TWN Info Service on UN Sustainable Development (Sept17/03)
19 September 2017
Third World Network

Argentina's "authoritarian" MC11 agenda views rile South nations
Published in SUNS #8533 dated 18 September 2017

Geneva, 15 Sep (D. Ravi Kanth) - Argentina, which is hosting the World Trade Organization's eleventh ministerial meeting in Buenos Aires from 10 December, has warned members to drop proposals for MC11, such as the elimination of most trade-distorting domestic subsidies - the Aggregate Measurement of Support (AMS) - proposed by China and India, on grounds that it will lead to the breakdown of the conference, sources told SUNS.

"Argentina, which is the chair for WTO's eleventh ministerial conference, is behaving in an authoritarian manner by telling countries to remove their proposals so as to ensure a successful ministerial meeting," said a source, who asked not to be quoted.

"For some time now, Argentina is setting markers as to what is feasible and what must be removed," the source maintained.

Further, Argentina does not seem eager to finalize the permanent solution for public stockholding programs for food security, as mandated by the tenth ministerial conference of December 2015, on grounds that it could pose problems at the ministerial meeting for successful resolution, the source said.

Argentina's comments on proposals tabled by members came into the open on Wednesday (13 September) at the informal open-ended meeting of the Doha agriculture negotiating body.

A large majority of developing countries - the African Group, the ACP (Africa, Caribbean, and Pacific) Group, South Africa, Zimbabwe, the Philippines, and Venezuela - supported the joint proposal from China and India for eliminating AMS, the most trade-distorting domestic subsidy in the industrialized countries, as a prerequisite for commencing the stalled reform in the domestic agricultural subsidies.

In their joint proposal - Job/Ag/102, China and India argued that "in the Uruguay Round AMS entitlements were made available in the Agreement on Agriculture to developed Members and some developing Members."

"Developed Members have more than 90% of global AMS entitlements amounting to nearly US$160 bn," the two largest developing countries maintained.

"As a result developed Members have access to huge amount of AMS beyond their de minimis," while "most developing Members have access only to de minimis resulting in a major asymmetry in the rules on agricultural trade," China and India pointed out.

Further, "most of the developing Members cannot provide product-specific Amber Box support exceeding 10% of the value of production of the agricultural product concerned," they maintained.

The asymmetries are further accentuated because the "developed countries and some developing countries are not even constrained by the 10% limit," and "theoretically speaking, the product-specific support on any product can be as high as the AMS limit."

In short, the developed countries - the United States, the European Union, Japan, Canada, Norway, and Switzerland among others - are provided "significant flexibilities" for supporting their trade-distorting subsidy programs for farm products.

The flexibilities include:

i. providing significantly high amount of subsidies compared to the value of production of the products concerned;

ii. concentrating the subsidies in a few products; and

iii. shifting the products in which the subsidies are concentrated.

China and India showed concrete examples of the AMS entitlements and the concentration of subsidies for specific products.

The two countries argued that "another distortion arises from the fact that Members with AMS limits have the flexibility to concentrate the subsidies in just a few products."

Against this backdrop, China and India said "in order to achieve the long outstanding reforms in agriculture subsidies the AMS entitlements of developed Members must be eliminated as a pre-requisite for consideration of other reforms in domestic support negotiations."

"Only in this way will it help reduce some of the inequities built into the WTO rules in favour of the developed Members," the two Asian countries pointed out.

Egypt on behalf of the African Group, Botswana on behalf of the ACP group, South Africa and Zimbabwe supported the joint proposal from China and India saying it offers a proper direction for reforming domestic farm subsidies.

China maintained that the agriculture negotiations must remain consistent with the Doha Work Program, including the 2008 revised draft modalities that were constructed on the basis of the development dimension.

China said the joint proposal with India showed how the developed countries enjoyed "exorbitant privilege" for continuing their trade-distorting domestic subsidies while curtailing minimum flexibilities for developing countries, said a person who took part in the meeting.

India maintained that the current Agriculture Agreement, premised on the Uruguay Round deal, is "imbalanced" and replete with "asymmetrical rules."

India suggested the subsidies provided in developing countries seem like a drop in the ocean as compared to the AMS and other trade-distorting subsidies granted by the developed countries.

In sharp opposition, the EU and Brazil said the joint proposal from China and India will maintain inequality between members as some developing countries would have AMS and others would not.

"Such a narrow focus on just one accounting mechanism of trade-distorting support represents a highly inaccurate picture of the realities of agricultural subsidies in major countries."

[It may be recalled that in August 2003, as a counter to a US-EU bilateral deal (on the eve of the Cancun ministerial) not to raise or focus on each other's subsidies but focus on developing country markets, Brazil had reached out to China and India, and created the G20 group of developing countries on 20 August 2003, for bringing developmental reform in global farm trade.

[The EU is on record at the Uruguay Round TNC at that time for hitting out on Brazil and others at their move countering the US-EU deal. Now, Brazil has jettisoned the G-20 to join hands with the EU against them. See SUNS #5401 of 21 August 2003, "Agriculture: Key developing countries formulate modalities approach", and #5402 of 22 August 2003, "Agriculture: G-17 get broad developing country support, attacked by EC". SUNS]

Argentina went well beyond the EU and other critics of the China-India joint proposal by suggesting that the joint proposal from the two developing countries is a recipe for disaster at Buenos Aires.

It said the joint proposal does not merit any attention, and urged members not to make such proposals at this juncture, said a participant who asked not to be quoted.

The unusual statement from Argentina caused a flutter at the meeting, raising the hackles of developing countries, because the MC11 host has started fixing the markers for the ministerial meeting, the participant said.

The United States, which does not want any reform of the AMS and other trade-distorting domestic subsidies at this juncture because of its ongoing preparation for the new farm bill, said there are far too many divergences.

The US expressed skepticism that members can find a solution to issues that remain unresolved for many years.

The US urged members to use the eleventh ministerial conference for "reflection" and not enter into any substantive outcomes.

Even on the issue of cotton subsidies, the industrialized countries remain evasive and reluctant to address the subsidies "ambitiously, expeditiously, and specifically," the participant said.

The EU and Brazil as well as Australia, New Zealand, and Canada from the Cairns Group - drove home a strong message for an outcome/agreement on domestic support at Buenos Aires.

They called for an outcome on Overall Trade Distorting Domestic Support (OTDS) in domestic support at the Buenos Aires meeting.

Australia said that it would be presenting a revised proposal with two or three options for a nominal ceiling for domestic support.

The EU and Brazil also made a case for an outcome based on their proposal of a floating limit for OTDS, expressed as a percentage of the Value of Production.

Australia, Canada, New Zealand and Paraguay, however, called for a fixed limit on OTDS in nominal terms.

The chair for the Doha agriculture talks, Ambassador Stephen Karau of Kenya, said in his state of the play report that "a key question is whether this limit should be fixed or floating" and "what type of support such a limit should apply to."

Australia said that it is working on a proposal to bridge positions on these two issues during the meeting.

Members remained divided on market access: the Philippines said any future work program must advance the unresolved issues in the Doha market access pillar while Paraguay and Peru suggested a work program without any linkage to the Doha Work Program.

Russia called for the elimination of special safeguards but several members - the EU, Korea, and the Philippines among others - said it is impractical to address the issue at this juncture.

On export restrictions, many members supported a proposal from Singapore for enhanced transparency notifications.

India, however, maintained that Singapore's proposal will impose burdensome requirements on developing countries.

In sum, the upcoming eleventh ministerial meeting in Buenos Aires has started presenting ominous signs, with the host country suggesting what should be decided during the four-day meeting, sources said.