TWN Info Service on Sustainable Agriculture
21 April 2022
Third World Network

LDCs outline their priorities on agriculture for WTO's MC12
Published in SUNS #9559 dated 21 April 2022

Geneva, 20 Apr (D. Ravi Kanth) -  The least-developed countries (LDCs), led by Chad, have offered their response to the allegedly "biased" draft text on agriculture for the World Trade Organization's 12th ministerial conference (MC12), which is tentatively scheduled to take place in Geneva from 12-15 June.

With their declining share of agricultural exports in global farm trade, which dropped from 0.83% in 2018 to 0.54% in 2020, the LDCs have called for "a reform of the Agreement on Agriculture (AoA) towards a fair and market-oriented agricultural trading system, which gives priority to issues related to food security and resilience, such as trade distorting domestic support, including cotton, the special safeguard mechanism and public stockholding for food security purposes."

In their communication (JOB/AG/227) dated 14 April, the LDC group stated its priorities unambiguously in response to the draft text issued by the chair of the Doha agriculture negotiations, Ambassador Gloria Abraham Peralta of Costa Rica.

The revised draft text (TN/AG/50) issued by the chair on 23 November 2021 has been severely criticized by developing countries and LDCs in various meetings on grounds that it has allegedly turned on its head the previous Doha ministerial mandates on agriculture, particularly an outcome on the permanent solution for public stockholding (PSH) programs for food security by MC12, said people familiar with the development.

India had said repeatedly that the chair's draft text is "imbalanced" and cannot be the basis for further discussions, a criticism that was also echoed by the African Group of countries.

Meanwhile, in a briefing paper issued by the Third World Network on 14 April, the authors - Ms Kinda Mohamadieh and Ms Ranja Sengupta - argued that "the agriculture negotiations leading up to MC12 in 2021 were already heavily biased against developing countries."

The paper graphically pointed out that "issues of great interest to them (the developing countries) have been consistently pushed to the back (burner) by the developed countries, with the active cooperation of the chair of the agricultural negotiations, Ambassador Gloria Peralta from Costa Rica."

It says that issues such as the permanent solution for PSH programs, which has been "languishing since 2013" and even the Special Safeguard Mechanism (SSM), have been pushed to the WTO's 13th ministerial conference (likely to take place in 2024).

The paper says that "there has been a systemic push to promote issues often inimical to the interests of developing countries" in domestic support.

The authors pointed out how the entire burden on domestic support is being shifted to the developing countries, including attempts to undermine the "development box" of special and differential treatment (S&DT) enshrined in Article 6.2 of the AoA.

The briefing paper also shed light on the emerging food crisis created by the Russia-Ukraine war.

It said that the "inequitable rules of the WTO Agreement on Agriculture (AoA) have ensured that subsidized agricultural products from developed countries penetrated markets in developing countries and LDCs, threatened small-scale production in these countries, and made many countries net food importers."

It is against this backdrop that the LDC proposal on agriculture for MC12 appears to tear down the chair's allegedly "biased" proposals that seem to be rigged in favour of the US and the Cairns Group of farm-exporting countries led by Australia and Brazil.

As reported in SUNS #9556 dated 14 April 2022, differences came into the open on agriculture at the "green room" meetings, with the United States indicating its unwillingness for any outcomes on agriculture, on the one side, and India arguing firmly that without a permanent solution for public stockholding programs for food security, it will not agree to any other outcome, on the other, said people familiar with the development.

Given the hardening of positions on the Doha agriculture mandate, particularly on the allegedly "biased" draft text circulated by the agriculture chair in November last year, the LDCs have set out their demands on agriculture for MC12.

THE LDC PROPOSAL

In their document issued on 14 April, the LDCs unambiguously stated that they would give priority to issues "related to food security and resilience, such as trade-distorting domestic support including cotton, the special safeguard mechanism and public stockholding for food security purposes."

On trade-distorting domestic subsidies, the LDC group argued that "there is no agreed principle and parameter on the trade-distorting domestic support reduction and the positions on agriculture negotiations remain broadly divergent."

The LDC group pressed for substantial cuts in trade-distorting domestic support and reducing existing asymmetries in domestic support entitlements, with a particular focus on products of specific export interest to LDCs.

