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TWN Info
Service on Sustainable Agriculture Geneva, 18 Jan (D. Ravi Kanth) – Attempts are currently underway at the World Trade Organization to eliminate market price support programs for public distribution in developing countries, with calls for reversing the previous ministerial mandates such as the perpetual “peace clause” for food grains, said people familiar with the development. Brazil, the founder of the G-20 coalition of developing countries on agriculture but now appears to be a spokesperson for the United States and members of the Cairns Group of farm exporting countries, has apparently suggested at a recent meeting that public stockholding programs for food security are unsustainable and may not constitute a solution, said people familiar with the development. In targeting India, Brazil apparently suggested that ministerial mandates can also be “undone” to stop the public stockholding programs, even though they sustain hundreds of millions of poor people across developing countries in Asia and Africa, said people familiar with the development. Brazil’s new campaign comes in the wake of the US Congress representatives, who had appealed to the US Trade Representative (USTR) Ambassador Katherine Tai and US Agriculture Secretary Tom Vilsack to launch dispute settlement proceedings against India for allegedly crossing the 10% de minimis limit as set forth in the Uruguay Round Agreement. THE US INITIATIVE In a letter written by a group of US lawmakers to the USTR and the US Agriculture Secretary last week, it is argued that Washington should launch a trade dispute against India for subsidies provided to its rice and wheat farmers that allegedly exceed the WTO limits, according to a report in Washington Trade Daily on 17 January. According to the letter, “American commodity producers are operating at a clear disadvantage to their competitors primarily from India, where the government is subsidizing more than half of the value for rice and wheat, instead of the ten percent allowable under WTO rules.” “Considering India’s activity, we encourage you to initiate the WTO litigation process through a request for consultations,” the letter said. Apparently, the US government remains convinced that India has not complied with its commitments and has provided more than $3.8 billion to fertilizer companies to shield their rice and wheat growers from rising input costs. “Trade distorting domestic support has always been a major challenge for farmers, and WTO rules were created to limit these practices,” the lawmakers wrote, suggesting that “for the most part, the system has been successful but there are repeat offenders, like China and India, where enforcement is necessary.” In effect, the US seems to be challenging India’s use of the revised Bali “peace clause” with respect to rice, which India had informed the WTO last April due to its crossing the de minimis limit of 10%. For the last few years, the US has adopted a new technique of counter-notifications against India at the WTO’s Committee on Agriculture. For example, in a document (G/AG/W/174) titled “Certain measures of India providing market price support to rice and wheat”, dated 9 May 2018, the US argued that “using publicly-available sources, the United States has compiled data and information on India’s market price support (MPS) for wheat and rice. Further to Article 18.7 of the WTO Agreement on Agriculture (AoA), the United States is providing this information to other Members in the interest of promoting transparency surrounding India’s MPS policies. This document is for the purpose of discussion by World Trade Organization (WTO) Members. Some aspects were necessarily based on partial information.” It argued that “India appears to be providing significant market price support, both in terms of absolute value and as a percentage of the value of production, for wheat and rice” running into huge percentage points because of calculations done on a rupee basis and not on a dollar basis as India did in her notification. Similarly, the US filed another counter-notification against India’s support to cotton in document G/AG/W/188 on 9 November 2018. After these two counter-notifications by the US, Australia counter-notified against India’s support for sugar, following which it launched a trade dispute against India’s sugar program. Australia, the US, and Canada filed a counter-notification (G/AG/W/193) against India’s market price support to pulses, including chickpeas, pigeon peas, black matpe, mung beans, and lentils on 5 March 2019. Underlying these counter-notifications is the unusual practice of challenging India’s notifications that are made in dollar terms to prepare the ground for trade disputes. More importantly, these counter-notifications are not just meant to challenge a sovereign country’s notifications, but are a loud and clear signal that they would like to eliminate all market price support programs in India and other developing countries, said people, who asked not to be quoted. ATTEMPTS TO MAKE BALI “PEACE CLAUSE” REDUNDANT India had already invoked the revised Bali “peace clause” for the second time last April. India had informed the WTO that the value of its rice production in 2019-20 was to the tune of $46.07 billion, while it provided subsidies to the tune of $6.31 billion, or 13.7 percent as against the permitted 10 percent. So, a signal has been sent by the US Congress representatives, that based on the counter-notifications that the US filed against India, as well as India’s increased market price support programs for wheat and rice during the COVID-19 pandemic, India should be challenged on these programs – notwithstanding the fact that these programs qualify under the Bali perpetual “peace clause”, said people, who asked not to be quoted. In a similar vein, Australia along with Brazil and Guatemala recently won a trade dispute against India on its sugar support programs. Subsequently, India appealed the panel ruling because of its alleged erroneous considerations. The European Union has also allegedly sounded to India that its wheat and rice support could be challenged, despite the invocation by India of the Bali perpetual “peace clause”. “SUBTLE THREATS” AGAINST INDIA & OTHER DEVELOPING COUNTRIES Underlying these “subtle