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TWN Info Service on WTO and Trade Issues (Jun15/04)
4 June 2015
Third World Network  

US call to drop SSM rebuffed by South envoys
Published in SUNS #8031 dated 1 June 2015

Geneva, 29 May (D. Ravi Kanth) -- Many trade envoys from the developing countries rebuffed on 28 May the United States demand that the special safeguard mechanism (SSM) must be dropped due to the lowered level of ambition in market access for agriculture products for concluding the Doha Development Agenda (DDA) negotiations by the end of this year, several trade envoys told SUNS.
 
At a "green room" meeting of select trade envoys convened by the World Trade Organization Director-General Roberto Azevedo to discuss the special safeguard mechanism (SSM) for developing countries in Agriculture, the US stood completely isolated on its call that the SSM should not be pursued in the post-Bali work programme to conclude the Doha negotiations at the tenth ministerial conference in Nairobi, Kenya, in December this year.
 
A large majority of developing countries have consistently demanded a credible and simple SSM for curbing the unforeseen surges in the import of agriculture products from heavily subsidized countries in the North.
 
But the US, which is one of the world's largest subsidisers as well as a leading exporter of farm products, struck a hardline stance, saying the SSM is not going to "fly" because of the proposed low level of ambition in the market access for agriculture products.
 
The SSM is part of the market access package and since the market access is going to be re-calibrated, then, there is no need for such a SSM-type flexibility, the US trade envoy Ambassador Michael Punke maintained at the meeting, according to trade envoys present at the meeting.
 
However, a large majority of trade envoys who took part in the "green room" meeting upbraided the US for its stance, saying that the SSM is among the "developmental" imperatives of the Doha Development Agenda (DDA) negotiations for developing countries since 2001.
 
Indonesia, India, China, Turkey, Barbados on behalf of the Africa, Caribbean and Pacific (ACP) group, Lesotho on behalf of the African Group, and several other trade envoys from developing countries challenged the US on its intransigent position to reject the SSM without even entering into any hard negotiations, a trade envoy said.
 
India corrected the DG when he tried to sum up the meeting by saying that "some" members have reservations on the need for SSM. "Except for one member, all other members are ready to negotiate the SSM," India told the DG.
 
Indonesia, which is the coordinator for the 47-member G-33 developing country coalition, told the DG that the SSM is not an issue for one or two members. Indonesia's ambassador Iman Pambagyo made a detailed presentation about how the SSM evolved and the progress made in drawing-up the instrument over the last 14 years. He said it is unsustainable to link SSM to the market access package - as suggested by the US trade envoy during the meeting - saying that it has a "standalone" status.
 
The SSM, said Ambassador Pambagyo, ought to be a "simple, operable, and effective safeguard mechanism" for all developing countries to implement in the face of volatile world prices and supply of agriculture products due to increased climate change-induced disturbances and persistently high subsidization of agriculture in both domestic and export subsidies. He said small and subsistence farmers in developing countries need the SSM to respond to import surges and price declines.
 
The G-33, said Ambassador Pambagyo, had proposed both price and volume triggers to deal appropriately with situations where low-priced, undervalued, and/or subsidized exports cause havoc in the developing countries. The G-33 called for price and volume triggers based on "most recent or current market realities". Indonesia suggested that a three-year rolling average must be the basis for replacing "the 3-decade-old fixed reference price of 1986-1998."
 
The G-33 proposed a price trigger involving a 10% drop in the price of agriculture products and a volume trigger of an increase in imports to the tune of 110%, 115%, 135% and above.
 
Indonesia dismissed suggestions that the SSM can be adopted through a modified special safeguard, saying that developing countries will need a simple and effective instrument and policy space.
 
Ambassador Pambagyo assured that the SSM would guarantee "predictability, coverage, and sunset provisions" in the face of arguments advanced by Australia and other industrialized countries that such a mechanism will undermine market access because of lack of predictability.
 
Indonesia also dismissed the arguments that the SSM will lead to an increase in tariffs beyond the Uruguay Round ceiling.
 
Ambassador Pambagyo said it should be possible to apply safeguards exceeding existing bindings especially for tariffs that are very sensitive and with no tariff-overhang. The SSM measures will be consistent with the formula and the required conditions for remedies. The volume-based safeguards may be maintained for a period of 12 months from the initial invocation of the measure.
 
Ambassador Pambagyo said there is not "one reality" as suggested by an industrialized country but "several" realities in the developing countries that warrant the use of SSM to protect resource-poor farmers from the vagaries of international market pressures.
 
Trade envoys from India, the Philippines, China, Turkey, Barbados, and Lesotho supported Ambassador Pambagyo, arguing that the Round cannot be concluded without finalizing the SSM. The developing countries warned that attempts to deny the SSM could torpedo the DDA negotiations, said people familiar with the meeting.
 
Argentina, Pakistan, and Mexico cautiously welcomed the need for SSM while Australia, New Zealand, the European Union, and Japan among others said while they have a problem with the demand for SSM, they are willing to discuss options from the G-33 group.
 
