Info Service on WTO and Trade Issues (Nov16/16)
25 November 2016
Third World Network
Agriculture: Proposals tabled on domestic support, market access
Published in SUNS #8361 dated 23 November 2016
Geneva, 22 Nov (Kanaga Raja) - A meeting of the Special Session of
the Agriculture Committee at the World Trade Organisation (WTO) on
16 November discussed several proposals on domestic support in agriculture
and on agricultural market access.
The Chair, Ambassador Vangelis Vitalis of New Zealand, convened the
meeting to report on his small group consultations since the last
meeting in July and to allow the full membership to voice their views
on the way forward in the negotiations.
In his statement, the Chair said that his report back was based on
67 bilateral consultations undertaken since the summer break, supplemented
by meetings with several Groups that were able to see him, as well
as a meeting on 9 November to which he invited all 15 Group Coordinators.
He said he has been particularly encouraged that broad agreement -
if not necessarily consensus - continues for a set of shared objectives
for the negotiations, including that: (1) Agriculture should form
part of any outcome at MC11; (2) Ministerial expectations should be
delivered upon, including as set out in the relevant Nairobi Ministerial
Decisions, the Nairobi Ministerial Declaration, as well as Article
20 of the Agreement on Agriculture; (3) An outcome at MC11 on agriculture
is difficult to envisage without progress across the Doha agriculture
issues, as well as in other areas of the wider (i.e. non-agriculture)
negotiations, including in NAMA, services, Rules, Development and
on 'new issues'. It is acknowledged, however, that these other non-agriculture
areas may move at different speeds and deliver different types of
outcomes both in scope and ambition; and (4) Members continue to seek
to avoid polarising debates in CoASS (Committee on Agriculture in
Special Session) and understand that any such polarisation risks paralysis,
not simply in agriculture, but more generally.
In his latest round of consultations, however, five very specific
contextual elements - two of which are new - appear to be at the forefront
of Members' thinking:
(1) Engagement of Ministers: Since our last meeting, Norway's Minister
of Foreign Affairs convened an informal meeting of a group of Ministers
in Oslo on 21-22 October. The Chair's Summary of Discussion Note,
issued under his own authority, reports that: "Ministers were
in general agreement that further work in the lead- up to MC11 with
development at its centre would include elements of domestic support
in agriculture based on updated notifications, the mandated permanent
solution for public stockholding for food security purposes; other
mandated tasks from Nairobi."
The sub-set of Ministers in Oslo were also clear about their expectation
that outcomes "should be achieved through incremental steps rather
than major leaps, at least in the short term." Ministers recalled
the agreement at Nairobi that all Doha issues remain on the table,
Ministers pointed to well-known topics that probably need more time
before results may be harvested. They include: continued reform in
agriculture; market access in NAMA, agriculture and services..."
(2) Greater engagement of private sector stakeholders: The Chair said
he is pleased to report that there has been a sharp rise in the interest
of stakeholders in the negotiations. This level of interest is in
sharp contrast to the situation ahead of the Nairobi Ministerial last
year. "This suggests to me that we may have begun the process
of re-energising agricultural stakeholders to believe that the WTO
still matters to them," he added.
(3) The Known-unknowns: "Previously I have recalled that Members
have been reflecting on the likely impact on our negotiations of the
recent referendum result in the United Kingdom. To this I would now
add the recent election results in the United States. In addition,
many Members are also considering the potential effect of the launch
of a Dispute Settlement case by one Member on a specific aspect of
another Member's agricultural domestic support. Members have also
been thinking about the implications for our negotiations of the ratification
processes related to two significant preferential trade agreements
- the Canada-EU Trade Agreement and the Trans-Pacific Partnership
(4) UN Sustainable Development Goals: The Chair said he has been pleased
to see that increasing numbers of Members have been expressing an
interest in how to ensure that the WTO negotiations in agriculture
can contribute to achieving the United Nations Sustainable Development
Goals (UN SDGs).
"Many of you have expressed concern, for instance, that in the
absence of progress it will be difficult to achieve Goal 2 which emphasises
the need to 'correct and prevent trade restrictions and distortions
in world agricultural markets'. As I continue to remind Members, you
have already delivered one specific sub-component of the Goal 2 target
- that which relates to the elimination of agricultural export subsidies.
We now need to deliver on the remainder," said Ambassador Vitalis.
