TWN Info Service on WTO and Trade Issues (Oct13/11)
23  October 2013
Third World Network
Agriculture: Chair reports on consultations to date on Bali elements
Published in SUNS #7677 dated 18 October 2013

Geneva, 17 Oct (Kanaga Raja) -- The Chair of the agriculture negotiations at the World Trade Organisation (WTO) last week provided a comprehensive report to the full membership on consultations on the elements under the agriculture pillar of the proposed Bali package of deliverables.

An informal open-ended meeting of the Special Session of the Committee on Agriculture on 11 October heard its Chair, Ambassador John Adank of New Zealand, reporting on the consultations that both he and Director-General Roberto Azevedo have been holding since early September, and in particular the consultations that the agriculture chair has been holding in various formats since the last Trade Negotiations Committee (TNC) meeting on 30 September.

In his report, Ambassador Adank addressed the G-33 proposal on public stockholding for food security, the G-20 proposal on export competition and the G-20 proposal on TRQ (Tariff Rate Quota) administration.

On the G-33 proposal, the Chair noted that one of the important developments (from the Room E process) was the agreement by members to explore a due restraint provision as a possible interim solution to the G-33 proposal.

He highlighted that his consultations on the G-33 proposal have been based on the eight elements identified as the components of an interim solution: 1. The nature of such a solution (whether it is to be political or legally binding); 2. Its character (whether it is to be automatic, non-automatic or hybrid); 3. Its coverage; 4. Transparency and reporting; 5. The safeguards that might be appropriate to minimize distorting effects; 6. Other terms and conditions; 7. Duration and review; and 8. Post-Bali work.

On the first element (the nature of a solution), the Chair said that during consultations, he had identified four options available for introducing a due restraint provision by Bali. These are: a Waiver, a Ministerial Decision (other than waiver), a Ministerial Declaration, and a Chairperson's statement.

"While there is no convergence for the time being on the precise legal or political form an interim solution should have, many members have recognised that by discussing in some details transparency requirements, conditionality and safeguards, members had already taken steps towards elaborating quite specific requirements on which the flexibility will be dependent."

According to the Chair, this seems to point to a more "legalistic" approach closer to a waiver or another form of Ministerial decision than the other two options he had mentioned. The final legal weight of any decision will, however, depend in the minds of many on the final conditions and safeguards and the terms in which any Decision is drafted, he added.

On the second element of character, the Chair reported that there seems to be convergence on the point that the flexibility would be subject to conditions, but once the agreed conditions (transparency, reporting and any other conditions) are fulfilled, its implementation becomes automatic.

On the third element of coverage, Ambassador Adank underlined that it has also been agreed informally by many that:

* the flexibility should be available for public stockholding programmes for food security purposes in developing countries relating to staple crops in cases where there is a clear risk of breaching AMS (aggregate measurement of support) commitments as a result of these programmes;

* the flexibility is expected to cover the breach of the AMS commitments under Art. 6 and 7 of the Agreement on Agriculture (AoA) arising from the public stockholding programmes; and

* while the purpose of the flexibility is not to provide greater flexibility for domestic food aid per se, given that the existing provisions on Domestic Food Aid are not an issue, Footnote 5-6 of Annex 2 can be seen as providing relevant context for what we have been discussing.

On the number of staple crops that might be potentially covered, members have been divided between those who would like some numerical limitations, and others who do not want any such limitations. While the suggestion to limit the coverage to "traditional" staple crops has been well received by many; the question of a numerical limitation therefore remains open.

According to the Chair, another issue raised in the discussions was the issue of "backfilling" which is the possibility of using the part of AMS that would be shielded against legal actions to increase the AMS under another programme not related to food security, and the various circumvention issues that might arise.

"It was considered by a number of members that the real constraint to this would be the duration of the interim solution, and others suggested that it may be only a theoretical rather than a practical possibility, but it may be an issue members may want to come back on."

On element four relating to transparency and reporting, Ambassador Adank said that it is fair to say that "this has been the element on which we have seen the most convergent and detailed focused discussion so far."

It is generally accepted that the use of any proposed flexibility would be subject to: up-to-date notifications; and the provision of some additional information as per a template the draft of which has been provided and discussed but which will need to be further refined.

He noted that members have already had a very extensive discussion in this area and are, in his belief, close to an agreement on these various elements. The periodicity for the regular notifications would be yearly, while some different views still remain regarding the additional information to be provided and how often it should be provided, whether ad hoc, annual, or other basis.

On element five concerning safeguards, the Chair said that discussions on safeguards have at times been rather conceptual and concentrated around issues such as: what constitutes a negative spillover effect (e. g. commercial injury, undermining the food security of other members); what conditions would be required to minimize the distorting effects (e. g. food security objective, conditions/restrictions for the release of stocks to export/domestic markets), and what might constitute a safeguard (e. g. programme design, specific measures, general rules).

"Our initial discussions seemed to proceed on the basis of an acceptance that while the flexibility would address the situation of possible breach of Articles 6 and 7 of the AoA, the SCM [Subsidies and Countervailing Measures] Agreement would apply and hence provide some safeguards against adverse effects to the interests of another member. This issue will however require some further discussion."

