Info Service on WTO and Trade Issues (Nov15/16)
23 November 2015
Third World Network
assails Brazil, EU over export competition proposal
Published in SUNS #8139 dated 20 November 2015
Geneva, 19 Nov (D. Ravi Kanth) - India took Brazil, the European Union
and other sponsors to task at the World Trade Organization (WTO) on
Wednesday (November 18) over their controversial proposal to placate
the United States for overcoming the difficulties Washington faced
in implementing the 2008 revised draft modalities on the export competition
pillar for agriculture products, several trade envoys told the SUNS.
At an informal open-ended meeting of the Doha agriculture negotiating
body, Brazil and the EU, hitherto the rivals in agriculture negotiations
but now solid partners, presented their 13-page proposal which was
specially carved out to enable the US not to undertake any fresh commitments,
according to trade envoys familiar with the meeting.
The proposal called for major changes in the 2008 revised draft modalities
or the Rev. 4 provisions on export subsidies, export credits, food
aid, and state-trading enterprises. The former chair for the Doha
agriculture negotiations Ambassador Crawford Falconer of New Zealand
had suggested the disciplines in these four areas of the export competition
pillar after marathon negotiations during 2006 and December 2008.
Significantly, the Rev. 4 disciplines in the export competition pillar
were based on balance with reduction commitments in the other two
pillars - market access and domestic support - in the final Doha agriculture
Barring the United States, which opposed the Falconer text, a large
majority of countries under the leadership of Brazil, which led the
G20 group of developing countries, had accepted the provisions as
the final landing zone for outcomes in agriculture.
Brazil's former trade envoy Ambassador Roberto Azevedo, who is now
the WTO's director-general, had said in 2011 that the Rev. 4 is the
basis for concluding the Doha agriculture package. Ambassador Azevedo
had then said:
"The December 2008 draft modalities are the basis for negotiations
and represent the end-game in terms of the landing zones of ambition.
Any marginal adjustments in the level of ambition of those texts may
be assessed only in the context of the overall balance of trade-offs,
bearing in mind that agriculture is the engine of the Round...
"The draft modalities embody a delicate balance achieved after
10 years of negotiations. This equilibrium cannot be ignored or upset,
or we will need readjustments of the entire package with horizontal
repercussions. Such adjustments cannot entail additional unilateral
concessions from developing countries."
But, in an inexplicable move, Brazil chose to join ranks with the
EU to craft a proposal that brought about "major adjustments"
in the export competition pillar without discussing it with its key
allies in the G20 group, a trade envoy told the SUNS. "Until
the joint proposal was shared privately by some members, we did not
know what it contained," the envoy said.
The Brazil-EU joint proposal which was co-sponsored by Argentina,
New Zealand, Paraguay, Peru, and Uruguay suggested some Rev.4-plus
commitments such as reducing the implementation period to eliminate
export subsidies to three years. More pointedly, it contained wholesale
changes of the provisions for export credits and food aid in Rev.
4 to ensure that the US can implement them without any change to its
farm bill enacted last year, according to agriculture negotiators.
(See SUNS #8136 dated 17 November 2015).
Significantly, Brazil maintained that it is "politically impossible"
to accept the proposal on Special Safeguard Mechanism (SSM) tabled
by the G-33 group of countries led by Indonesia last Friday. At the
same time, it wanted other countries to consider a proposal on export
competition that contained many imbalances, said an Asian agricultural
On Wednesday, Brazil, the EU, and other co-sponsors introduced the
proposal at the informal meeting of the Doha agriculture negotiating
body. The EU ruled out any debate on the provisions because of the
paucity of time. "We don't want to enter into debate on the Rev
4-plus provisions on export subsidies," the EU's trade envoy
Ambassador Marc Vanheukelen told the participants, according to trade
envoys present at the meeting.
In response to the proposal by Brazil-EU-Argentina-New Zealand-Paraguay-Peru-Uruguay,
several countries expressed technical concerns. Mexico expressed surprise
at the coming together of Brazil and the EU to table a joint proposal
on export competition pillar. "I don't know whether it is positive
or negative," a Mexican official told the meeting, arguing that
his capital is currently examining the changes proposed by Brazil
and the EU.
India raised detailed technical questions on the joint proposal and
sought replies in a written format. India largely targeted the proposed
disciplines on export credits and food aid in the joint proposal.
India's questions include:
i) The proponents have differing repayment period for export credits.
Brazil, for example, has a repayment period of six months while New
Zealand provides for 90 days and less a year. Peru has 180 days while
the EU is discouraging its member states to provide export credits
for more than short durations. Against this backdrop, why are the
proponents seeking to dilute the provisions for export credits in
the Rev. 4?
ii) The proponents must clarify as to what and whose concerns they
are trying to address?
iii) The proposal on export credits provides flexibility to adopt
OECD disciplines on the interest rate premium. India is not a member
of OECD and can't reference a OECD discipline in WTO dispute. India
said it understands the OECD discipline was agreed in the United States-Brazil
cotton dispute. Therefore, are the proponents trying to multilateralise
a bilateral agreement reached between two members outside the WTO?
iv) The joint proposal by Brazil and its co-sponsors has called for
new monitoring mechanism for overseeing the implementation of the
disciplines in the export competition pillar. The provisions in the
monitoring mechanism go well beyond the Rev.4 disciplines. On the
one hand, the proponents are calling for weaker disciplines on export
credits and food aid and on the other, they are proposing stronger
monitoring and transparency requirements which are extremely burdensome
to WTO members. Can the proponents provide the underlying rationale
for these provisions?
v) As regards food aid, the EU provides food aid in the form of cash
contributions to international agencies and no in-kind food aid outside
emergencies. New Zealand provides food aid but does not permit re-exports.
When proponents do not have an issue on monetization then why have
they proposed a safe box where in-kind monetization is made possible?
vi) Are the proponents not concerned that this monetization will lead
to trade-distortions and that there is no check on the prices at which
the food aid is sold?
vii) In our view, India said, the provisions in the joint proposal
on food aid are far more trade-distorting, since there are disciplines
on governments but no checks on private actors.
viii) India said that it is not a supporter of re-calibration. However,
India maintained that if there is re-calibration then it must be across
all the pillars, i.e market access, domestic support, and the export
ix) On disciplines for state-trading enterprises, India sought to
know why a longer time period is provided to continue agriculture
state-trading enterprise monopolies?
Therefore, said India, it cannot accept a discipline where there is
selective lowering of the ambition and in turn raising the ambition
elsewhere. India urged the proponents to provide written responses
on the issues it raised.
India's technical questions drew an unusual degree of opposition and
ire from Brazil's trade envoy Ambassador Marcos Galvao. The Brazilian
envoy told the Indian agriculture official that "members must
not take high moral ground by raising the technical issues,"
according to participants familiar with the meeting.
The Indian official said he is not taking high moral ground but asked
technical questions as is the practice in the WTO trade negotiations,
according to participants present at the meeting.
Further, India said it is not showing disrespect to members but merely
seeking clarifications on a proposal that is aimed to help the United
States, according to the participants.
In short, Brazil has pushed itself into an embarrassing position by
aligning with the EU and by singlehandedly dismissing the G-33 proposal
on SSM, which was hailed by the US at the last informal meeting. Brazil's
joint paper on export competition has destroyed its credibility permanently,
said a trade envoy who asked not to be quoted.