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TWN Info Service on WTO and Trade Issues (Mar15/06)
30 March 2015
Third World Network

 
Wide gaps at WTO on public stockholding issue
Published in SUNS #7989 dated 25 March 2015
 
Geneva, 24 Mar (Kanaga Raja) -- "Wide gaps" remain among the membership on the G-33 proposal for a permanent solution on the issue of public stockholding for food security purposes, the Chair of the agriculture negotiations has told the Special Session of the Agriculture Committee at the World Trade Organisation (WTO).
 
The Committee was holding a dedicated session on the issue of a permanent solution to public stockholding on the afternoon of 20 March. The dedicated session was preceded by an informal meeting in the morning that discussed the issues of market access and domestic support.
 
According to trade officials, the Special Session of the Agriculture Committee chaired by Ambassador John Adank of New Zealand took up in the morning of 20 March two papers, one by Paraguay and the other by Argentina, on possible new approaches to tariff reduction.
 
However, these papers as well as a series of consultations in smaller groups on market access and domestic support held by the Chair have shown that differences remain on many of the key points, in particular on the question of whether the existing Rev. 4 draft modalities text is the basis for further negotiations, trade officials added.
 
"The issues are certainly becoming much more familiar with delegations but the convergence is still the real challenge that we face here," said the Chair in wrapping up the 20 March meeting.
 
DISCUSSION ON MARKET ACCESS AND DOMESTIC SUPPORT
 
According to trade officials, reporting on his consultations among a smaller group of countries on market access, Ambassador Adank said: "While the discussions suggested some possibilities for convergence, it's clear that different views continue to exist regarding the suitability of various approaches."
 
"The concerns raised by members on certain aspects of the proposals are familiar because many of these are linked to the fact that members in the WTO have extremely diverse tariff structures. This means, of course, that the results of any formula approach will affect each Member differently. These issues were present when we were negotiating the 2008 draft modalities and they persist today," he added.
 
The Chair said that his task is to find a path to convergence and he will hold more consultations on this.
 
According to trade officials, there were two new unofficial papers from Paraguay and Argentina, both suggesting that tariff reductions in agriculture should at least partly be achieved by members exchanging requests and offers with each other instead of using the formula in the Rev. 4 text.
 
Paraguay has proposed that members' offers be based on an average tariff reduction figure that would also be subject to a minimum cut, while Argentina has proposed a request-offer approach that is not based on any targets or formulae.
 
According to trade officials, Paraguay has proposed a formula for cutting tariffs that would specify an average cut across all agricultural products - except those that have "bound" tariff ceilings below 10% or are duty-free - subject to a minimum cut.
 
Countries would be free to propose bigger or smaller cuts for individual products, provided the averages and minimums were respected. The proposed cuts would be "initial offers", and a country would then enter into two months of bargaining if other countries request, for example, steeper cuts for products that they export.
 
According to the proposal, the Least Developed Countries (LDCs), Small and Vulnerable Economies (SVEs) and countries that have joined the WTO "very" recently would not have to make any cuts.
 
According to trade officials, Paraguay has also provided some tentative figures (highlighted in square brackets): a 54% average and 20% minimum cut for developed countries; a 36% average and 15% minimum cut for developing countries in general (apart from the LDCs, SVEs and "very" recent new members); and a 30% average with a 10% minimum cut for new members except those that joined "very" recently. The cuts would be phased in over a suggested period of five years (six cuts) for developed countries, and 10 years (11 cuts) for developing countries.
 
According to trade officials, while several countries said that the proposal had helped to focus the discussions, some had reservations, saying either that it was not ambitious enough or that it was too ambitious.
 
Chinese Taipei, on behalf of the Recently Acceded Members (RAMs), said that there should be no distinction between those that joined recently and those that joined earlier on, since the membership negotiations resulted in all of them having lower bound tariff ceilings than the rest of the membership - 17% on average for these new members, compared with 40% in developed countries and close to 62% in developing countries.
 
According to trade officials, Argentina has proposed that countries request import tariff cuts from their trading partners, which could then respond with offers. The approach would be same in agriculture, non-agricultural market access (NAMA) and services.
 
Some members however rejected Argentina's proposal outright, saying that the outcome would be too unpredictable, that the negotiations would take too long, and that smaller countries with less bargaining power would be at a disadvantage.
 
According to trade officials, members also remained divided on the amount of flexibility to be allowed for all countries on tariff reductions for products that are politically sensitive, and for developing countries on "special products (SP)" and a "special safeguard mechanism (SSM)".
 
On the issue of domestic support, trade officials said that the focus has been on the concept of "overall trade-distorting domestic support" (OTDS), which comprises the Amber Box, the Blue Box and de minimis.
 
