Info Service on WTO and Trade Issues (Nov17/01)
1 November 2017
Third World Network
convergence on PSH or domestic support reduction
Published in SUNS #8564 dated 31 October 2017
Geneva, 30 Oct (D. Ravi Kanth) - Two closed-door meetings held last
week by WTO Director-General Roberto Azevedo - one with proponents
of permanent solution for public stockholding (PSH) programs for food
security in developing countries and the second on agriculture domestic
support reduction commitments - have failed to bring about any convergence,
trade envoys told SUNS.
Azevedo held the two closed-door meetings, one on 25 October with
the proponents of the permanent solution for public stockholding programs
for food security in developing countries, and the second on 27 October
with proponents for domestic support reduction commitments.
But the two meetings failed to bring about any convergence among participants
either on the permanent solution for public stockholding programs,
or the reduction on domestic support, according to trade envoys who
attended the two meetings.
Azevedo, who was formerly the chief trade negotiator for Brazil during
the crucial meetings in the run-up to the 2008 revised draft modalities,
assumed the role of negotiator at last week's meetings, in the absence
of the current chair of the Doha agriculture negotiations Ambassador
Stephen Karau of Kenya who is busy with elections back home in Nairobi.
At both the meetings, the United States remained conspicuously absent.
The DG was apparently interested at this juncture only in talking
with the proponents rather than opponents of the two proposals, said
a trade envoy from South America who asked not to be quoted.
The US has made its position clear that there cannot be any negotiated
outcomes or a ministerial declaration at the WTO's eleventh ministerial
conference (MC11) in Buenos Aires beginning on 10 December.
"The DG is aware of all the intricacies and the linkages in both
these issues, unlike the current Doha agriculture talks chair who
is clueless about the likely outcomes at Buenos Aires," the South
American trade envoy said, adding that Azevedo is in a position to
nudge the proponents to come to a common understanding.
The meeting on the permanent solution for public stockholding (PSH)
programs which took place on 25 October was attended by trade envoys
of the European Union, Brazil, Norway, Russia, Indonesia which coordinates
the G33 Group, India, Turkey, Korea, Dominican Republic, Kenya, and
Egypt among others.
During the brief meeting, Indonesia, India, Korea, Turkey, Kenya,
and Egypt - all members of the G33 coalition of developing countries
- made an emphatic case about the need to have a credible and effective
permanent solution at Buenos Aires so as to enable developing countries
to assist hundreds of millions of poor farmers without any legal hurdles.
Indonesia, which is the coordinator of the G33 farm coalition, delivered
the strongest message during the meeting. It made clear that the G33
members along with a large majority of developing countries will reject
any attempt to link the PSH permanent solution with the domestic support
Indonesia said the two issues stood on their own merit without any
linkage, and any attempt to force a linkage now will not only have
serious ramifications but will derail the meeting in Buenos Aires,
said another trade envoy who asked not to be quoted.
In response, Azevedo intervened to say that the linkage issue is not
the main one suggesting that the participants must focus on other
elements of the permanent solution, the envoy said.
India raised fundamental concerns on the interim decision on PSH programs
reached at the WTO's ninth ministerial meeting in Bali.
India said the coverage of products in the Bali decision which include
"food" products must be replaced by the current Annex I
list of products in the WTO's Agreement on Agriculture (AoA).
India said by suggesting food products only in the Bali decision,
it has created confusion, said an African trade official.
Azevedo maintained that the inclusion of food products in the Bali
agreement was agreed among ministers instead of inserting language
on "few products".
He said that if India insists on any change on the issue of coverage
of products, then it would have to agree to tightening the safeguards
or other issues in the permanent solution, the South American envoy
India then raised several issues on the safeguards as well as transparency
provisions for the proposed mandated permanent solution.
The Bali agreement, India said, contained the most intrusive and unworkable
transparency provisions that none of the developed countries, except
New Zealand, would be able to implement in reality.
Instead of working to develop an effective permanent solution, India
said that some proponents are making the permanent solution for PSH
programs impossible to use, the South American envoy said.
Turkey demanded an easy and effective permanent solution, a view which
was also shared by other members such as Korea, Kenya, and Egypt.
