Developed nations stonewall on food security

Entrenched developed-country positions are stymieing efforts at the WTO to enable developing countries to maintain public stockholding schemes geared towards attaining food security.

by D. Ravi Kanth

GENEVA: Major developed countries on 17 April gave short shrift to a proposal from the G33 developing-country coalition that offered credible options for creating “policy space” in the proposed permanent solution for public stockholding programmes for food security purposes in the developing countries, several trade envoys said.

The United States, the European Union, Canada, Australia and Norway along with Pakistan, Paraguay, Thailand and Colombia adopted stonewalling tactics by avoiding addressing the elements proposed by the G33 in its proposal.

The chair of the Doha Round agriculture negotiations, Ambassador John Adank of New Zealand, had convened a meeting of select trade envoys on 17 April to discuss various issues concerning the disciplines to be included in the mandated permanent solution for public stockholding programmes for food security by the end of this year.

Members who were present at the meeting included the US, the EU, Canada, Australia, Norway, New Zealand, China, India, Indonesia, Brazil, the Philippines, Barbados (representing the African, Caribbean and Pacific coalition), Lesotho (on behalf of African countries), Pakistan, Paraguay, Thailand and Colombia.

Ahead of the meeting, the chair had posed several questions to the participants. These include “what forms can members envisage for a permanent solution” in terms of new rules that would increase “policy space” to a defined degree subject to various conditions.

Adank sought to know “whether the permanent solution [should] be more like a permanent mechanism that would respond to a particular situation that might emerge in an individual developing country”.

The chair also asked how to address the “unintended consequences” that would arise from the G33 proposal which was submitted last year. Adank wanted to know “what kind of alternative approaches to treatment within the Green Box could be considered”.

Lastly, the chair asked “what are the kinds of safeguards that members would see as important for any permanent solution” and “whether the safeguards in the interim solution/peace clause assist in this regard and if so, how might they be utilized for the permanent solution.”

Policy space needed

In response to the chair’s questions, Indonesia, which coordinates the G33 coalition which counts India, China, the Philippines, Kenya, Zimbabwe, Venezuela, Bolivia and Cuba among its members, made a detailed statement.

Indonesian Ambassador Iman Pambagyo rejected the US’ proposal “on the proposed Elements for Discussion on Public Stockholding for Food Security”, pointing out that the proposal goes beyond finding a permanent solution on public stockholding for food security purposes as mandated by trade ministers at the WTO’s 9th Ministerial Conference in Bali, Indonesia, in December 2013.

The Bali mandate, which was further modified last year after India and the US had reached an understanding, calls on WTO members to negotiate “a permanent solution on the issues of public stockholding for food security purposes” by 31 December 2015.

The US proposal now calls for a review of “the efficacy and trade effects of the existing public stockholding programmes for food security policies.” The US wants “to review the existing WTO rules and policies adopted by Members and how these policies are constrained by those rules,” and finally “to establish best practices for capacity building to implement the agreed best practices.”

Indonesia said the G33 “would like to make it clear that we tabled the proposal not because we have limited capacities to adopt best practices in this area but, rather, because we need some policy space to effectively support low-income or resource-poor farmers, to fight hunger and rural poverty.”

“What we are seeking are specific inputs or suggestions on how the Group [G33] could help [in] addressing some concerns and objections by some Members to the Group’s proposal,” but not extraneous comments, the Indonesian ambassador said.

The G33 proposal offered three alternatives for constructing the permanent solution. First, adding a new paragraph to the government services programmes in the Green Box disciplines of the WTO’s Agreement on Agriculture on public stockholding programmes for food security.

Second, the G33 suggested modifying the existing rules to ensure that the acquisition of food stocks by developing countries to support low-income, resource-poor producers is not required to be calculated under the Aggregate Measurement of Support (AMS) in the Amber Box measures.

And third, it called for modifying and amending the rules to calculate subsidies based on the so-called external reference period 1986-88.

