SSM blocked by US, EU, Australia and Brazil

by D. Ravi Kanth

GENEVA: The United States, the European Union, Australia and Brazil on 24 November blocked a major deliverable concerning the special safeguard mechanism (SSM) for the developing countries at the Nairobi ministerial meeting, several trade envoys told the South-North Development Monitor (SUNS).

The G-33 group of developing countries led by Indonesia have consistently demanded the SSM in the Doha agriculture negotiations in order to safeguard the interests of their hundreds of millions of poor farmers from unforeseen surges in imports of agricultural products, particularly those supplied by heavily-subsidizing developed countries.

The chair of the Doha agriculture negotiations, Ambassador Vangelis Vitalis of New Zealand, convened a closed-door meeting on 24 November with 10 countries to explore the outcome on the SSM for the Nairobi meeting. Vitalis called the trade envoys of the US, the EU, Australia, Japan, Brazil, China, India, Indonesia, the Philippines and Turkey to discuss the G-33 proposal.

G-33 proposal

Indonesia made a detailed presentation of the G-33 proposal on the SSM, explaining the central features of the proposed instrument, including the volume and price triggers.

Indonesia suggested that the volume-based SSM “shall be applied on the basis of a moving average of imports in the preceding three-year period” (hereafter “base imports”). On this basis, the applicable triggers and remedies shall be set as follows:

a. Where the volume of imports during any year exceeds 110% but does not exceed 115% of base imports, the maximum additional duty that may be imposed on applied tariffs shall not exceed 25% of the current bound tariff or 25 percentage points, whichever is higher.

b. Where the volume of imports during any year exceeds 115% but does not exceed 135% of base imports, the maximum additional duty that may be imposed on applied tariffs shall not exceed 40% of the current bound tariff or 40 percentage points, whichever is higher.

c. Where the volume of imports during any year exceeds 135% of base imports, the maximum additional duty that may be imposed on applied tariffs shall not exceed 50% of the current bound tariff or 50 percentage points, whichever is higher.

Indonesia spoke about other features such as the calculation of volume and price triggers and the application of volume-based and price-based SSM, and the exceptions.

The Philippines explained the importance of the SSM for developing countries in general and their farmers in particular. The SSM, according to the Philippines, is essential for its farmers in the current context of volatile global farm prices.

For a while during the meeting, there was silence as major developed countries did not speak. After considerable prodding by Vitalis for a constructive discussion, Australia said it will reject the SSM because it is a balancing element for the proposed deliverables in the export competition pillar. Australia maintained that it cannot agree to the SSM without discussing issues in the market access pillar.

Australia said the SSM cannot be addressed without discussing the trade involving free trade agreements, according to trade envoys familiar with the meeting.

Turkey said the SSM is not linked with market access according to the Hong Kong Ministerial Declaration of 2005, in which trade ministers did not draw any linkage between the SSM and market access, according to trade envoys present at the meeting. The Hong Kong Ministerial Declaration maintained that “developing country Members will also have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers, with precise arrangements to be further defined,” Turkey pointed out.

The EU praised the G-33’s work on the revised SSM proposal but maintained that the developing-country coalition did not address the central issue of the linkage with market access. Without addressing market access, members can’t engage in the SSM, the EU maintained.

The US said many developing countries do not want the SSM without market access. The US said that it cannot agree to the SSM without “new market access,” according to trade envoys present at the meeting.

China lamented the lack of proper engagement despite the G-33 having explained all the features of the SSM. China said it is concerned about the fate of the SSM, emphasizing that political willingness is more important.

Brazil said that it will not question the motives of the members who have tabled the G-33 proposal. However, it cannot accept the SSM without market access, stressing that without market access it cannot accept a mechanism that is more trade-restrictive.

From the statements made by Australia, the EU, the US and Brazil, it is very clear that they are determined to stonewall the negotiations, India maintained, according to trade envoys present at the meeting. If this is the level of engagement that members are showing on the SSM, then they must be prepared for the same level of engagement in other areas, India warned.

In response to India’s statement, the US maintained that disagreement doesn’t mean non-engagement. The US sought to know whether the G-33 will allow export competition to progress or not, said a trade diplomat familiar with the discussion.

Later on 24 November, the chair convened a meeting of trade envoys of the US, the EU, China, India, Brazil, Australia and Japan to discuss the proposals tabled by Brazil and the EU on export competition and the US proposals on food aid and state trading enterprises.

At the meeting, India objected to the process involving only seven countries but not a larger group of countries to discuss the proposals on the export competition pillar. India suggested that the chair must adopt a parallel process involving a larger group of countries as he had suggested at the SSM meeting, according to trade envoys present at the meeting.

In short, the US, the EU, Australia and Brazil want to pocket outcomes in the export competition pillar at the Nairobi meeting without yielding ground on the SSM and the permanent solution for public stockholding programmes for food security for developing countries. This will be a repeat of the 2013 Bali Ministerial Conference in which they grabbed a binding Trade Facilitation Agreement while offering only best-endeavour outcomes to the least-developed and developing countries, a developing-country trade envoy said. (SUNS8143)                                          

Third World Economics, Issue No. 604, 1-15 November 2015, pp8-9