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TWN Info Service on WTO and Trade Issues (Mar15/03)
17 March 2015
Third World Network

 
WTO Members discuss Cairns Group paper on domestic support
Published in SUNS #7977 dated  9 March 2015
 
Geneva, 6 Mar (Kanaga Raja) -- A formal meeting of the regular Committee on Agriculture of the World Trade Organisation (WTO) on Wednesday, amongst others, discussed a revised paper by the Cairns Group of agricultural exporters that had compiled the latest data on domestic support by the top ten global traders of agricultural products.
 
Among the paper's findings are that in the last year reported, the average level of total support relative to value of production (VOP) was 19.3% in developed countries and 12.4% in developing countries.
 
It also found that in most (but not all) developed countries, reductions in AMS (Aggregate Measurement of Support) have been accompanied by significant increases in green box support, with green box support among these countries now accounting for an average of 14.2% of VOP in the last year reported. (See below.)
 
According to trade officials, the Cairns Group paper elicited some diverging views, with different members drawing different conclusions from the data.
 
Some members were of the view that the figures cited overlook the difference between the large amounts paid per farm in commercial agriculture, and the considerably smaller amounts paid per head to poor farmers.
 
THE CAIRNS GROUP PAPER ON DOMESTIC SUPPORT
 
The Cairns Group paper (G/AG/W/141) on trends in domestic support presents domestic support data from 2001 to 2013 for the top ten global traders of agriculture products (sum of exports and imports) -- the United States, the European Union, China, Brazil, Canada, Japan, India, the Russian Federation, Indonesia, and Australia.
 
[The Cairns Group comprises Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand, Uruguay, and Viet Nam.
 
[A footnote in the Cairns Group paper notes that Argentina does not support the paper, while Indonesia and the Philippines are still completing their domestic clearance processes in capitals.]
 
According to the Cairns Group, the data set presented in an Annex to its paper focuses on the top ten global traders of agriculture products in 2012, the most recent year for which data is available.
 
The ranking is based on total trade turnover (i. e. the sum of imports and exports) measured in United States dollars (USD).
 
According to these parameters, the top ten global traders of agriculture products in 2012 were the United States, the European Union, China, Brazil, Canada, Japan, India, the Russian Federation, Indonesia and Australia.
 
The Annex shows levels of green box support (Annex 2 of the Agreement on Agriculture - AoA), "special and differential treatment" support (Article 6.2 of the AoA), blue box support (Article 6.5 of the AoA) and amber box support
(including product specific and non-product specific support) from 2001 (the launch of the Doha Round) to 2012 for each of these Members.
 
Based on this methodology, the paper found that the United States' level of current total aggregate measurement of support (CTAMS) declined dramatically from 2001 to 2011, from $14.5 billion (7.2% of value of production - VOP) to $4.7 billion (1.2% of VOP), and then rebounded to $6.9 billion (1.7% of VOP) in 2012.
 
This was accompanied by a commensurate increase in green box support from $50.7 billion (25.3% of VOP) in 2001 to $127.4 billion (32.1% of VOP) in 2012.
 
The US did not use any blue box support during the sample period. Total support (sum of all other types including AMS that are de minimis) increased from $72.2 billion to $139.6 billion.
 
Relative to VOP, total support remained relatively stable, hovering between 34.1% and 39.7% (except for 2007).
 
The European Union's level of CTAMS also declined dramatically over the sample period (2001 to 2010) from $35.3 billion (13.5% of the value of agriculture production) to $6.5 billion (2.0% of VOP).
 
This was accompanied by a commensurate increase in green box support from $18.5 billion (7.1% of VOP) to $88.7 billion (20.8% of VOP).
 
Blue box support decreased from $21.3 billion (8.2% of VOP) to $4.1 billion (1% of VOP), while total support increased from $75.9 billion (29.1% of VOP) to $103.1 billion (24.2% of VOP).
 
According to the paper, China has a nil AMS commitment and does not have recourse to Article 6.2 (of the Agreement on Agriculture in relation to investment subsidies and agricultural input subsidies in developing countries).
 
Green box support more than doubled during the sample period from $30.6 billion to $86 billion. However, relative to VOP, levels of green box support remained fairly constant between 8.7% and 11.7%.
 
Total support increased from $30.9 billion in 2001 to $99.8 billion in 2008. Relative to VOP, total support remained relatively stable, hovering between 9.7% and 13.6%.
 
