DG must come clean on previous mandates on Doha Round

Writing prior to the 27 April TNC meeting, Chakravarthi Raghavan had highlighted developing-country concerns that the earlier agreed mandates on the Doha Round would be discarded in favour of an agenda which caters primarily to the developed countries’ interests.

GENEVA: When WTO Director-General (DG) Roberto Azevedo speaks at the informal meeting of the Trade Negotiations Committee convened for 27 April, the large majority of developing countries hope he will come clean on what he intends to do with the previous mandates on the Doha Round talks, and whether in fact he intends to dump them as the US wants and drastically change the special and differential treatment provisions in agriculture for developing countries in order to open their markets to heavily subsidized US agri-exports.

Azevedo, since February of this year (after the meetings of some ministers at Davos), has been holding consultations, in particular with the US, the EU and some other nations, purportedly to find a way forward to draw up by end July a post-Bali work programme on the Doha Development Agenda (DDA), as decided by the WTO General Council in November 2014.

While he has been holding meetings with groups of countries, a large number of developing countries have come away from such meetings with the feeling that it was mere pro forma and that they are being kept out of the loop while he has been seeking the views of the US, the EU and a select few developing countries on “recalibrating” the DDA.

In these efforts, Azevedo has been consulting with the former US agriculture negotiator Joseph Glauber on the kind of “recalibrated” agricultural agenda on the domestic support and export competition pillars which the US can live with and accept under the current US farm legislation (and which would thus not require any modification of current US support/subsidy policies).

In their various remarks and statements at the WTO, at formal meetings and small informal consultations, the US and the EU have not only been attempting to resile from their legal commitments to further reforms and an end to their subsidization of domestic agriculture. They have also been seeking to get key developing countries to give up their existing rights under the WTO Agreement on Agriculture (AoA) and open up their markets to subsidized exports from the US and the EU at the cost of poor and marginal farmers in these developing countries.

Rev. 4 text

The DG’s consultations with a small number of countries and the two subsidizing “elephants” in the agricultural sector (the US and the EU) have been running in parallel to the consultations being held by the chair of the agriculture negotiations, Ambassador John Adank of New Zealand, where members have repeatedly made clear the need to base further talks on the Rev. 4 agri-modalities text.

This text, evolved after several years of negotiations under the Doha Round, cannot be jettisoned merely because it does not suit the interests of one country (the US), developing-country members have been insisting.

According to various media reports, the DG, in his consultations, is proceeding on the basis of major modifications to the Rev. 4 text, which he has said, in various pronouncements last year outside the WTO, is no longer feasible.

At the 27 April meeting, the DG has to come clean on what he intends to do with the previous mandates on the DDA negotiations, including the 2008 revised draft modalities, as there are growing attempts to undermine the special and differential treatment provisions of the AoA, according to developing-country trade envoys.

In a move to satisfy a “trans-Atlantic trade elephant” that wants commitments from developing countries in the domestic support pillar regardless of the special and differential treatment provisions in the AoA that exempt certain subsidy programmes of developing countries from any reduction commitments, the 2008 revised draft modalities could be torpedoed so as to ensure a brand-new post-Bali work programme, developing countries fear.

If a post-Bali work programme is cobbled together in the next three months, then it would become the basis for concluding the DDA negotiations at the 10th Ministerial Conference of the WTO in Nairobi, Kenya, in December.

Azevedo is due at the 27 April TNC meeting to report about his assessment of the state of play in the negotiations and his consultations, particularly in agriculture.

The developing and least developed countries want to know what the DG has been and is discussing and pursuing behind the scenes on the issue of subsidies in the domestic support pillar, a South American trade envoy told the South-North Development Monitor (SUNS).

“We are not invited to the closed-door negotiations but we are hearing reports that various special and differential treatment flexibilities are going to be curtailed in the post-Bali work programme,” the envoy said.

D. Ravi Kanth adds from Geneva:

On 22 April the DG held consultations with the so-called G6 countries – the US, the EU, China, India, Brazil and Australia – to discuss the critical issues in the domestic support pillar, where one major developed country is unwilling to undertake commitments commensurate with its current levels of trade-distorting subsidy programmes. At the same time, that country wants developing countries such as China and India to undertake reduction commitments in their subsidy programmes aimed at benefiting their poor and marginal rural farmers.

Prior to the meeting with the six countries, the DG also held two rounds of consultations with former chief US agriculture trade negotiator Joseph Glauber to map out commitments the US can accept in accordance with its latest farm bill, which was passed last year.

For many countries, said another trade envoy, it is not clear what has transpired in the meetings that the DG has held so far, and whether they are a preparation to carve out commitments on who should do what regardless of the previous mandates.