It has also been suggested that a member using the flexibility could be asked to provide a description of measures in place aimed at ensuring food security objectives of the programme are met and at seeking to minimise any production or trade distortive effects in order to provide further comfort to other members in relation to the granting of the flexibility.

On element six relating to other terms and conditions, the Chair reported that it has not been subject to any specific discussion probably because all issues that have emerged were better taken care of under the other seven elements.

On element seven of duration and review, regarding duration, members can be broadly divided into two groups:

* those who would like to have a clearly time-bound interim solution (for example, two years or till the next Ministerial, or some other specific date); and

* those who would like to have the interim solution in place until a permanent solution has been agreed on.

Between these two options, there is, of course, also the possibility of a time-bound duration coupled with a work programme aimed at elaborating a more durable solution but without any direct link between the duration of the interim solution and an agreement on a permanent solution.

"It has also been pointed out that the duration will also be related to the nature of the flexibility that it provides and to the post-Bali work; and some have noted that a shorter duration acts as a safeguard against some of the issues of concern to members."

Regarding the issue of a review, the Chair reported that the discussion among members in this area ranged across a number of different elements.

First, it seems to be generally accepted that the Committee on Agriculture (CoA) would be the focus for receiving notifications from members who were seeking flexibility and that this might also provide an opportunity for members to raise questions or queries with members.

Some members have said however, that while this oversight function was understood, it should not be confused with the CoA having the power to decide whether the flexibility should be dropped or continued for an individual member.

It was also noted that the experience with notifications and information submitted under the mechanism could be useful material for the work that might be carried out on seeking a more permanent solution to some of the issues raised by the G-33 proposal.

On element eight concerning post-Bali work, Ambassador Adank said that this is one of the elements where there is "no clear convergence at this stage", probably because the debates have ranged very broadly. There seems on the one hand to be an acceptance, however, that work of some sort will need to continue post-Bali to explore progress on more enduring solutions. But exactly how this work would be framed is yet to be elaborated in the discussions.

Ideas floated range from suggestions to start looking at the post-Bali work based on the elements identified by the G-33 as "problematic" within Annex 3 and Footnotes 5 and 5-6, to a number of members warning against prejudging the nature of the discussions and the outcome of the future work and advocating in favour of a more open approach to the post-Bali work, noting also here the context of the wider post-Bali work programme in agriculture and other areas.

On export competition, the Chair said that his sense is that the recent discussions have helped members to move forward to identify what could be the various elements of a possible Bali outcome in this area.

"While we can see convergence emerging around some of these elements, it is fair to say that a number of issues still remain far from agreed."

He noted that while these elements focus on export competition, a number of members have underlined that they also see these elements in the wider context of the agriculture negotiation, including domestic support and market access, and more generally in the context of the Doha round as a whole.

"This is a point that we will need to keep in mind in the coming weeks as we frame any agreed elements of agriculture for Bali."

On the reaffirmation of the Doha Development Agenda (DDA) final objective to be achieved on export competition, the Chair said that the discussions have highlighted the possibility to register the following points under this heading:

First, a clear message recalling that export subsidies in all forms are a highly trade-distorting form of support.

"And we know the particular context of agriculture in that regard, given that unlike industrial products, export subsidies within scheduled limits are permitted."

Second, an acknowledgment that export competition remains a key element, and for some members their clear priority, of the Doha round in the context of the continuation of the on-going reform process enshrined in article 20 of the Agreement on Agriculture.

Third, a reaffirmation of the final objective on export competition of the Doha Round as specified in the Hong Kong Ministerial declaration, which referred to "the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect".

Finally, there were different views expressed as to whether the revised draft modalities for agriculture (TN/AG/W/4/Rev. 4) should be referenced as remaining the basis for a final agreement in the export competition pillar - "so this is an area that we will need to explore further to see what options present themselves. I would hope that we would at least be able to convey in some way the sense that the important progress achieved in the negotiations in the past in this key area of Doha can be acknowledged."

On the recognition of the positive trend regarding the decreased use of export subsidies and possibly similar positive trends in other areas of the export competition pillar in recent years, Ambassador Adank reported that members, in this regard, drew attention to the decreased use of export subsidies subject to reduction commitments and acknowledged the fact that the reforms undertaken by some members have contributed to this positive trend.

"However, a number of members also pointed out that this should not be seen as a replacement in any way for the attainment of the objective which still eludes us and which is the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect. They have also noted that this observation on the positive trend is therefore somewhat mitigated by the regretful fact that the 2013 deadline foreseen in the Hong Kong Ministerial declaration could not be met."

Finally, several members suggested making reference to the trends and reforms in the other areas of the export competition pillar, i. e. export finance, international food aid and agricultural exporting state trading enterprises. One member noted that not all the members had undertaken reforms, and that the importance of those reforms could differ significantly from one member to the other.

"Here, I think we'll have to work further to see which trends and reforms could be identified, and how we can describe the overall context," said the Chair.

On the issue of engagement to pursue the reform process and maintain this positive trend after MC9 pending the achievement of the final objective, the Chair highlighted that this part of the discussion is considered by a large number of participants as the central part of the overall outcome on export competition for Bali.