In response to India's position, the European Union, Brazil, and Norway
maintained that the permanent solution must remain as close as possible
to the Bali interim decision. The three countries stuck to that position
with varying nuances, and maintained that the permanent solution must
remain anchored on the Bali agreement, trade envoys said.
The EU said it is in favour of a permanent solution for PSH programs
but insisted on transparency and safeguard measures.
Brazil said that it is expanding the scope for a balanced outcome
on the permanent solution by including it with domestic support, and
suggested that the unresolved issues in the two areas can be taken
up later after the Buenos Aires meeting.
Brazil said the permanent solution must reflect the Bali decision
and any changes must be minimal. It argued that if India wants to
add any substantive changes then they must be discussed after Buenos
Aires given the paucity of time.
Norway said the permanent solution must be close to the interim solution
that was agreed in Bali in December 2013.
Russia circulated a proposal on PSH programs on 27 October in which
it argued that while it is willing to agree to lesser transparency
provisions in the permanent solution, it will need enhanced safeguard
provisions, according to a person familiar with the proposal.
In effect, Russia, a major wheat exporter, raised the bar on safeguard
provisions in the permanent solution so as to ensure that China and
India do not export wheat, the person said.
The director-general - who did not call for the consultations the
other key opponents to the permanent solution for PSH such as the
United States, Australia, Canada, Pakistan, and Paraguay - said that
any attempt to open up the elements in the Bali decision could lead
to reciprocal demands from other members, according to people familiar
with the development.
The US has repeatedly said that the permanent solution cannot undermine
the Bali interim decision, a position that was reflected in the consultations
During the green room meeting on domestic support on 27 October, the
director-general pleaded with the proponents that they must make every
effort for a beginning on domestic support at Buenos Aires, failing
which they will be sending a wrong signal to the people who are watching
from outside, said a trade envoy who asked not be quoted.
"If you don't do anything on domestic support, then, it will
not send a good message, therefore be prepared to discuss something
among yourselves," the DG said, according to the envoy.
The European Union, Brazil, Australia, New Zealand, Japan, Switzerland
on behalf of the G10 countries, Mexico, China, India, and Guyana on
behalf of the ACP (Africa, Caribbean, and Pacific) coalition and Paraguay
took part in the meeting.
India and China referred to their own proposal which called for eliminating
the most trade-distorting domestic support or the Aggregate Measurement
of Support (AMS). The two countries maintained that the AMS in the
industrialized countries is the biggest issue at this juncture.
India made a forceful case that because of the AMS some members are
able to support some products up to 200% and 300% of the value of
the production, while developing countries only have de minimis that
cannot be breached beyond 10%, said a participant from South America.
India and China said there are huge divergences among members on the
domestic support, arguing that they are not sure whether they will
be able to proceed further.
China said the ultimate goal for members must center around the elimination
of AMS, suggesting that the two countries are suggesting a process
that eventually leads to the elimination of AMS.
The EU and Brazil maintained that their proposal is basically a middle
ground solution for kick-starting the negotiating process on domestic
Australia and New Zealand referred to their proposal saying that it
offers a credible route to all members to address domestic support
with a small beginning.
But Mexico, Japan, and Switzerland said they cannot accept the EU-Brazil
and Australia-New Zealand proposals.
The two proposals, they said, target some countries while leaving
Japan acknowledged the need to cut "water" but maintained
that it should not be at others' cost. Japan asked for a price for
cutting water in the AMS suggesting that it is engaged in its own
Switzerland also said that while they have not carried out as big
a reform, they also have the same concerns with the EU-Brazil, and
Australia-New Zealand proposals.
In short, the divergences on the domestic support remained unbridgeable,
said a participant who asked not to be quoted.
The participants remained sharply divided even on the future program
on domestic support with Switzerland suggesting that Article 20 in
the AoA will remain the basis for future work.
With less than six weeks left for the Buenos Aires meeting, the developing
and least developed countries are facing an ugly situation, as the
entire Doha edifice on agriculture and other issues is being reduced
to rubble even before they reach Buenos Aires.