Commenting on the chair's proposal on reviewing Article 6.2 of the AoA (which is referred to as the "development box"), the LDCs argued that domestic support provided to low-income or resource-poor farmers under Article 6.2 "shall not be subject to further limitations nor included in the calculation of trade-distorting domestic support."

On trade-distorting domestic support, the LDCs stated that the negative effects of high levels of trade-distorting domestic support provided by the European Union and the United States "continue to displace LDC producers on global markets while creating conditions of unfair competition on domestic and regional markets."

These demands raised by the LDCs seem to have already been opposed by the US and the Cairns Group led by Australia, said people familiar with the development.

Due to their marginal share in global agricultural trade and their vulnerabilities, the LDCs said that "special and differential treatment should be an integral part of future negotiations and exempt LDCs from any reduction commitments, in accordance with all our mandates originating under Article 20 and Article 15.2 of the AoA, and Article XI.2 of the Agreement Establishing the WTO."

The LDCs argued that the ongoing policies on trade-distorting domestic support "directly hamper the development and food security prospects of LDCs."

The group wants to be excluded from "any reduction commitments as a result of future disciplines on domestic support."

The group stressed that the "reference to reviewing Article 6.2 criteria shall be removed from paragraph 16 of the draft text".

EXPORT RESTRICTIONS

In its proposal, the LDC group stressed that export restrictions "are an important policy tool for LDCs in times of price volatility or risks of critical food shortages on the domestic market. At the same time, as net food-importing countries, LDCs are also vulnerable to the price volatility resulting from shortages on the world market."

COTTON

On cotton, a priority issue for the LDC group, it underscored the need "to continue negotiations on domestic support for cotton in accordance with mandates agreed by Ministers in Hong Kong, Bali and Nairobi to tackle cotton in an ambitious, expeditious and specific manner."

As an interim step, the LDCs want members to agree at MC12, to:

a. Freeze their trade-distorting support on cotton at 2019-2020 levels and refrain from introducing new such subsidies, while a negotiated solution is being sought; and

b. Negotiate, by the 13th WTO ministerial meeting, specific modalities to cap and progressively eliminate all forms of cotton trade-distorting support, taking into account the unique challenges faced by cotton-producing Members, including developing countries and LDCs.

SPECIAL SAFEGUARD MECHANISM

On the special safeguard mechanism (SSM), the LDCs reiterated that the establishment of "a special safeguard mechanism to offset the negative impact of price volatility and import surges on resource-poor farmers is an important aspect for LDCs."

As an interim step, the LDCs said "members should agree at the 12th Ministerial Conference to establish simplified investigation procedures for the application by developing countries and LDCs of safeguard measures on imports of subsidized agricultural products."

PUBLIC STOCKHOLDING

On the permanent solution for PSH programs, the LDC group stressed "the importance of agreeing on a permanent solution on Public Stockholding (PSH) for Food Security Purposes. This issue has been on hold for too long and concrete results are largely overdue."

The LDCs argued that any permanent solution should incorporate the following elements:

a. As envisaged by most proposals to date, the permanent solution should replace the interim "peace clause" with a decision that PSH programmes fulfilling certain conditions should not be included in the AMS calculation;

b. The scope of the PSH programme should not be defined in terms of specific crops nor subject to an upper limit on total procurement of the domestic production quantity. Rather it should cover any programme for the acquisition of foodstuffs at administered prices, provided that its objective is to support low-income or resource-poor producers; and

c. In addition, the permanent solution should cover any purchase of food at administered prices under PSH programmes, provided that the administered price is set below the level of international prices for the same crops.

Finally, the LDC group supported "a ministerial decision at MC12 prohibiting export restrictions on foodstuffs purchased for non-commercial humanitarian purposes by the WFP, provided that such purchases are in compliance with the "do-no-harm" principle underlying WFP's procurement policy, and that the supplying Member's food security is not jeopardized by such purchases."

In conclusion, the LDC group's communication seems to have brought about an alignment of priorities and interests of developing countries and LDCs in the deliverables on agriculture at MC12.

Given the opposition by the US and the Cairns Group to any credible outcome based on the previous ministerial mandates, it remains to be seen how the battle on agriculture unfolds at MC12, if it is held as scheduled.