TWN
Info Service on WTO and Trade Issues (Mar15/06)
30 March 2015
Third World Network
Wide gaps at WTO on public stockholding issue
Published in SUNS #7989 dated 25 March 2015
Geneva, 24 Mar (Kanaga Raja) -- "Wide gaps" remain among
the membership on the G-33 proposal for a permanent solution on the
issue of public stockholding for food security purposes, the Chair
of the agriculture negotiations has told the Special Session of the
Agriculture Committee at the World Trade Organisation (WTO).
The Committee was holding a dedicated session on the issue of a permanent
solution to public stockholding on the afternoon of 20 March. The
dedicated session was preceded by an informal meeting in the morning
that discussed the issues of market access and domestic support.
According to trade officials, the Special Session of the Agriculture
Committee chaired by Ambassador John Adank of New Zealand took up
in the morning of 20 March two papers, one by Paraguay and the other
by Argentina, on possible new approaches to tariff reduction.
However, these papers as well as a series of consultations in smaller
groups on market access and domestic support held by the Chair have
shown that differences remain on many of the key points, in particular
on the question of whether the existing Rev. 4 draft modalities text
is the basis for further negotiations, trade officials added.
"The issues are certainly becoming much more familiar with delegations
but the convergence is still the real challenge that we face here,"
said the Chair in wrapping up the 20 March meeting.
DISCUSSION ON MARKET ACCESS AND DOMESTIC SUPPORT
According to trade officials, reporting on his consultations among
a smaller group of countries on market access, Ambassador Adank said:
"While the discussions suggested some possibilities for convergence,
it's clear that different views continue to exist regarding the suitability
of various approaches."
"The concerns raised by members on certain aspects of the proposals
are familiar because many of these are linked to the fact that members
in the WTO have extremely diverse tariff structures. This means, of
course, that the results of any formula approach will affect each
Member differently. These issues were present when we were negotiating
the 2008 draft modalities and they persist today," he added.
The Chair said that his task is to find a path to convergence and
he will hold more consultations on this.
According to trade officials, there were two new unofficial papers
from Paraguay and Argentina, both suggesting that tariff reductions
in agriculture should at least partly be achieved by members exchanging
requests and offers with each other instead of using the formula in
the Rev. 4 text.
Paraguay has proposed that members' offers be based on an average
tariff reduction figure that would also be subject to a minimum cut,
while Argentina has proposed a request-offer approach that is not
based on any targets or formulae.
According to trade officials, Paraguay has proposed a formula for
cutting tariffs that would specify an average cut across all agricultural
products - except those that have "bound" tariff ceilings
below 10% or are duty-free - subject to a minimum cut.
Countries would be free to propose bigger or smaller cuts for individual
products, provided the averages and minimums were respected. The proposed
cuts would be "initial offers", and a country would then
enter into two months of bargaining if other countries request, for
example, steeper cuts for products that they export.
According to the proposal, the Least Developed Countries (LDCs), Small
and Vulnerable Economies (SVEs) and countries that have joined the
WTO "very" recently would not have to make any cuts.
According to trade officials, Paraguay has also provided some tentative
figures (highlighted in square brackets): a 54% average and 20% minimum
cut for developed countries; a 36% average and 15% minimum cut for
developing countries in general (apart from the LDCs, SVEs and "very"
recent new members); and a 30% average with a 10% minimum cut for
new members except those that joined "very" recently. The
cuts would be phased in over a suggested period of five years (six
cuts) for developed countries, and 10 years (11 cuts) for developing
countries.
According to trade officials, while several countries said that the
proposal had helped to focus the discussions, some had reservations,
saying either that it was not ambitious enough or that it was too
ambitious.
Chinese Taipei, on behalf of the Recently Acceded Members (RAMs),
said that there should be no distinction between those that joined
recently and those that joined earlier on, since the membership negotiations
resulted in all of them having lower bound tariff ceilings than the
rest of the membership - 17% on average for these new members, compared
with 40% in developed countries and close to 62% in developing countries.