(5) The interface between the CoASS negotiations and domestic policy
considerations: "Many Members have underlined to me the emphasis
they place on active and dynamic engagement at the CoASS as a signalling
mechanism for their intent to deliver outcomes at MC 11 in Buenos
Aires. They expect that this will inform Members' thinking on their
domestic policy settings, including their future domestic agricultural
policy settings," he said.
On domestic support and cotton, the Chair reported that an outcome
on Domestic Support in general and Cotton in particular continues
to be regarded by the overwhelming majority of Members as a priority
for Buenos Aires. "I have detected no change in the determination
or intensity of interest in this part of the negotiations."
"In terms of the substance, a feature of this latest round of
consultations has been that Members are engaging with me on a level
of detail that had been absent hitherto. This has included several
Members and most Groups identifying what they can and can't work with,
while also signalling their expectation of further specific proposals,
particularly on domestic support, but also on cotton."
"I continue to assess that the significant number of questions
and submissions members have circulated over the past six months underlines
the commitment of all Members to engage with one another on domestic
support and, more particularly on what may be do-able for the meeting
in Buenos Aires," said the Chair.
According to the Chair, the question before members, however, remains
as challenging as ever. There are two aspects to the challenge members
confront: (i) it is clear that notwithstanding the overwhelming majority
of Members in favour of an outcome on domestic support, several important
Members who need to be involved in any outcome are signalling difficulties
in this regard; and (ii) we remain some way away from knowing what
the content or contours of the domestic support content of the MC11
package should be.
Some Members - regardless of their position on domestic support, or
on agriculture more generally - have argued that there needs to be
a better balance both within the agriculture negotiations, as well
as more broadly including in NAMA, services, Rules and new issues.
They do not yet believe that this is the case and this is informing
some Members' approaches. And, needless to say, Special and Differential
Treatment remains of crucial importance.
On market access, the Chair reported that during the consultations
since July, and particularly since the Oslo WTO mini-Ministerial,
there has been a noticeable shift on this part of our negotiations.
"To be precise, there has been an intensification and expansion
of interest in the negotiations on agricultural market access. More
Members than ever before have raised the issue of market access with
me bilaterally. Several Members have indicated that movement on market
access may help them to encourage movement at home on domestic support."
Those Members expressing an interest in market access have identified
topics such as: escalation, simplification; tariff peaks, tropical
products as well as the special safeguard on agriculture. Many Members
also continue to encourage the conversion of non-ad valorem rates
to ad valorem rates and binding in any remaining unbound rates. Some
Members continue to have an interest in both real tariff cuts and
to changes to TRQs, including both liberalisation of administrative
procedures, but also to movement in these TRQs themselves. A number
of Members have made it clear that if they were to engage on market
access, Special Products would need to form part of any tariff reduction
On export competition, the Chair reported that this is perhaps the
only part of the negotiation where there has not been a discernible
shift in positioning since July, and indeed since the Nairobi Ministerial.
Continued negotiations on export competition are of continuing interest
to a small group of Members. It is the case, however, that this remains
a lower priority item for most Members in terms of paragraph 31 of
the Nairobi Ministerial Declaration.
In fact, several Members have made it clear during my bilateral consultations
that they do not consider export competition to be 'unfinished business'
as some have suggested. They believe that the negotiations were taken
as far as was possible in Nairobi and that this area is a distraction
from the other issues, like domestic support and market access on
which CoASS should be focused, the Chair said.
At the informal meeting, Members discussed three proposals on domestic
The first proposal, in the form of a room document (JOB/AG/72/Add.1),
was introduced by Brazil on behalf of Brazil, Argentina, Chile, Colombia,
Paraguay, Peru and Uruguay. It draws on a previous submission by the
group and proposes four different options to limit different kinds
of domestic support.
These options are: (1) As a comprehensive limit on trade-distorting
domestic support appears to remain a valid concept to be explored
in the negotiations, the co-sponsors believe that further consideration
should be given to the idea of expressing this new limit as a percentage
of the Value of Production (VoP); (2) The co-sponsors suggest to use
the current structure of the AoA and agree to cuts to the AMS, "de
minimis", and to the Blue Box at each ministerial; (3) Anti-concentration
disciplines may be an important tool to limit the potential for distortions
in the international trade of agricultural products. If Members are
willing to pursue this path, product-specific limits as envisaged
in the past could be an option; (4) Option 4 aims at limiting the
effect that subsidised agricultural production can have in international
markets. When highly subsidised products are exported, the domestic
subsidy becomes a "de facto" export subsidy, disrupting
markets and harming producers elsewhere, with consequences particularly
severe for poor farmers in developing countries.
