Info Service on WTO and Trade Issues (Apr13/04)
Substantive discussions to begin on G-33 proposal
Geneva, 3 Apr (Kanaga Raja) - Following up on nine technical meetings (from late February to mid-March) relating to the G-33 proposal on public stockholding for food security, Members are now willing to take the process to the next level and start discussing the substance of the proposal itself.
This was the assessment of the Chair of the Special Session of the Agriculture Committee, Ambassador John Adank of New Zealand, at an informal open-ended meeting late last week.
At the last informal meeting in mid-February, the Chair had announced a series of "information-sharing" meetings at the technical level on the G-33 proposal, the purpose of which was not to negotiate at this stage, but to improve Members' understanding of practices and policies that are currently in place.
This series of meetings was to be purely to share information, without affecting Members' negotiating positions or their rights and obligations in the WTO, the Chair had added (see SUNS #7528 dated 19 February 2013.)
In his opening statement at the informal meeting on 27 March, Ambassador Adank said that the purpose of the informal meeting was to update Members about the recent consultations on the G-33 proposal, and to allow delegations an opportunity to exchange further views on this proposal or any other issues.
Before commencing discussions on the G-33 proposal, the Chair also provided an update of the other issues under consideration in the Committee.
First, on the G-20 proposal regarding an understanding on TRQ (tariff rate quota) administration, the Chair said that the consultations that he has held to date "have highlighted that Members continue to see this as a useful one to explore for possible decision in Bali [venue of ninth ministerial conference in early December] even though there have been some concerns or sensitivities that have been raised that I don't think we're in a position to resolve immediately."
"But we shall need to return to that proposal in due course," he added.
Second, regarding the request for studies on the export competition pillar as well as on export restrictions, the Chair informed the membership that the Secretariat has finalised its studies on export competition and export restrictions, which were circulated to Members on 21 March.
Turing to the G-33 proposal, Ambassador Adank presented a detailed report on the work that has taken place in this area since Members last met.
Recalling that on 15 February he had launched the technical process related to the G-33 proposal and had asked Jonas Skei of Norway to lead this process, the Chair said that his report today was based on the report he had received from Mr Skei in his capacity as technical facilitator.
(See SUNS #7525 dated 14 February 2013 for details of the G-33 proposal).
Ambassador Adank said that based on the report from Mr Skei, his understanding is that the technical process was successful in delivering active participation and engagement by Members and for the constructive atmosphere in which the meetings took place.
Summarising the factual details, the Chair said that the technical process lasted for almost four weeks - from 20 February to 15 March - during which nine technical meetings took place. It was based on the replies received to the questionnaire on public stockholding for food security purposes and food aid programmes that he distributed on 20 December 2012.
The Chair further said that during this process, 28 Members replied to the questionnaire and eight sets of written questions were circulated to Members. Among those questions were generic ones addressed to all, and specific ones addressed to individual Members.
Specific questions were addressed to 15 Members in total, and these were, in alphabetical order, questions to Australia, Brazil, China, the EU (European Union), India, Indonesia, Israel, Japan, Korea, Norway, Pakistan, the Philippines, Singapore, Switzerland, and Saudi Arabia.
According to the Chair, written replies were provided by the EU, Israel, Norway, Singapore and Switzerland. Six Members - Pakistan, India, China, Indonesia, Brazil and the Philippines - made a presentation of their public stockholding and/or food aid policies.
In addition to this, the Chair said that several Members have informed the Secretariat that they are still in the process of preparing their replies to the questionnaire.
He noted that in the last session of the technical process that was held on 15 March, "while it was felt that some more technical work might be necessary, Members showed a willingness to move on and start discussing the substance, meaning the substantive proposal itself."
He further noted that in its statement that day, the G-33 highlighted the need for further technical guidance from the Committee on Agriculture in Special Session should Members wish to continue with the technical process.
Commenting on the G-33 proposal itself, arising from the discussions in the technical process and in some subsequent informal consultations that built on those discussions, Ambassador Adank said that it was generally felt by the proponents of the proposal that if policy space has been reduced by increasing market prices and therefore higher administered prices, as a result the AMS (Aggregate Measurement of Support) limit is considered to be more constraining now than it was when the Uruguay Round was concluded.
However, added the Chair, the proponents find themselves in different situations regarding whether the risk of breaking their bindings is imminent or longer-term.
"Proponents consider that public stockholding for food security is the most suitable policy instrument at their disposal to address the food security issue given their current level of economic development. It was therefore felt that the current rules prevent them from adequately taking care of the food security of their populations."
According to the Chair, the main limitation, they report, stems from the AMS calculation methodology, (which) in their view, does not adequately reflect the economic value of subsidies. The AMS constraint steps in for programmes under which public stocks are acquired at administered prices, he added.
He noted that there was quite a lengthy discussion in the technical process of this, with proponents noting that they felt that administered prices were necessary for the following reasons: firstly, to guarantee that the government would be able to buy when competing with the private sector; secondly, to stimulate production in order to guarantee adequate availability of food; third, to ensure adequate remuneration for some segments of farmers; and/or fourthly, to shield farmers from effects of price volatility.
It was generally considered by the proponents that when helping farmers, for the above-mentioned reasons, the final beneficiaries of these policies are the consumers, said the Chair, adding that this policy tool is seen to allow them to address two elements of food security, that are availability of and access to food.