Besides these two reported developments, the DG also held consultations with various other members during which he would have tested different ideas.

Therefore, he must clarify once and for all whether the previous mandates – the 2001 Doha Ministerial Declaration, the July 2004 framework agreement, the 2005 Hong Kong Ministerial Declaration and the 2008 revised draft modalities – are all being “recalibra-ted”, a euphemism for undermining the previous mandates to suit the interests of one or two major developed countries.

[Since the 2013 Bali Ministerial Conference, Azevedo has been voicing outside the WTO the view that the 2008 modalities are no longer doable, and that special treatment to developing countries and least developed countries is only their wish and not a right. See articles titled “Multilateralism or global corporatism?” by Chakravarthi Raghavan in TWE No. 571, and “Azevedo renews his pitch for completion of TF Agreement” by Chakravarthi Raghavan in SUNS No. 7833 (30 June 2014). – SUNS]

When Azevedo was the trade envoy of Brazil in 2011, he co-wrote in an article: “The December 2008 draft modalities are the basis for negotiation and represent the end-game in terms of landing zones ambition. Any marginal adjustments in the level of ambition of those texts may be assessed only in the context of 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.”

Four years after making such a profound statement, Azevedo, in his new avatar of DG, has now left no stone unturned in giving conflicting signals on what is being attempted in agriculture because at the WTO he continues to remain conspicuously silent on the relevance of the Rev. 4 text for the formulation of the post-Bali work programme.

Special and differential treatment

Several developing countries want to know whether the special and differential treatment provisions in the AoA would remain sacrosanct or are being changed as the US wants when it says “big subsidizers” must place their programmes on the table for undertaking reduction commitments.

The US is particularly targeting input subsidies and market price support (MPS) programmes of developing countries for procuring food grains for public distribution programmes.

The developing countries, for example, are currently exempted from reduction commitments on agricultural input subsidies under Article 6.2 of the AoA, which says: “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.”

Therefore, when the US says input subsidies and MPS are more trade-distorting than area payments and partially decoupled support, clearly it is aimed at undermining Article 6.2.

Against this backdrop, the developing countries want to know from the DG what is going to be the status of Article 6.2, whether it would be truncated to remove the benefits for some developing countries or whether it would be further watered down.

Also, the US wants China’s de minimis support to be disciplined despite the Rev. 4 text having accorded an exemption to all the recently acceded members (RAMs) from reduction commitments.

Chair’s consultations

Further, there are concerns as to whether the DG’s meetings with the G6 will prevail over the consultations held by the chair of the agriculture negotiations Adank, where a majority of developing countries and LDCs are still maintaining their position that the Rev. 4 text should be the basis for formulating the post-Bali work programme.

A large majority of developing countries, for  example, called for retaining the Special Safeguard Mechanism (SSM) provision in the Rev. 4 text, perhaps with some minor changes. They also suggested specific changes in the Green Box and AMS to construct the permanent solution for public stockholding programmes for food security.

During the chair’s consultations on export competition on 22 April, many members  demanded  that the Rev. 4 disciplines on export subsidies, export credits,  food  aid  and  state trading enterprises must form part of the post-Bali work programme, according to trade envoys who took part in the meeting.

The US, however, maintained that the issues in the export competition pillar are complicated.

The disciplines on export credits in the Rev. 4 text could pose problems to the US, said a negotiator familiar with the agriculture consultations.

Japan demanded that export restrictions must be included in the work programme, while Switzerland demanded the inclusion of geographical indications.

When it comes to cotton, which was discussed on 23 April by Adank, the US continued to insist that China and India must reduce their support for cotton programmes.

In a sharp response to the US demand, China said its per capita cotton subsidies are estimated to be around $20 while the US’ per capita cotton subsidies are around $35,000.

India charged the US with continuing to provide trade-distorting subsidies that are contributing to 80% of the American cotton exports.

Besides, the US now provides a new crop insurance policy for its cotton producers called the stacked income protection plan (STAX) which could further harm the interests of the four major cotton-exporting West African countries Benin, Burkina Faso, Mali and Chad.

Against this backdrop, developing countries say, the DG must set the record straight on the previous mandates and whether he would allow the negotiations to be turned upside down just to suit the interests of one or two major “trans-Atlantic trade elephants.”

Between the two trans-Atlantic members, one wants minimal or zero commitments in the domestic support pillar while the other wants a simplified-average and minimum-cut reduction commitments in market access.

Azevedo’s continued silence on these two issues only reinforces the fears that developing and poorest countries continue to harbour at this juncture about the emerging post-Bali work programme. (SUNS8010)                   

Third World Economics, Issue No. 592/593, 1-31 May 2015, pp10-12