MC10 going down to the wire, US intransigent

The sharp differences among the WTO membership over agriculture and the fate of the Doha Round were played out in the course of the Nairobi meeting, as revealed in the following day-by-day reports on the conference proceedings.

by D. Ravi Kanth

NAIROBI (18 DEC): The WTO’s 10th Ministerial Conference, scheduled to end today, is going down to the wire because of the intransigent positions adopted by the United States.

The US is refusing to allow any mention of the Doha negotiations in the proposed Nairobi deliverables as well as the reaffirmation for continuing with the Doha Development Agenda (DDA) trade negotiations in the final ministerial declaration, several people familiar with the development told the South-North Development Monitor (SUNS).

A marathon “green room” meeting of five members – the US, the EU, China, India and Brazil – is trying to arrive at compromise language on the special safeguard mechanism (SSM) for developing countries, the work programme for finalizing the permanent solution for public stockholding programmes for food security, and the four elements of agricultural export competition – elimination of export subsidies, and disciplines on export credits, international food aid and state trading enterprises.

According to people familiar with the meeting, the differences are not abating on account of “my way or the highway” positions adopted by the US, which is insisting on having specific language on the three issues.

The facilitator for the agriculture deliverables, Joshua Setipa, the trade minister of Lesotho, was supposed to issue a revised second draft on 18 December morning and hold a meeting by noon. But, so far, the text has not been circulated due to continued fierce differences among the five countries, said a person who asked not to be quoted.

Continued differences

The differences on export competition are primarily between the US and China over export credits. China has questioned the underlying rationale of the proposed disciplines on export credits, particularly the repayment period and self-financing provisions.

In line with the US proposals, the facilitator has proposed maximum repayment period of 18 months as covered under the US’ GSM-102 export financing programme. Further, the facilitator has shelved the window of four years for refinancing. The language on self-financing which says it has to cover losses in the long term is what is already in the Agreement on Subsidies and Countervailing Measures.

In effect, the proposed language on refinancing merely reiterates the current rules, according to an agriculture negotiator who asked not to be quoted.

Under the 2008 revised draft modalities or Rev.4, export financing programmes even by private entities are not allowed. The draft by the facilitator has deleted this requirement, thereby allowing US financial institutions, banks or private insurance companies to remain undisciplined, the negotiator said.

China has suggested that the Hong Kong Ministerial Declaration and the Rev.4 disciplines are not followed so as to allow one member to continue its export subsidization through its export credit programmes, according to the negotiator.

China and India also raised sharp concerns on the proposed disciplines for agriculture monopoly state trading enterprises based on best-endeavour provisions.

The special and differential treatment flexibilities accorded to the developing countries in the 2008 revised draft modalities are not provided in the facilitator’s draft. Worse still, said the negotiator, the facilitator’s draft provisions on international food aid are based on best-endeavour provisions as proposed by the US in its proposal submitted a couple of months ago.

Besides the continued differences on export competition, China, India and Turkey with a few other countries have tabled two proposals on the special safeguard mechanism and public stockholding programmes for food security.

The two proposals, though substantially watered down as compared to the work done during the Doha trade negotiations, proposed an accelerated work programme to arrive at decisions by the next (11th) Ministerial Conference in 2017.

The draft proposal submitted by the three countries on the SSM called for an accelerated programme. It says:

“1. The developing country Members shall have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers.

“2. The Members shall intensify efforts to achieve rapid progress on work on a Special Safeguard Mechanism based on import quantity and price triggers for developing Members taking note of the work done so far, and the proposals by Members in this regard.

“3. The negotiations on this subject shall be held in the Committee on Agriculture in Special Session, in dedicated sessions and in an accelerated time-frame, distinct from the agriculture negotiations under the Doha Development Agenda. Members shall engage constructively to negotiate in order to ensure adoption of the Special Safeguard Mechanism by the eleventh Ministerial Conference.

“4. The General Council shall regularly review progress.”

On public stockholding program-mes for food security, the draft proposal says:

“Members reaffirm that the mechanism as set out in the Bali Ministerial Decision on Public Stockholding for Food Security Purposes, and the General Council Decision of 27 November 2014, shall remain in force until a permanent solution on the issue of public stockholding for food security purposes is agreed and adopted.

“1. The negotiations on a permanent solution on the issue of public stockholding for food security purposes shall continue to be pursued as a priority in the Committee on Agriculture in Special Session, in dedicated sessions and in an accelerated time-frame distinct from the agriculture negotiations under the Doha Development Agenda, so as to agree and adopt the permanent solution on Public Stockholding for Food Security Purposes, by the Eleventh Ministerial Conference.

“2. The General Council shall regularly review progress of these dedicated sessions.”

The United States vehemently opposed the proposal on the SSM because it mentions the Doha Development Agenda negotiations. The US along with Australia and Brazil have also rejected any language for the SSM work programme since no market access negotiations are being proposed in the deliverables, said a South American trade official.

Effectively, the US is blocking any mention of the Doha ministerial decisions in any of the deliverables in agriculture, said a developing-country envoy.

The way ahead

Meanwhile, the chair of the Nairobi meeting, Amina Mohamed, Kenya’s Cabinet Secretary for Foreign Affairs, held meetings with the trade ministers of the five countries on the most contentious issues in Part III of the draft ministerial declaration.

Mohamed has suggested language to the effect that since the two sides remained divided on the continuation of the Doha negotiations, negotiations will be continued without mentioning Doha at all.

The Indian trade minister Nirmala Sitharaman insisted that without having clear language that includes Doha in the work programme, India cannot accept the draft, said a person familiar with the meeting.

Further, the chair’s proposal to include new issues also resulted in a sharp divide among the developing countries on the one side and the major developed countries on the other. The developed countries want the inclusion of new issues in the final declaration.

In sum, the Nairobi meeting is on the verge of either setting new rules to suit the trade initiatives of the developed countries or collapsing like the infamous Cancun Ministerial Conference. So far, there is no agreement among the five countries but a compromise cannot be ruled out, according to a trade envoy. (SUNS8160)                                          

Third World Economics, Issue No. 605, 16-30 November 2015, pp7-8