"Therefore, proponents said they considered it essential to be able to use policies that contain at least some market-price support characteristics in order to achieve food security for both producers and consumers," said the Chair, in concluding his summary of the main points that came from the proponents' presentations.
But based on the information provided and the presentations made, Ambassador Adank said that there were also several questions and concerns raised by other Members during the various meetings.
He said that first, concerns were raised about the lack of in-built policy constraints and of adequate targeting of some programmes to limit the potential distortiveness of the measure. It was notably felt that in some cases, procurement would be allowed to continue even when stocks were enough to achieve the stated policy objectives. In addition, in some cases, the procurement does not seem to benefit only low-income and resource-poor farmers, but also large producers.
Second, while in certain cases the procurement was constrained by factors such as lack of adequate quantity, lack of sufficient storage, or producers' unwillingness to sell, it was questioned whether these de facto constraints could justify the lack of de jure constraints.
Third, said the Chair, it was also questioned whether the existing rules would allow for reaching current objectives by among others optimising the use of AMS through better targeting. It was also enquired whether the objectives could be reached by market forces, and if not, what factors were preventing market forces doing their jobs.
Members were also interested in hearing about what future plans proponents had for these policies, and potential reforms in this area. One of the main questions was where the policies were evolving in a direction where the policy space was only of a temporary concern.
Another related issue was whether the current and/or future disciplines actually encourage this policy direction, said the Chair.
And finally, the last, but by no means the least, question raised was about the systemic impact of loosening the Agreement on Agriculture disciplines in general and the Green Box disciplines in particular, the Chair said.
Ambassador Adank noted that at the end of the technical process, Members did not close the door for further technical work while showing their willingness to take the process to the next level.
Building on the knowledge acquired from the technical meetings, the Chair reported that he had held some informal consultations over the last ten days with various groupings of Members to seek further feedback from them on the proposal itself.
As this implied some matching "of our new knowledge about the existing policies with different elements of the proposal and had raised therefore both technical and political questions, I considered that these discussions would be most efficiently handled through an integrated Ambassador plus technical expert process."
He said that "there is a willingness to engage on the proposal to explore where convergence may be found. And I thank delegations for their constructive participation and encourage them to continue in this spirit. That will be necessary because it is clear we're not yet close to any agreement. In fact, the substantive discussion of the proposal has only just begun."
The Chair said his intention is to continue these consultations in different formats, seeking to identify areas where some convergence might be found, and to seek to build incrementally out from there.
While Ambassador Adank said he is not excluding further technical work at this stage, "I consider we've reached the stage where involvement at the Ambassadorial level is essential and important in determining the way forward."
According to trade officials, while all Members support the need for stockholding to improve food security, they differ over the means to achieve this.
The G-33 proposal would give developing countries a relatively free hand, with the group underlining that the present WTO disciplines will become a constraint on their ability to use these programmes.
According to trade officials, other Members (Australia, Canada, Chile, New Zealand, the US and Paraguay) expressed concern that without disciplines, some ways of implementing the programmes could distort markets - inflating the prices that farmers receive and the quantities they produce, and ultimately, depressing world prices.
They also want to avoid changing the way WTO agricultural trade rules are constructed, saying that this would happen if market-distorting policies (are) in the Green Box - which has no limits and is supposed to distort trade by no more than a minimal amount - instead of the Amber Box, which has limits and reduction commitments.
They therefore want to discuss ways of disciplining market intervention to avoid distortion and ensure that the programmes are really targeted at poor farmers and consumers, said trade officials.
According to trade officials, one Member (the EU) said that it is "unable to support the G-33 proposal as it stands".
According to trade officials, the informal meeting also looked briefly at several other issues, which are expected to be taken up for discussion later. These include a proposal from the G-20 on TRQ administration, from the G-20 and Cairns Group (but not yet submitted) on eliminating export subsidies and other aspects of export competition, and from the G-10 on tightening disciplines on export restrictions.
In reference to Members agreeing at the 2005 Hong Kong Ministerial Conference that export subsidies should be eliminated in 2013 as part of a Doha Round package, the G-20 and Cairns Group said that date has arrived even though the Doha Round has not been completed.
The EU said that the entire export competition package cannot be separated from the rest of the agriculture negotiations and other subjects in the Doha Round, and is therefore not a candidate for early agreement in Bali.
According to trade officials, the US agreed that it is too complex to be settled by December.
Japan reiterated its reservations over the TRQ administration proposal, which it said is part of a balance with other market access provisions in the agriculture negotiations. It asked whether special treatment for developing countries would leave Japan as the main target of the proposal.
According to trade officials, Brazil said that TRQ administration is about fulfilling market access commitments from the Uruguay Round - for example, quotas that are under-used even when domestic prices are higher than world prices - and should not be confused with new market access being negotiated under the Doha Round.
In concluding the informal meeting, Ambassador Adank said: "I think we've actually had a fairly free and frank exchange of views on a number of topics that make up our work, starting with the G-33 proposal where I have outlined how I plan to take the work forward in that area. But we've also touched on a number of other areas just now."
"I think a number of Members came back to the TRQ proposal, and again we've had, I think, a quite useful frank exchange of views on that proposal. As I said at the outset, we're going to have to come back to that proposal at an appropriate time," he said, adding that he will be consulting Members in due course about coming back to that proposal.
"I think it's fair to say that everyone is aware that there are various sensitivities associated with that proposal and we have to, I think, determine how we can work through and address any concerns that are raised in that regard," the Chair said.