On cotton, the co-sponsors say that whatever the option or combination
of options Members see fit to be part of a solution for domestic support,
cotton should be addressed in a manner consistent with the mandates,
with specific and more ambitious commitments and shorter implementation
The second submission is by Argentina, Australia, Colombia, New Zealand,
Paraguay, Peru, Uruguay and Viet Nam (JOB/AG/83), which is a statistical
analysis that seeks to identify the domestic support policies that
are being applied today that cause the largest distortions to global
The submission was introduced by Australia on behalf of the Cairns
Group of agricultural exporters. According to trade officials, Australia
maintained that in the cotton sector, one member is spending over
$10 billion on trade-distorting domestic support, and this is a significant
number. It was of the view that addressing this issue is imperative.
Australia also mentioned the issue of transparency. There are two
main problems with the transparency issue in domestic support - one
is the lack of notifications, and the second is under-reporting, it
The paper also highlights the issue of de minimis. It says that the
rising value of production in some of the world's largest agricultural
producers, both developed and developing, is changing the value of
de minimis in a way that was not anticipated by the drafters of the
Agreement on Agriculture. The combined value of agricultural production
for large producers and exports has tripled in the last 20 years.
According to Australia, in old times de minimis was meant to be a
small proportion of production but because production expanded exponentially,
this has become the major source of trade distortion in the world
market today. Back in 1995, the US de minimis was worth $13 billion,
but today, the US entitlement is worth $39 billion, said Australia,
which is way larger than its amber box support allowance.
The third submission is by Rwanda on behalf of the ACP group (JOB/AG/87).
It said that for the purpose of safeguarding rural development, food
security and livelihood security in the ACP countries, it is imperative
to address all trade-distorting domestic subsidies in an appropriate
and sustainable manner. It underlined that negotiations aimed at establishing
a fair and market-oriented trading system through a programme of fundamental
reforms to correct and prevent distortions in world agricultural markets
must continue as a matter of priority, within the CoASS.
The ACP proposed that disciplines should establish a binding overall
comprehensive limit to the sum of all trade-distorting domestic support;
and establish binding product-specific limits to trade-distorting
domestic support to avoid subsidy concentration.
On special and differential treatment, it said that in order to address
the special needs of developing country members, negotiations should
include, among others, the following elements: flexibilities in the
level of commitments and the schedules of implementation; exemption
of SVEs and NFIDCs from binding reduction commitments; technical assistance
and capacity building to address institutional and financial constraints
faced in the implementation of disciplines; and the provisions of
Article 6.2 of the AoA should remain unchanged.
According to the ACP, negotiations should aim to reach agreement on
a first set of development deliverables by MC11. Such an outcome should
reflect the principles of special and differential treatment and include:
an ambitious outcome on domestic support; for developed country members
benefiting from an AMS entitlement, an agreement on an overall comprehensive
limit to the sum of all trade-distorting domestic support, so as to
reduce the difference between the maximum AMS entitlement and the
current applied levels of domestic support; for other country Members,
an agreement on an overall comprehensive limit to the sum of all trade-distorting
domestic support without undermining the development and food security
needs of developing countries, including LDCs, SVEs and NFIDCs; and
an agreement on substantial reductions of, with a view to eliminating,
all trade-distorting domestic subsidies for cotton production.
According to trade officials, the EU said that it welcomes incremental
steps towards reform rather than major leaps. It expressed support
for the idea of a limit on the overall level of support. On cotton,
the EU said that members need an equally ambitious outcome while respecting
the red lines of all stakeholders. It also called on members to improve
Switzerland, on behalf of the G10, said that the proposal to base
subsidy caps on value of production would be difficult for smaller
agriculture producing countries with special characteristics. Norway,
a member of the G10, said that combining option 1 and option 3 in
the proposal by Brazil and others would be an "explosive cocktail".
Both South Africa and China believed that the Rev. 4 text (2008 draft
modalities text) should remain the basis of any reform going forward.
China also said that any new idea or approach to address domestic
support needs to address aggregate measure of support (AMS) available
to twenty-eight WTO members who were traditional agriculture subsidisers.
During the discussion on market access, the Chair said that although
market access is not identified as a high priority as compared with
domestic support, there are a substantial number of members who said
that market access is important. He pointed to three submissions by
Paraguay introduced two submissions. One addresses the issue of tariff
overhang, i.e. the difference between bound and applied tariff rates,
more commonly known as "water", co-sponsored by Argentina,
Australia, Colombia, Uruguay, Viet Nam and Peru (JOB/AG/84).