“General comments or utter rejections certainly will not help us to arrive at a permanent solution as mandated by our Ministers,” Indonesia told its counterparts from the developed world.

The G33, said Indonesia, wants “amended rules which will allow us some policy space to acquire stocks from low-income or resource-poor producers, and to fight hunger and rural poverty.”

“We are not talking about a permanent mechanism to respond to a particular situation that might emerge in a developing country,” Indonesia told the chair, while dismissing the criticism from Canada that public stockholding programmes for food security will lead to import substitution.

“Any agriculture policy which is aimed at increasing efficiency in domestic production, even if they are undertaken within the minimally trade-distorting scheme, will always create import substitution effects,” Indonesia said, according to participants familiar with the discussion.

As regards the repeated criticism from the EU and other developed countries that market price support cannot be transferred to the Green Box, Indonesia reminded them that the elements proposed in the G33 proposal “are already contained in Annex 2 [of the Agreement on Agriculture] that concerns The Basis for Exemption from The Reduction Commitments (the Green Box).”

Indonesia said the G33 wants the discussions on finding a permanent solution to be undertaken independently of discussions on the domestic support pillar of the Agreement on Agriculture.

Open markets

After the detailed statement from Indonesia, the US maintained that the task before members is to open markets and ensure food security for all, said a participant familiar with the meeting.

Despite two-and-a-half years of intense negotiations on the need for a permanent solution for public stockholding programmes for food security, the US claimed that it is lacking an understanding of the nature of the problem.

The US said it wants to know how the current Agreement on Agriculture does not provide policy space.

(The Doha Round was launched primarily to address the anomalies in the Agreement on Agriculture, which was based on the specific understandings between the US and the EU in the Blair House Agreement of November 1992.)

Pakistan, which has vociferously supported the US in the discussion on public stockholding programmes during the last two-and-a-half years, said members must not promote stockholding programmes as such schemes would distort trade. Any further policy space as demanded by the G33 will reduce “policy space of WTO,” it argued. The US proposal is a good starting point, Pakistan emphasized.

The EU said the US proposal to study public stockholding programmes ensures the profound need to understand the issue.

The EU is a major user of the Green Box and Blue Box measures that are found to be trade-distorting.

However, it categorically ruled out that the permanent solution for public stockholding programmes “cannot be found in the Green Box.”

“We can talk of Green Box or the entire [Agreement on Agriculture] but this will not lead to a permanent solution,” the EU warned.

Canada said the G33 proposal poses difficulties both “on the front and the back end” because on the front end it leads to increased purchases to satisfy the hunger of the producers while the distribution on the back end will lead to “export surges and import substitution.”

Australia said it is concerned about “the integrity of Green Box and exports from public stocks”. While claiming that it is committed to a permanent solution, Australia said the G33 proposal is seeking “more policy space for trade-distorting support.”  The distorting support should  not undermine international markets, according to Australia.

Norway, while acknowledging the need for the permanent solution, maintained that the Green Box is difficult.

Thailand, Paraguay and Colombia pressed for strong safeguards and predictability because of unintended consequences.

In sharp response to concerted criticisms from major industrialized countries and their allies in the South, India maintained that small and resource-poor farmers are unable to play their role due to an imperfect market. Consequently, those farmers in the developing world need support from the front end. As regards the back end, India said the Public Distribution System is feeding 800 million people. Public stockholding and market price support are crucial for the continuation of agriculture on which resource-poor farmers depend for their survival, India said.

Brazil said it would support domestic policies for food security.

In a nutshell, the intransigent positions adopted by the developed countries are a clear signal that the G33 and its members can forget a permanent solution with credible disciplines by the end of this year.

“There is no way that the US will allow any change in the [Agreement on Agriculture], which helps Washington to continue with its trade-distorting farm support programmes,” said a former trade envoy from an industrialized country. (SUNS8007)                 

Third World Economics, Issue No. 592/593, 1-31 May 2015, pp15-17