threats” is an alleged move to deny not only the permanent “peace clause” but also to curtail access to other special and differential treatment provisions on agriculture, including the benefits available to developing countries under Article 6.2 of the Agreement on Agriculture (AoA), which is treated as a “development box” of subsidies that are exempt from any reduction commitments. Article 6.2 of the AoA states: “In accordance with the Mid-Term Review Agreement that government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries, investment subsidies which are generally available to agriculture in developing country Members and agricultural input subsidies generally available to low-income or resource-poor producers in developing country Members shall be exempt from domestic support reduction commitments that would otherwise be applicable to such measures, as shall domestic support to producers in developing country Members to encourage diversification from growing illicit narcotic crops. Domestic support meeting the criteria of this paragraph shall not be required to be included in a Member’s calculation of its Current Total AMS (aggregate measurement of support).” For the past several years, the US and members of the Cairns Group of farm exporting countries had launched a sustained campaign that Article 6.2 should be eliminated. That campaign has not yielded any results. However, it has been raised under a different formulation that Article 6.2 should be subjected to a thorough review. In a similar vein, underlying the moves to challenge India’s invocation of the Bali “peace clause” and the alleged breach of New Delhi’s scheduled commitments for rice and wheat, is an alleged attempt to torpedo the Bali perpetual “peace clause” once and for all, said people familiar with the development. India’s use of the Bali perpetual “peace clause” for the second time for rice occurred due to the huge support for free food grains for around 800 million people during the pandemic, said people familiar with the development. It is against this backdrop that the US, the EU, and the Cairns Group members led by Australia, seem determined to curtail the flexibility to provide farm subsidies by India and other developing countries during this pandemic, despite the fact that the US and the EU provide tens of billions of trade-distorting farm subsidies that allegedly crossed their scheduled commitments, according to several estimates and studies. Although the dates for the re-convening of the WTO’s 12th ministerial conference (MC12) are yet to be decided, it seems clear that the chances of agreeing to the permanent “peace clause” are almost close to nil, and that on the contrary, a new narrative is underway of legally challenging the market price support programs (which are provided through public distribution programs in India) so as to deny major flexibilities to developing countries, said people familiar with the development. As reported in the SUNS last year, the mandated outcomes on the permanent solution for public stockholding programs for food security (PSH); the special safeguard mechanism (SSM); cotton; and the elimination of trade-distorting domestic subsidies, which are central issues for developing countries, may not find any resolution at the WTO. ANOTHER NORTH-SOUTH BATTLE ON AGRICULTURE For the third consecutive time in the WTO’s biennial ministerial conferences beginning from the 10th ministerial conference in Nairobi, Kenya (December 2015) followed by the 11th ministerial conference in Buenos Aires, Argentina (December 2017), and now at the much-delayed MC12 in Geneva, the permanent solution for PSH, SSM, and cotton are unlikely to be concluded because of opposition from the US, the EU, and the Cairns Group of farm exporting countries led by Australia. The WTO director-general Ms Ngozi Okonjo-Iweala, during a General Council meeting on 7 October last year, said “on agriculture, there was a recognition that this is probably the most difficult, where we are furthest away.” She said that “there is a lot of work to be done to come together with something that would be acceptable at MC12.” Ms Okonjo-Iweala said that “I would say that the spirit emerged to have a basic package and a strong work programme – following that with specifics and not just mentioning the word “work programme” – but to put some teeth in it, and timelines.” Continuing with her comments on agriculture at the General Council meeting, she said “one issue that I mentioned in my remarks was the need to be cognizant of the impact of the pandemic on low-income and low, middle-income countries, and the need to take into account this issue when we think about food security and what it means. This is a real issue that these countries have to deal with.” However, the DG failed to mention, at the GC meeting, the $700 billion in farm subsidies that are provided by the developed countries, which she had mentioned at the Paris mini-ministerial meeting earlier last year. STAGGERING LEVELS OF FARM SUBSIDIES BY US & EU Part of the problem is the staggering levels of trade-distorting farm subsidies provided by the US and the EU, who want to continue them without any reform of the inequities in the Uruguay Round. This is an attempt to conceal their Aggregate Measurement of Support (AMS) – referred to as the most trade- distorting domestic subsidies – which seems to have gone above their scheduled commitments, say farm trade negotiators. For example, the US has notified figures to the WTO on Washington’s aggregate measurement of support to the tune of more than $18 billion in the marketing year 2019/2020, resulting from the huge subsidies provided by the Trump administration on account of the US-China trade war as well as the COVID-19 pandemic. The figures suggest that Washington’s overall trade-distorting domestic support programs are below the de minimis level of $19 billion, but doubts are being cast as to whether the US is adopting some rather clever accounting practices in an attempt to conceal the likely breach that may have already taken place, said people, who asked not to be quoted. In conclusion, the developing countries have another major battle to wage at the WTO to retain their policy space to continue with their developmental agriculture programs.
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