Brazil's reported level of CTAMS increased from zero in 2001 to $520 million in 2008 and then dropped back to zero by 2013. From 2001 to 2013, the ratio of CTAMS to VOP remained below 1%.
 
Green box support increased from $1.5 billion to $6.2 billion, fluctuating between roughly 1.7% and 4.8% of VOP.
 
Similarly, "special and differential treatment" support (Article 6.2) increased from $332 million to $1.1 billion, fluctuating between 0.7% and 1.6% of VOP.
 
Total support increased from $2.8 billion in 2001 to $9.7 billion in 2012. Relative to VOP, total support remained relatively stable, fluctuating between 4.5% and 9.8%.
 
The paper said that Canada's reported levels of CTAMS decreased from $1.9 billion (8.3% of VOP) in 2001 to $513 million in 2011 (1.0% of VOP), although it fluctuated up and down in the intervening years.
 
Green box support more than doubled in absolute terms from $1.1 billion to $2.7 billion, but fluctuated between 5.0% and 12% of VOP.
 
Total support increased from $3.1 billion in 2001 to $5.7 billion in 2011. Relative to VOP, total support fluctuated between 11.5% and 22.1%.
 
Japan's reported level of CTAMS decreased from $6.1 billion (7.5% of VOP) in 2001 to $3.3 billion (4.9% of VOP) in 2007, and then increased steadily to $6.4 billion in 2012 (7% of VOP).
 
Green box support followed a similar pattern, decreasing from $23.4 billion (28.7% of VOP) in 2001 to $15.1 billion (22.2% of VOP) in 2007, and then gradually rebounding to $19.9 billion in 2012 (21.5% of VOP).
 
After reaching a low of $213 million in 2009, blue box support increased sharply to $3.1 billion in 2010 (3.7% of VOP) and then fell to around $1.6 billion in each of 2011 and 2012 (1.8% of VOP).
 
Total support decreased from $30.7 billion in 2001 to $19.6 billion in 2007 and then steadily increased to $30.3 billion in 2012. However, relative to VOP, total support decreased from 37.6% in 2001 to around 32.8% in 2012.
 
According to the paper, India has a nil AMS commitment. Its levels of product-specific trade-distorting domestic support increased steadily from 2001 to 2010, with the former shifting from negative to positive in 2007.
 
"Special and differential treatment" support (Article 6.2) increased sharply from $8.3 billion (8.1% of VOP) to $31.6 billion (13.7% of VOP).
 
Green box support increased by nearly fivefold in absolute terms from $4 billion to $19.5 billion and increased from 4.2% to 8.4% of VOP.
 
Total support increased quite dramatically from $12.3 billion in 2001 to $53.2 billion in 2010. Relative to VOP, total support increased from 13.0% to 23.1%.
 
The Russian Federation's CTAMS increased from $2.9 billion in 2001 to $5.5 billion in 2009, but relative to VOP decreased from 8.8% to 6.9% of VOP.
 
Green box support displayed a similar trend increasing from $1.1 billion to $2.2 billion and generally staying between 2.4% and 3.6% of VOP.
 
Similarly, total support increased from $4.2 billion in 2001 to $7.8 billion in ]but decreased from 12.7% to 9.8% of VOP.
 
The paper noted that Indonesia has a nil AMS commitment, and that it is currently working to fill in certain gaps in its domestic support notifications relating to AMS, including providing information on its public stockholding programs.
 
Green box support increased from $241 million (1.1% of VOP) in 2001 to $3.6 billion (2.9% of VOP) in 2011.
 
Levels of "special and differential treatment" support (Article 6.2) increased from zero to $1.9 billion, ranging from zero to 2.7% of VOP, but appear to be on an upward trend.
 
Total support increased from $241 million in 2001 to $5.4 billion in 2010, from 1.1% to 4.4% of VOP.
 
According to the paper, Australia's level of CTAMS decreased from $158 million (0.7% of VOP) in 2001 to zero in 2010.
 
Over the same period, green box support increased from $722 million to $1.8 billion, ranging from 3.2% to 7.1% of VOP.
 
Total of support increased from $887 million in 2001 to $1.8 billion in 2010. Relative to VOP, total support fluctuated between 3.9% and 7.8%.
 
