TWN Info Service on WTO and Trade Issues (Feb10/10)
17 February 2010
Third World Network

G33 takes offensive in WTO battle on SSM
Published in SUNS #6862 dated 12 February 2010

Geneva, 11 Feb (Shefali Sharma) -- The G33 tabled a paper at the World Trade Organization (WTO) on January 28 on the Special Safeguard Mechanism (SSM) that brings the central issues of food security, livelihoods and rural development back to the negotiating table of a Round that is supposed to be geared towards development.

These concerns have been brought "back" because the original G33 concepts for the SSM to be "special" (because existing WTO safeguards do not adequately address price declines and import surges), effective and "easy to use" are not operationalised in the current negotiating draft for agriculture, i. e. the draft of the Chair of the agriculture negotiations of December 2008, called the "December text".

Since May 2008, the text on SSM has been the subject of controversy and opponents of the SSM have also proposed new and increasing conditions on how, when and for how long developing countries can use the SSM.

The price-based SSM has barely been discussed; while much of the emphasis has been on volume "triggers" that would activate the SSM and on measures called "remedies" that developing countries could take to counteract import surges that threaten farm livelihoods and local food production.

The G33 paper entitled "Refocusing Discussions on the Special Safeguard Mechanism: Outstanding Issues and Concerns on its Design and Structure" brings the focus back to the real purpose and necessity of such a mechanism for developing countries (see SUNS #6856 dated 4 February 2010).

The G33 is a group of 46 countries characterized by large agrarian populations and food security concerns, and that take a defensive position in the WTO's agriculture negotiations.

For months now, agriculture-exporting countries (both developed and developing) have been demanding that the G33 table reasons and evidence of the need for an SSM that is not as circumscribed as the one proposed in the December text
(including some of the text that is in brackets).

The exporters are seeking assurance that their own exports under "normal" conditions will not be impeded. In meetings, this has been referred to as "normal trade flows," although exporting countries have yet to clarify whether normal trade refers to their own average exports or whether they mean "normal" global agriculture trade flows.

However, it is widely acknowledged by agriculture experts that global agriculture markets and trade are complex and far from "normal". They are characterized by price volatility, high incidence of import surges, oligopolistic behaviour, imperfect information and supply chains - all leading to widespread market distortions.

At a minimum, an effective SSM, in the absence of predictability of prices and volumes and any significant change in dumping practices of developed countries, would be a tool to protect developing countries where the majority of the population depends on farming as a way of life.

Food security, special and differential treatment towards developing countries and "correcting... distortions in world agricultural markets" were some of the key principles of the WTO's Agreement on Agriculture (AoA). And Article 20 of the AoA was meant to review the progress Members were making in reducing trade distortions and ensuring that food security was not undermined.

But after eight years of negotiating the Doha Round, and after a global food crisis and a financial crisis in recent years, the WTO Members once again find themselves with an agriculture draft that allows developed countries with massive domestic support programmes to "shift boxes", i. e. adjust their trade-distorting programmes and shift them to a category of support called the "Green Box" so that spending can continue with hardly any restraint or disciplines.

In fact, just a day after the G33 tabled their SSM paper, news broke that the European Union (EU) is increasing its subsidized sugar exports by an additional 500,000 tonnes. According to news reports, this would be 576,500 tonnes more than what the EU is allowed to do under its WTO commitments. (See SUNS #6855 dated 3 February 2010.)

This is following from the expansion of the EU's dairy quota in recent years that has not only dumped dairy on the world market, but forced small dairy producers in the EU out of business when there was oversupply and global prices went down.

Meanwhile, the US continues to defy WTO judgments on its subsidized cotton exports. And US President Barack Obama faces a tough Congressional fight in making any changes to the 2008 Farm Bill that actually increased US domestic agriculture spending for its agri-lobbies.

According to Senator Blanche Lincoln, a Democrat from Arkansas, who now heads the Senate Agriculture Committee, "The Farm Bill is a contract with our famers that they depend on to make business decisions. Changing the rules in the middle of the game would be detrimental to their operations and would cost us even more jobs in rural America."

The Doha Ministerial Declaration's Paragraph 13 formally brings G33 concerns into the negotiations "to effectively take into account [developing countries'] development needs, including food security, livelihood security and rural development." Yet, the notion of an effective and simple SSM and why the G33 are demanding it is being questioned.

The G33 have responded by tabling their "political" paper which is the first of a series of several papers they are tabling on the SSM. Two other papers on "seasonality" (the use of the SSM on "seasonal" products) and "cross check" were also circulated to Members on 5 February. (See SUNS #6861 dated 11 February 2010.)

The cross-check paper challenges the idea proposed in the December text that the volume related SSM can only be used if the price is also declining and conversely that a price related SSM can only be used if there is also evidence of a volume increase. The G33 has asked that the conditionality of a "cross check" be eliminated in the negotiating draft.

The seasonality paper discusses the notion of "seasonality" and whether a shorter time limit for an SSM can be imposed on so-called "seasonal" products given that the Northern and Southern hemispheres have opposite seasons and some countries produce certain products all year; while the same products can be considered seasonal in a specific country.

A G33 paper on the price-based SSM is to be expected this week in time for the informal agriculture session on Friday, 12 February. On 11 February, a meeting was planned to be held at the New Zealand Mission of some G33 Members, some developing and developed country exporters and the agriculture negotiations Chair, Ambassador David Walker of New Zealand.

A few more G33 papers are expected before the end of February and in time for the next two-week agriculture negotiating session on March 1-12.

The exporting countries have not made any formal remarks on the "Refocusing" paper, but criticism from some exporting country officials has been reported. It is expected that some discussion on this paper as well as the two technical papers will take place this week.

From the exporters' side thus far, Australia has presented a modeling exercise that makes the case for the December text; while Uruguay, Brazil and the US tabled short papers in the week of December 7.

Meanwhile, the South Centre, a Geneva-based think tank that supports developing country governments, has published a series of policy briefs and analytical notes on the SSM.

These papers cover various aspects of the SSM, including the incidence of import surges, trends in actual price declines and volume surges, an assessment of the proposed price-based SSM, why the volume-based triggers of the December text would be inadequate in dealing with actual import surges and a comparison of the Special Safeguard Provision (SSG) primarily used by developed countries with the proposed SSM.

One G33 official said that the SSM is meant to be used by many different countries with very different conditions. The official said, "We cannot just limit our debate to specific products and specific countries. It is an instrument meant for all developing countries." +