The other (JOB/AG/85), co-sponsored by Argentina, Australia, Chile,
Colombia, New Zealand, Pakistan, Uruguay, Viet Nam and Peru, calls
for an end to the special agricultural safeguard (SSG) by MC11.
The third is a submission by Uruguay (JOB/AG/86), co-sponsored by
Argentina, Australia, Colombia, Costa Rica, New Zealand, Paraguay
and Peru, which highlights the main market access impediments that
have been identified by Members in recent years in the CoASS: high
tariffs, tariff escalation (tariff increase at later stages of processing,
resulting in greater effective protection), tariff peaks, high level
of disparities in tariff levels among members, limitations by tariff
rate quotas (TRQs) access only, and non-tariff measures.
According to trade officials, the discussion on SSG was based on a
Secretariat note which shows that among the members entitled to use
the SSG to increase import tariffs at time of price decline or import
surge, only six members used the tool in the past five years, and
the use of SSG has generally been declining.
South Africa said further tariff reductions will limit its ability
to respond to trade distortions. If the SSG is to end, then it should
be replaced by another mechanism, for example, the SSM for developing
countries, it said.
Turkey said that the 'cherry picking' season is starting now (in apparent
reference to members picking topics for the Buenos Aires ministerial
conference next year). On the papers on market access, it argued that
market access negotiations should include Special Products (SP). It
said that it needs more time to provide detailed comments on the proposals.
Indonesia said that it is still discussing the proposals back in capital.
It pointed out that trade remedy tools are used in emergencies and
the fact that very few developing countries use the SSG is a sign
that a tool should be developed that is easier for developing countries
A technical note on tropical products submitted by Costa Rica was
also discussed. Singapore drew the attention of members of a proposal
that it had put forward in July on improving transparency on export
restrictions, while Brazil said that it is working with some other
members on a proposal on private standards on sanitary and phyto-sanitary
The Chair also reported on the issue of notifications of domestic
support. He said that in an organisation of 164 Members only twenty-seven
have submitted data covering the period to the year 2015. Only two
of these are developed Members. Put another way that means that 106
Members (EU counted as one) are falling short of their notification
"If we take a more generous interpretation of the notification
deadline, thirty-six Members plus four recently acceded Members can
be considered up to date in their notifications to 2014. Of these
only four are developed Members - Australia, New Zealand, Norway and
The remaining Members which are up-to-date are Developing Members,
including several Least Developed Members. Of these and in the context
of the negotiations, only Brazil and Argentina are major agricultural
exporters. Put another way, this still means that 97 Members (EU counted
as one) - the majority in this organisation - are out of date in their
"Furthermore, Members will be as concerned as I was to learn
that fully twenty-nine Members have never submitted a domestic support
notification. A further ten Members have not submitted notifications
for the past fifteen years (i.e. since 2002). This means that just
under a quarter of the WTO's Membership has either not troubled itself
to submit a notification in the past fifteen years, or worst still,
has not ever bothered to make a notification," the Chair lamented.
"Put simply, the challenge we face in the negotiations is that
we risk negotiating either in the dark, or at best in the dusk. That
means there is a risk of error - an error that might benefit some
and punish others. That clearly is an undesirable situation that none
of us will want to risk," said Ambassador Vitalis.
In some concluding remarks at the end of the meeting, the Chair said:
"I have been encouraged by the engagement we have had during
this meeting and therefore the state of our negotiations."
He said that an overwhelming majority of Members continue to seek
an outcome for domestic support for Buenos Aires. What precisely that
will look like remains unclear, but the range of submissions and interventions
underline that on domestic support there is a lot "on the table."
It is for members to find ways to engage on the well understood sensitivities
- many of which were reiterated today - and to find a way forward.
On market access too, this meeting has demonstrated that there is
much greater interest than ever before in this part of the negotiation
- a shift in gear. That is to be welcomed, though clearly a great
deal still needs to be done to find an outcome that can secure consensus,
"It appears to me that we are able to identify a common set of
eight guidelines for outcomes at MC11."
According to the Chair, these include that any outcome in whatever
area we can agree on must be: (1) transparent in outcome and in negotiation;
(2) development-relevant; (3) clear and simple to understand; (4)
practical and do-able; (5) effective; (6) proportionate; (7) evolutionary,
not revolutionary, i.e. incremental; and (8) a stepping stone to further
engagement on agricultural reform.