TWN Info Service on WTO and Trade Issues (Jun15/20)
29 June 2015
Third World Network
 
Azevedo ideas in agriculture surface as Australia-Canada non-paper
Published in SUNS #8048 dated 24 June 2015
 
Geneva, 23 Jun (D. Ravi Kanth) -- A proposal floated by the World Trade Organization Director-General Roberto Azevedo during his meetings with seven major developed and developing countries to bring about convergence on the domestic support pillar of the Doha agriculture package has now surfaced in a non-paper issued by Australia and Canada, several trade envoys told the SUNS.
 
During his meetings with the trade envoys of the United States, the European Union, China, India, Australia, and Japan on June 11 and 15, Azevedo made a strong pitch for a common concept that all the seven countries agree for a cut in the overall trade-distorting domestic support (OTDS), said trade envoys familiar with the development.
 
Regardless of the existing Doha ministerial mandates on domestic support, Azevedo pressed hard that China and India accept his proposal for undertaking commitments to reduce OTDS. The DG did not suggest any figures for the cuts in the OTDS.
 
China and India spurned the Azevedo pitch, fiercely opposing his proposal, saying they will never agree to any change of the OTDS concept as mandated in the Doha trade negotiations such as the July 2004 Framework Agreement, the 2005 Hong Kong Ministerial Declaration, and the 2008 revised draft modalities, said a trade envoy familiar with the development.
 
But the US, the EU, Australia, and Japan supported the DG's proposal for a cut in the OTDS by all. Brazil, which is the coordinator for the G-20 developing country farm coalition, remained silent at the two meetings of the seven countries.
 
The DG's proposal on OTDS is now echoed in a non-paper issued by Australia and Canada on June 18, said a trade official.
 
Australia and Canada argued that it is "feasible" to find a landing zone on the overall trade-distorting domestic support (OTDS) by reducing the space between the current levels of expenditure and the existing limits in the World Trade Organization's Agreement on Agriculture (AoA) of total trade-distorting support of the United States, the European Union, China, India, and Brazil.
 
The AoA was concluded during the previous Uruguay Round of trade negotiations, particularly after the Blair House Agreement between the United States and the EU in November 1992. The compromises struck between the US and the EU in the AoA caused "inequities" in the global farm trade. The AoA, however, committed the agriculture subsiders, mostly in the developed countries, to continuing the reform process for gradually reducing/ eliminating these subsidies.
 
The Doha Development Agenda trade negotiations were launched in 2001 for creating a "level-playing field" in the global farm trade through substantial reduction commitments in trade-distorting domestic support. But in an attempt to protect one major developed country (the US) which is not in a position to undertake substantial reduction commitments in domestic support because of its farm law, the DG is making a Herculean effort to change the templates in such a way that that country is left off the hook in the Doha Round, several trade envoys maintained.
 
To bolster the DG's attempts to arrive at a framework on the domestic support, Australia and Canada have circulated a non-paper, trade envoys said.
 
"At a technical level," according to Australia and Canada, the space between existing entitlements of major members in the AoA and their recent reported levels of total trade distorting support can be reduced to find a landing zone on OTDS "that accommodates Members' existing policies over the short to medium term whilst improving disciplines on domestic support over the Uruguay Round."
 
The TDS (trade-distorting support), according to Australia and Canada, refers to the sum of Members' current total AMS (Aggregate Measurement of Support) and de minimis support.
 
The TDS, however, doesn't cover the reduction commitments in both old and new blue box support that are addressed in the July 2004 Framework Agreement, the 2005 Hong Kong Ministerial Declaration, and the 2008 revised draft modalities.
 
Australia and Canada argued that figure for TDS is "intended to provide an estimate of the hypothetical maximum amount of trade distorting support that a Member could provide in a given year."
 
"In 2012, the gap between the United States AoA limit on total trade-distorting domestic and the reported current total trade-distorting support is USD46 billion," according to the non-paper. "This means that the United States could increase its trade-distorting support under the Farm Bill [of 2014] by over four times what was reported in 2012 while still respecting the limit," the paper maintained.
 
The US had undertaken commitments in the AMS, blue box, and de minimis during the previous Uruguay Round. Under the 2008 revised draft modalities, the US is required to reduce its OTDS to USD14.5 billion.
 
In their non-paper, Australia and Canada did not refer to the DMD (Doha Ministerial Declaration) of 2001, the July 2004 Framework Agreement, the 2005 Hong Kong Ministerial Declaration, and the 2008 revised draft modalities.
 
On China, the non-paper stated, "the gap between China's limit on total trade-distorting domestic support and reported current total trade-distorting support is USD142 billion." Therefore, "China could increase its reported current trade-distorting support by over eight times while still respecting its WTO accession commitments."
 
China did not undertake any AMS or blue box commitments because it joined the WTO only in 2001. In its accession commitments, China had agreed for only de minimis support of 8.5% of its total production.
 
Under the July 2004 Framework Agreement, the 2005 Hong Kong Ministerial Declaration, and the 2008 revised draft modalities for recently acceded members, China is exempted from any reduction commitments in its de minimis.
 
The non-paper, however, conceded that OTDS was an innovation compared to existing AoA disciplines because it would impose a fixed ceiling on the sum of the Final Bound Total AMS, de minimis and blue box support.
 
"OTDS levels the playing field by making it harder to shift support between boxes as well as creating an upper limit on unrestricted increases in support," Australia and Canada argued.
 
"The large binding overhang between AoA limits and reported levels of trade-distorting domestic support should allow both parties [the US and China] sufficient scope to comfortably accept OTDS bindings without needing to modify existing policies in the short or medium term," the non-paper argued.
 
As a "way forward," Australia and Canada maintained, "major WTO Members including the United States, the European Union, China, India and Brazil have a lot of space between their most recent reported total trade- distorting support and current limits under the AoA."
 
Besides, "there are consistently large gaps, or binding overhang, between China and the United States' reported levels of total trade-distorting domestic support and their current limits... These gaps are projected to grow in the future."
 
In conclusion, "this large and consistent binding overhang means that it is feasible and doable to find a landing zone on OTDS that accommodates existing policies over the short to medium term while also improving the disciplines on domestic support over the Uruguay Round," Australia and Canada argued.
 
"The non-paper by Australia and Canada is a mischievous attempt to change the goalposts in the domestic support pillar and the deafening silence (of the paper) on what was negotiated over the last 14 years eroded its credibility in one go," a developing country trade official told the SUNS.
 
"The paper [by Australia and Canada] is dead on arrival as everybody knows that it is the US that needs to be protected because of its Farm Bill and the only way to address the problem is allowing some insignificant cuts from the Uruguay Round," the official added.
 
The non-paper is an attempt to bolster the DG's concerted initiatives to force China and India to undertake some minimum cuts even though they are not required to do so under the Doha mandates, another trade official said.
 
"It could well be that the DG has given his consent for the non-paper," the official added.
 
Recently, some 10 days ago, the DG has praised Canada at its trade policy review meeting, saying that "WTO Members can count on Canada to support a pragmatic and successful outcome at the Tenth Ministerial Conference in Nairobi this December."
 
"We agree with the many Members who have warned that a failure to succeed in Nairobi will have dire consequences for the WTO's reputation as a forum to negotiate modern global trade rules," the DG said at the Canada Trade Policy Review (TPR) meeting.
 
Australia is also well known for its efforts to push the DG's initiatives time and time again, including the hosting of meetings of seven trade envoys as well as the informal ministerial meeting in Paris early this month.
 
In short, by joining together to circulate the non-paper, Australia and Canada have only vindicated what is being popularly perceived about their collective effort to push the DG's initiatives. +