Reporting on his consultations on this issue, the Chair said that these consultations "were very useful. In short, it was seen by many to be a valuable concept in terms of its design to reduce trade distorting support, limit box- shifting, and/or level the playing field. However, the discussions also helped to uncover some important issues which attract sharply differing views. These will require further serious effort."
 
"Over the next few weeks, I intend to continue similar consultations on each key element of the Domestic Support toolbox, bearing in mind that of course they are inter-related," he said.
 
In the ensuing discussions, the European Union said that the Rev. 4 text would mean an 80% reduction in OTDS for them and a 70% cut in the Amber Box. Thanks to the reform of the Common Agricultural Policy, the EU said that it is willing to take up the challenge of the Rev. 4 text.
 
The US said that it is committed to the post-Bali work programme, and to the view that members should contribute commensurate with their positions.
 
According to trade officials, China supported the G-33, saying that the Rev. 4 text is the only negotiating document on the table.
 
Referring to some members that have said that they have difficulties with the Rev. 4 text, China said that it wants to know what these difficulties are.
 
It said that it can consider the difficulties that some members have, but it cannot negotiate the whole of the Rev. 4 text.
 
China also contested the notion of new ideas, saying that these must be consistent with the mandates, and they should not be more flexible for some while asking others to do more.
 
On market access, China said that the July 2004 framework mandate spells out a tiered formula for reducing tariffs, and there is no mandate for a request-offer approach.
 
It further said that any re-calibration should not be used to dilute the rights of some members while reducing obligations for some other members.
 
As the largest net importer, China said that it is not a demandeur. It can contribute but it has already made considerable concessions.
 
With respect to the issue of domestic support, India said that the Rev. 4 text is the basis for the negotiations and those with difficulties should say what they are.
 
Australia said that the issue boils down to two main questions: What is the US prepared to do, either if others do not "contribute" (by making their own cuts) or if others do contribute? What is China prepared to do?
 
The Cotton-4 said that the domestic support discussions will have implications for cotton.
 
According to trade officials, Brazil said that the tiered formula is the best means so far to achieve ambitious results in market access and domestic support.
 
South Africa said that it is willing to work with proposals in the Rev. 4 text.
 
On the issue of market access, India that it is constructively engaged but that should not be interpreted as supporting the simplification of tariff reduction formulas.
 
According to trade officials, India disliked the Paraguay paper, saying that it turns S&D on its head. While it accepts that the Rev. 4 text was never agreed, India pointed to the July 2004 and the Hong Kong ministerial decisions. It had heard in other contexts of ministerial decisions that have to be respected. Therefore, the tiered formula is a ministerial decision, it added.
 
It also said that the issues of SP and SSM were also in the July 2004 framework. The design may differ and that can be negotiated but the concept cannot be scrapped, it said.
 
The EU welcomed the Paraguay paper but said that it needs further discussion. It said that more elements can be further simplified.
 
Using average cuts undeniably helps to make the negotiations simpler but the EU will refrain at this stage from discussing numbers, as it needs to see the contours first to match it with NAMA, as well as the two other agriculture pillars.
 
PUBLIC STOCKHOLDING FOR FOOD SECURITY
 
Reporting on consultations held since the first dedicated session on 28 January, the Chair reminded members that trade ministers had agreed in Bali that a permanent solution to the issue should be found by the 2017 Ministerial Conference and that the membership subsequently agreed in November 2014 that the permanent solution should be pursued as a priority, with the goal of securing a deal by the end of this year.
 
According to trade officials, the Chair said that his latest consultations have shown that a "wide gap" exists between the proponents of the G-33 proposal and more sceptical members (among them the European Union, Australia, the United States, and Japan) who had expressed concerns about the G-33 initiative.
 
In particular, said the Chair, the consultations highlighted two broad concerns about the G-33 proposal:
 
* the impact on the "architecture" of the Agriculture Agreement in allowing programs based on government-guaranteed prices for farmers (market price supports) into the Green Box, which covers domestic support with little or no impact on trade, and;
 
* the "unintended consequences" of public stockholding programs on the domestic market of the country with the program, on export markets, and on the food security of other members.
 
"There is a clear need for further consultations aimed at getting deeper into the substance of a possible outcome," said the Chair, adding that "greater willingness from members on all sides is needed to make them go anywhere."
 
He also said that the ideas expressed so far by the non-proponents on how to resolve these issues have been fairly diverse and rather preliminary in nature. Some of the ideas expressed by the opponents of the G-33 proposal include finding a solution on the basis of the AMS calculation method.
 
The Chair further said that it was also suggested that it should be possible to find ways of guaranteeing fair prices for producers and feeding the poor without leading to distortions of markets. The views expressed are quite divergent and rather tentative, he said.
 