Meanwhile, Brazil's agriculture minister Mrs Katia Abreu told reporters during a media briefing at the Brazilian mission here on Thursday that there are differing interests among countries on SSM, emphasizing the need for avoiding "hardline" positions on SSM.
 
In a separate development, the WTO DG held a meeting with seven major industrialized and developing countries on May 27 to discuss the outstanding issues in the export competition pillar of the Doha agriculture negotiations. There are four issues such as the elimination of export subsidies, the phasing out of export credits, the termination of monetization of food aid, and the disciplining of state-trading enterprises (STEs).
 
The EU, which had committed to eliminate export subsidies by 2013, maintained at the DG's meeting that it is ready to do more than what is required in the 2008 revised draft modalities in the export competition pillar for eliminating export subsidies provided the developing countries agree to ending special and differential treatment flexibilities in Article 9.4 of the Agreement on Agriculture.
 
"The EU stand amounted to cherry-picking and forcing developing countries to pay for something that it is required to do," said an African trade envoy.
 
India, China, and Brazil dismissed the EU's demand, saying that it is completely unacceptable because it is inconsistent with the existing Doha mandates.
 
"This demand to do away with Article 9.4 will never be accepted and it is an initial position from the EU which it knows will never be accepted," said a developing country trade envoy.
 
Trade envoys from the United States, the European Union, China, India, Brazil, Australia, and Japan took part in the meeting.
 
The US had suggested that it cannot see any landing zone in the export credits while demanding the continuation of monetization in food aid, according to people familiar with the meeting.
 
Another developed country suggested that it would have some concern about strong disciplines on the state- trading enterprises.
 
Azevedo expects to convene a meeting on the trade-distorting domestic support after the informal ministerial meeting in Paris next week on the margins of the Organization for Economic Cooperation and Development (OECD) meeting.
 
In short, attempts are being made to deny special and differential treatment as set out in Article 6.2 on domestic support and Article 9.4 on the export-related measures in agriculture.
 
Meanwhile, at the media briefing in the evening, Brazil's agriculture minister Mrs Katia Abreu made a fervent plea for arriving at a "balanced" outcome with measureable progress for reducing trade-distorting domestic subsidies and eliminating export subsidies so as to conclude the Doha Development Agenda (DDA) negotiations by the end of this year.
 
"This is a very important phase and (it is) very important to finalize a balanced outcome in all three pillars (market access, trade-distorting domestic support, and export competition of Doha agriculture package) by December 2015," Mrs Abreu told reporters after meetings with the trade envoys of the BRICS (Brazil, Russia, India, China, and South Africa), and seven major industrialized and developing countries.
 
"We are optimistic and there is a shared responsibility (for all members to make appropriate commitments)," she said, emphasizing the importance of substantial reduction commitments in domestic subsidies and export subsidization. The Brazilian minister suggested that members are open to a balanced outcome in the domestic support pillar except for the US.
 
Minister Abreu also spoke of an increase in the level of subsidies provided by India and China, maintaining that members must attempt at a "meaningful deal" to strengthen the WTO.
 
Minister Abreu concurred with her colleague Celso Amorim, who had said at the Cancun Ministerial Conference in 2003 that no deal is better than a bad deal.
 
However, she argued that an outcome at the tenth ministerial conference is essential to strengthen the WTO for revitalizing the trade body.
 
The Brazilian minister met with trade envoys from Argentina, the European Union, Japan, Australia, the United States, New Zealand, and Kenya.
 
Argentina reminded the Brazilian minister that agriculture is the key in the Doha Round. Buenos Aires said it wants strong results in the domestic support and market access because of its offensive interests in agriculture.
 
The EU said it wants balance within each pillar of the Doha agriculture package as well as balance between the three pillars of domestic support, market access, and export competition.
 
The EU's trade envoy Ambassador Angelos Pangratis said we need to bear in mind the linkage between agriculture, market access for industrial goods, and services. Brussels called for a lot of political consultations in a step-by-step process for concluding the Doha negotiations by the end of this year.
 
Japan said it is a net food importing country which has considerable food security concerns. Tokyo said it is not expecting a high level of ambition, suggesting that it is ready to adjust its high ambition in industrial goods and services in line with the outcomes in agriculture, said a trade envoy familiar with the meeting.
 
Australia called for substantial reduction commitments in trade-distorting domestic support. Australia said with low ambition, it would need an outcome that can deliver on the open markets.
 
The United States maintained that it is big exporter of farm products with strong interests in the external markets. The US said that it wants to reduce trade-distorting domestic support provided emerging economies also undertake commensurate commitments. The US argued that it is not going to secure any gains in the market access with no new market access in the emerging economies, according to participants familiar with the meeting.
 
Kenya told the Brazilian minister that Nairobi wants a successful outcome at the tenth ministerial conference with "development" as the key to the success. Kenya called for substantial reduction commitments in the trade- distorting domestic support while ensuring a permanent solution for public stockholding programs for food security. +

 


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