US wants S&DT for its non-compliance on export competition pillar

by D. Ravi Kanth

GENEVA: The developed countries led by the United States have demanded special and differential treatment (S&DT) for themselves so as to not comply with the commitments in the export competition pillar based on the Doha agriculture mandates.

They, however, remain opposed to providing S&DT to the developing and poorest countries on several other issues of the Doha Round, trade envoys told the South-North Development Monitor (SUNS).

“This is hypocrisy of the worst kind in which the US wants special and differential treatment for not addressing the disciplines on export credits, food aid and state trading enterprises in the Doha agriculture package but [is] not prepared to extend the same treatment for the developing and poorest countries on the core issues,” said a trade envoy from a developing country.

“The US has steadfastly opposed the permanent solution for public stockholding programmes for food security, special safeguard mechanism, and a waiver from commitments for patent protection for pharmaceutical products for the poorest countries,” the envoy said.

At a meeting of select trade envoys from over 30 countries on 16 October, the chair of the Doha Round agriculture negotiations, Ambassador Vangelis Vitalis, posed three questions: (i) where is the problem in Rev.4 (revised draft modalities of December 2008), (ii) what are the specific concerns of the members, and (iii) how do they propose to address them.

Many members, particularly developing countries, welcomed the chair’s three questions and said categorically that they are ready to work on the basis of the 2008 revised draft modalities, according to the participants present at the meeting.

Also, trade envoys welcomed the elimination of export subsidies. However, Switzerland pressed for a longer period for phasing out its export subsidies.

But the US trade envoy Ambassador Michael Punke raised a flag on several issues in the export competition pillar based on the 2005 Hong Kong Ministerial Declaration and the 2008 revised draft modalities. He stated unambiguously that Washington will not be in a position to accept several major disciplines on export credits, food aid and state trading enterprises, according to trade envoys present at the meeting.

The US demanded “safe harbour” protection for its export credits from the disciplines of the WTO Agreement on Subsidies and Countervailing Measures (SCM) while complying with the current Agreement on Agriculture (AoA) for export credits. The US also dismissed binding commitments for food aid while raising concerns even in the area of state trading enterprises.

The US said categorically that export credit guarantees with repayment periods of 180 days and below as mandated in the Hong Kong Ministerial Declaration and the Rev.4 text are not acceptable to it since the US law allows a two-year repayment period.

The US also made it clear that the disciplines on food aid in Rev.4 are not acceptable to Washington. The US said it could agree only with best practices for food aid. The US said that it would have a problem even in the disciplines on state trading enterprises on the issue of government funding provision, according to a South American participant.

Although the European Union said it is ready to work on the basis of Rev.4, it also signalled its willingness to settle for any outcomes based on the consensus among members. Effectively, the EU indicated that it can turn a blind eye in case the disciplines on export credits, food aid and state trading enterprises are sufficiently weakened, said an envoy from a South American country.

S&DT for developing countries

While the US adopted a unilateral position on export credits, food aid and state trading enterprises, the other developed countries, particularly Australia and the EU, targeted the developing countries by calling for the elimination of special and differential treatment for developing countries under Article 9.4 of the Agreement on Agriculture, according to participants present at the meeting.

The US, however, maintained that it is not against S&DT flexibilities for developing countries, emphasizing that Washington can agree to a longer phase-out period for developing countries but that the end-point has to be the same for all members.

The strongest attack on the double standards and sheer hypocrisy of the positions adopted by the developed countries came from India.

The Indian envoy Ambassador Anjali Prasad dismissed the Australian demand on the ground that the Hong Kong Ministerial Declaration of 2005 has clearly stipulated that “developing country Members will continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture for five years  after  the end date for the elimination of  all  forms  of export subsidies.”

Furthermore, the Rev.4 text has stated that developing countries can “continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture until the end of 2021, i.e., five years after the end date for elimination of all forms of export subsidies [2013 for industrialized countries and 2016 for developing countries],” India argued.

Several developing countries supported India by saying that they will adhere to the Hong Kong Ministerial Declaration and the Rev.4 text to eliminate export subsidies five years after the industrialized countries do away with their subsidies, said a participant familiar with the developments.

In sharp contrast to its demand for “safe harbour” treatment for export credits from the disciplines of the SCM Agreement, the US vehemently opposed India’s demand for insulating public stockholding programmes for food security from the SCM Agreement disciplines.

The US’ demands in the export competition pillar and its refusal to address disciplines in the domestic support pillar are tantamount to ensuring that the inequities in the Agreement on Agriculture based on the Uruguay Round continue in perpetuity, said an African trade envoy.

Even as the US mounts unprecedented pressure on members in order to secure substantial flexibilities in finalizing the disciplines on export credits, food aid and state trading enterprises, it is ready to pound the developing countries by vehemently opposing the permanent solution for public stockholding programmes for food security and special safeguard mechanism. The US is also forcing the least developed countries to run in circles over their demand for extending the waiver on TRIPS Agreement commitments until they graduate to developing-country status, the envoy added.

In short, the coming weeks will indicate whether the US can manage to secure the best concessions and treatment while a large majority of countries are not only denied the much-promised “development” dividends of the Doha Round but are asked to bury the 14-year-old Round.

At the same time, the US continues “cherry-picking” which of the Uruguay Round commitments and mandates for further work it will pursue and which it will ignore – the latest example being its unwillingness to continue negotiations on harmonizing rules of origin (mandated to be taken up and completed by end-2008) or continue with the process of agriculture reform to eliminate all agricultural subsidies. (SUNS8118)                                   

Third World Economics, Issue No. 601/602, 16 September -15 October 2015, pp6-7