Summarising these trends in domestic support, the paper said that in absolute terms, the total support levels of all Members in the sample increased from 2001 to 2012, growing more rapidly in developing countries but starting from a much lower base.
 
A similar trend can be seen when looking at total support as a percentage of VOP. Total support levels relative to VOP remained relatively stable in developed countries while they increased in developing countries.
 
However, said the paper, it should be underlined that in the last year reported, the average level of total support relative to VOP was 19.3% in developed countries and 12.4% in developing countries.
 
The CTAMS has declined in most (but not all) developed countries, in some cases very significantly. This has created a considerable amount of overhang between the Final Bound Total AMS (FBTAMS) and CTAMS for some Members.
 
Among developing countries, only Brazil has a FBTAMS and CTAMS has remained low. Reported AMS levels have increased steadily in India and China, but remain below de minimis.
 
Among the three Members in the sample eligible to report certain input and investment subsidies under Article 6.2 (Brazil, India and Indonesia), this type of support seems to be emerging as an increasingly favoured policy tool.
 
Article 6.2 support has grown very rapidly, at least tripling in all cases, and also accounting for a growing proportion of VOP, said the paper.
 
Only the EU and Japan reported blue box support. In the EU's case, support levels declined significantly and now accounts for less than 1% of VOP.
 
In Japan's case, support levels declined gradually from 2001 to 2009 and then began to increase dramatically, far exceeding earlier levels in 2010, 2011 and 2012.
 
The paper said that in most (but again not all) developed countries, reductions in AMS have been accompanied by significant increases in green box support.
 
Among these countries, green box support now accounts for an average of 14.2% of VOP in the last year reported.
 
Although it started from lower levels, green box support also increased among developing countries and accounts for an average of 7% of VOP in the last year reported.
 
MEMBERS' REACTIONS TO THE PAPER
 
According to trade officials, Argentina, Indonesia, the Philippines, Bolivia, India, China and Brazil said that the paper was unbalanced, as it played down the differences in the scale of support, which remains much higher in developed countries.
 
India and China said that the support in developed countries is for large-scale commercial farming while in their countries it is for millions of poor farmers.
 
According to trade officials, India recalculated the compiled numbers to show that support figures per person produce a different picture.
 
These range from hundreds of dollars per person per year in the developing countries, to thousands or tens of thousands each in the developed countries, it said.
 
The US presented some graphs showing the different trends over the years in the 10 countries, with increases in distorting subsidies in the developing countries.
 
However, Brazil said that the US should have presented the graphs to the same scale in order to show the difference between the amounts of support given by richer and poorer countries.
 
Paraguay, Mexico and Uruguay said that the amount of trade distortion that was created is a concern, irrespective of where that distortion comes from.
 
Australia said India's per capita figures were interesting, but it remains concerned about the impact of support in India, which it said overtook Australia as the seventh largest trader.
 
According to trade officials, the EU said that the data reflect the reforms it has undertaken to move support out of the distorting Amber Box to the minimally distorting Green Box.
 
Argentina, however, pointed out that the scale of Green Box subsidies in developed countries is so large now that it must be causing distortion.
 
The EU and New Zealand said that some notifications are not up-to-date and that keeping up-to-date data is necessary for transparency.
 
In response to comments that the paper is either simplistic or unbalanced, Canada, which presented the Cairns Group paper, and New Zealand, said that the paper is designed to allow countries to draw their own conclusions from the data.
 
Q&A ON MEMBERS' POLICIES
 
According to trade officials, the Committee also undertook its more routine work of monitoring countries' policies through questions and answers.
 
Among the members to whom questions were posed were Brazil, on its domestic support; Canada, on its policies for cheese and other dairy products; China, on domestic support for cotton; Costa Rica, on complying with its support limit for rice; India, on its policies for cotton and sugar and its rice and cereals exports; Pakistan, on its wheat export subsidies; Russia, on its agricultural support and grain exports; Thailand, on its sugar and rice policies; Turkey, on its wheat flour sales; the US, on its export guarantees; and Switzerland's export subsidies.
 
Meanwhile, with respect to the implementation of the Bali outcomes, the Chair of the Agriculture Committee, Ms Miriam Beatriz Chaves of Argentina, reminded members about the recommended use of an additional column on quota fill rates in tariff quota notifications (under tariff quota administration). +

 


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