. But the Cairns Group, for some inexplicable reason, has remained silent on the issue of disciplining “green box” subsidies, perhaps, for fear of attracting the wrath of the US and the EU, said negotiators familiar with the discussions. PSH MEMBERS HIT BACK The Cairns Group’s espousal of the reform of domestic support, instead of focusing on the issue of PSH, caused a furor at the meeting on 20 November, said people familiar with the discussions. Apparently, several developing countries including Nigeria, Indonesia, South Africa, Egypt, and China among others sharply criticized the tactics adopted by the Cairns Group members allegedly to undermine the negotiations. While Nigeria seems to have criticized the Cairns Group for “ambushing” the discussions, India also concurred with Nigeria’s assessment, saying that it would present its views on 21 November. In criticizing the Cairns Group, Nigeria said the Cairns Group’s proposed formula makes public stockholding subject to the total cap and allows only limited products to be included. Nigeria said that “someone came to make a presentation based on assumption … (about) developing countries, then presented a solution and (hope) we accept the platform and move forward.” In varying degrees of emphasis, South Africa, Turkey, Indonesia, and Egypt raised their specific concerns about the Cairns Group proposal. EXTERNAL REFERENCE PRICE During the discussions on the second day on 21 November, India made a detailed presentation of the urgent need to update the external reference price (ERP), which is based on 1986-88 prices. India said the ERP was supposed to have been reformed five years after the WTO’s Agreement on Agriculture was implemented, adding that no one anticipated that the ERP based on 1986-88 prices will go on for more than three decades. India apparently showed different slides at the meeting on how different the ERP would be if inflation and other changes are taken into consideration, said people present at the meeting. In sharp disagreement with India’s presentation on the ERP, the US apparently said that the ERP is supposed to be a “handbrake” so that members contained/removed their trade-distorting subsidies, said people present at the meeting. India challenged the US assessment of the ERP, saying that it is not a “handbrake” on subsidies. India apparently argued that it is a “brake that is applied on several countries to sustainably improve/develop their own capacities.” Further, it is a brake on other countries building their farm capacities, India said, adding that the proponents of a fixed ERP do not want other countries to develop their agriculture because of their commercial interests. Using the analogy of a doctor treating a patient, India apparently gave the example that when a patient is sick, the doctor would order a blood test so as to know what is causing the ailment. Without examining the blood sample, India asked rhetorically, how would the doctor be able to diagnose what is the problem. India emphasized that is the reason “why we are saying that farm rules are asymmetrical and need to be reformed, particularly the updating of the ERP.” Brazil apparently said that the ERP cannot be discussed in isolation, suggesting that there has to be a “holistic” reform of agriculture, said people who asked not to be quoted. In short, the way in which the special session on the dedicated issues of PSH and SSM ended seems to suggest that the prospects for an outcome on agriculture look rather bleak at MC13, said people familiar with the discussions. +
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