"It is my sense that nobody would disagree with the importance of maintaining the reform process in the field of export competition given the positive climate that such actions can contribute for WTO negotiations overall and the significant negative consequences that any reversal of the trend would have on this climate."

However, said the Chair, the question of how, and for some members whether, such a general orientation could possibly translate into some type of more specific concrete engagement by members, remains the subject of different views.

The G-20 proposal for a down payment clearly remains on the table. However, a number of members have continued to register that they do not see a legal change to commitments as possible in the context of Bali.

In terms of a specific proposal for a standstill option - whether political or legal - some members consider that it would reward those members who have made less effort in the past to the detriment of those who have undergone significant reforms. Other notions were floated in these discussions, like, for example, encouragement to continue the past positive trend, and the importance of on-going exercise of restraint in the use of all forms of export subsidies.

Some members also registered the point that any kind of engagement or commitment in this area should address in a parallel manner all the areas of the export competition pillar, and not only export subsidies.

On monitoring and transparency, Ambassador Adank said that "there seems to be a willingness to consider incorporating into the Bali outcome some elements related to the enhancement of transparency and the monitoring of the policy developments by members in the area of export competition. At the same time, some members have cautioned that improvements on transparency and monitoring should not constitute a substitute for more substantive commitments."

Among the ideas raised here, there have been suggestions for: More timely notifications by members as per current notification requirements; the notion of a dedicated discussion on an annual basis, or more regularly, as agreed, by the Committee on Agriculture of developments under the export competition pillar.

Several members also proposed to establish additional notification requirements in relation to all the areas of the export competition pillar. One member suggested collecting within a specific amount of time information related to export competition to get a better sense of the current state of play in this field. Also proposed was the notion of some kind of review within two years, if new notification requirements were introduced, to evaluate what had been highlighted by these new requirements.

"One of the challenges in relation to this latter proposal would be to identify more precisely what could be the information subject to new notification requirements. This is an area that will require some more technical work among members and I understand there are technical discussions going on informally among members in this area that I will be monitoring."

On the post-Bali work programme, the Chair said that this area will need to be developed building upon the other sections which he described previously, taking into account the wider context of the WTO agriculture negotiation and more generally the context of the Doha round as a whole.

He noted that a number of members have registered the importance of export competition remaining a priority issue for the post-Bali work programme.

The general sentiment has been that while members have different views about the conditions that would be required to deliver on the DDA final objective on export competition, members should continue to work actively to secure the conditions for further concrete progress in this area as early as feasible.

"In short, some good progress has been made in identifying points of potential convergence but some important divergences remain and a lot of work remains to be done," the Chair said, adding that in some of these areas, the discussions are still quite preliminary and members will need as a priority to take those discussions forward in the immediate period ahead as they progress on the other issues (G-33 proposal and TRQ administration).

[At an informal meeting of the TNC on 14 October, Argentina had said that there had been no progress on the export competition issue, and without that Argentina would not be part of any consensus (see SUNS #7676 dated 17 October 2013.) - SUNS]

The Chair said that the TRQ administration proposal, tabled early last year, was generally welcomed as a positive element in the discussions.

"It is fair to say that on TRQ administration there are fewer issues remaining to be resolved than in the discussions on the G-33 proposal and export competition. I have continued to consult with members in various configurations regarding the remaining area of divergence."

Recalling that the proposal contains two distinct elements: transparency provisions associated with TRQ administration and an underfill mechanism, he said that in general, his sense remains that members would like to see an outcome delivered in this area for Bali.

"In my consultations I've noted that all members seem reasonably comfortable with the transparency provisions of this proposal."

At the same time, the consultations have confirmed that the S&D treatment foreseen in the TRQ underfill mechanism continues to be problematic for some members. "Although we've known for some time that this issue would need to be addressed, until recently, we've seen limited engagement on the topic."

That being said, some members have come forward with ideas or alternative approaches to S&D treatment and shared those views with other members.

Other members continue to argue that the text in the proposal for the underfill mechanism should remain unchanged and that without the specific S&D provision envisaged in the text as submitted, the proposal would not be acceptable. They consider that this proposal reflects a delicate balance and stress that changing the proposal could have unintended consequences on the Bali package overall.

"This issue still represents an important aspect of our work for Bali. I have urged members and I will continue to urge them to continue the candid conversations on the differences that persist in this area to identify what may be viable avenues to explore, and I will continue my efforts to facilitate convergence."

In wrapping up the session, Ambassador Adank said: "What remains of key priority now is to capture in a more concrete way the convergence that I have described earlier, but also not shy away from highlighting the key areas of divergence that we also have to bridge."

"Given the limited time left, I urge all of you to approach the discussions in coming days, in the next couple of weeks constructively and to recognise that we now have extremely limited time if we are to deliver agreed agriculture elements for Bali," the Chair concluded.

According to trade officials, only one delegation spoke at the meeting. The Philippines, on behalf of the G-33, broadly confirmed the assessment provided by the Chair. It also drew attention to the importance of its proposal on food security.