At the session, the US tabled a new proposal on "elements for discussion" on public stockholding for food security.
 
According to trade officials, the US said that its purpose was to "provide a common and basic understanding of the various facets surrounding the issue ... and assist in providing a basis for recommending a permanent solution to the issue," focusing on:
 
* reviewing the efficacy and trade effects of public stockholding for food security purposes, including the experiences of members with existing food security and public stockholding policies;
 
* reviewing public stockholding for food security policies and the WTO, including evaluating policies currently permitted by WTO rules and how existing policies are constrained by those rules;
 
* developing best practices and recommendations, including identifying practices that address food security objectives within the constraints of current WTO rules and recommending a permanent solution to the issue of public stockholding for food security.
 
According to trade officials, the US said that it was committed to moving forward on the issue but that the Agriculture Agreement already provides room for pursuing food security objectives.
 
Trade ministers had already examined the G-33 proposal and could not come to an agreement on it, thus resubmitting the same proposal without changes would seem to be a "fruitless pursuit," the US said.
 
Amongst others, the US proposal calls on Members to consider developing a set of best practices for public stockholding policies, specifically to:
 
i. identify any practices in implementing public stockholding programme that would address Members' food security objectives within the constraints of current WTO rules;
 
ii. identify those practices that achieve Members' food security objectives in the most economical, targeted, and effective manner;
 
iii. identify those practices that are not trade-distorting, do not adversely affect the food security of other Members, and avoid unintended consequences; and
 
iv. establish a comprehensive list of notification and enhanced transparency procedures.
 
According to trade officials, members of the G33 said that they would study the US proposal. They however said that the mandate given by trade ministers was to find a permanent solution to the public stockholding issue, and not to expand the discussions into a review of existing programmes, which would delay the permanent solution.
 
China said that members should be alert against the risk of expanding the scope of the discussions. The best way to move forward at this critical juncture is to focus on the discussions as mandated by Bali, it added.
 
Indonesia, on behalf of the G-33, said that it would need time to study the proposal. It said that there needs to be a clear mandate to find a permanent solution to the issue of public stockholding for food security purposes, and not to expand the discussions into a review of existing programmes.
 
If members were to go along the road (set out by the US), it would look like a lot of work will need to be done before they come up with a permanent solution, it added.
 
According to trade officials, India said that the US proposal may result in an outcome where members are being advised as to what kind of food security policies they should adopt, which is not part of the mandate. Time is running out, it said.
 
In response to Australia's remarks that since the meeting of 28 January, there hasn't been anyone from the G-33 coming around and offering to discuss the issue, India said that "it is not our responsibility to go banging on the doors of others, and asking ‘what's wrong with our proposal'".
 
It's a collaborative effort, and is not the responsibility of one side or the other to initiate the negotiations on this, it added.
 
According to trade officials, G-33 members defended the G-33 group's proposal, with India saying that the current rules allow public stockholding programmes to be classified as green box support (Annex 2, paragraph 3 of the Agriculture Agreement).
 
Several G-33 members including India and the Philippines also said that they were willing to discuss concerns about the potential spill-over of public stockholding programmes onto international markets and how these concerns could be addressed through appropriate safeguards.
 
The EU said that the "integrity" of the Green Box needed to be maintained and trade-distorting market prices support kept out of it.
 
Australia said that it could never accept price support programmes being transferred to the Green Box.
 
According to trade officials, it highlighted its concerns about one unnamed member which it said stockpiled purchased wheat for food security and had also exported more than 4 million tons in the first six months of 2014, or 20% of Australia's total annual wheat exports.
 
Japan said that it had systemic concerns regarding the G-33 proposal, particularly the unintended consequences of such programmes.
 
There was also a debate at the meeting on whether a ‘Friend of the Chair' should be appointed on this issue.
 
According to trade officials, G-33 members were of the view that it would be a good idea for the Chair to appoint a Friend of the Chair to deal specifically with this issue, while mainly developed countries including the EU were of the view that this wasn't really an issue.
 
The Chair concluded that what was seen this afternoon is some elaboration of the points that members have been making.
 
On the US submission, he said that a number of members want to look at it in more detail, adding that there are now two submissions on the table for discussion - the G-33 and US proposals. There is no monopoly on a solution to this issue, he added.
 
The Chair noted that there is a lot of debate about whether the US proposal was within the mandate or not.
 
Obviously, the mandate makes it clear that the goal is to reach agreement on a permanent solution. Exactly what that comprises of is up to members, he said.
 
It seems necessary for members to listen carefully to what each other is saying, said Ambassador Adank, adding that it is a collective responsibility for everyone to participate.
 
"We won't arrive at an agreement without that kind of engagement," he said, adding that he will continue to consult with members on this issue and how to take this forward. +

 


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