According to trade officials, Argentina has proposed that countries
request import tariff cuts from their trading partners, which could
then respond with offers. The approach would be same in agriculture,
non-agricultural market access (NAMA) and services.
Some members however rejected Argentina's proposal outright, saying
that the outcome would be too unpredictable, that the negotiations
would take too long, and that smaller countries with less bargaining
power would be at a disadvantage.
According to trade officials, members also remained divided on the
amount of flexibility to be allowed for all countries on tariff reductions
for products that are politically sensitive, and for developing countries
on "special products (SP)" and a "special safeguard
mechanism (SSM)".
On the issue of domestic support, trade officials said that the focus
has been on the concept of "overall trade-distorting domestic
support" (OTDS), which comprises the Amber Box, the Blue Box
and de minimis.
Reporting on his consultations on this issue, the Chair said that
these consultations "were very useful. In short, it was seen
by many to be a valuable concept in terms of its design to reduce
trade distorting support, limit box- shifting, and/or level the playing
field. However, the discussions also helped to uncover some important
issues which attract sharply differing views. These will require further
serious effort."
"Over the next few weeks, I intend to continue similar consultations
on each key element of the Domestic Support toolbox, bearing in mind
that of course they are inter-related," he said.
In the ensuing discussions, the European Union said that the Rev.
4 text would mean an 80% reduction in OTDS for them and a 70% cut
in the Amber Box. Thanks to the reform of the Common Agricultural
Policy, the EU said that it is willing to take up the challenge of
the Rev. 4 text.
The US said that it is committed to the post-Bali work programme,
and to the view that members should contribute commensurate with their
positions.
According to trade officials, China supported the G-33, saying that
the Rev. 4 text is the only negotiating document on the table.
Referring to some members that have said that they have difficulties
with the Rev. 4 text, China said that it wants to know what these
difficulties are.
It said that it can consider the difficulties that some members have,
but it cannot negotiate the whole of the Rev. 4 text.
China also contested the notion of new ideas, saying that these must
be consistent with the mandates, and they should not be more flexible
for some while asking others to do more.
On market access, China said that the July 2004 framework mandate
spells out a tiered formula for reducing tariffs, and there is no
mandate for a request-offer approach.
It further said that any re-calibration should not be used to dilute
the rights of some members while reducing obligations for some other
members.
As the largest net importer, China said that it is not a demandeur.
It can contribute but it has already made considerable concessions.
With respect to the issue of domestic support, India said that the
Rev. 4 text is the basis for the negotiations and those with difficulties
should say what they are.
Australia said that the issue boils down to two main questions: What
is the US prepared to do, either if others do not "contribute"
(by making their own cuts) or if others do contribute? What is China
prepared to do?
The Cotton-4 said that the domestic support discussions will have
implications for cotton.
According to trade officials, Brazil said that the tiered formula
is the best means so far to achieve ambitious results in market access
and domestic support.
South Africa said that it is willing to work with proposals in the
Rev. 4 text.
On the issue of market access, India that it is constructively engaged
but that should not be interpreted as supporting the simplification
of tariff reduction formulas.
According to trade officials, India disliked the Paraguay paper, saying
that it turns S&D on its head. While it accepts that the Rev.
4 text was never agreed, India pointed to the July 2004 and the Hong
Kong ministerial decisions. It had heard in other contexts of ministerial
decisions that have to be respected. Therefore, the tiered formula
is a ministerial decision, it added.
It also said that the issues of SP and SSM were also in the July 2004
framework. The design may differ and that can be negotiated but the
concept cannot be scrapped, it said.
The EU welcomed the Paraguay paper but said that it needs further
discussion. It said that more elements can be further simplified.
Using average cuts undeniably helps to make the negotiations simpler
but the EU will refrain at this stage from discussing numbers, as
it needs to see the contours first to match it with NAMA, as well
as the two other agriculture pillars.
PUBLIC STOCKHOLDING FOR FOOD SECURITY
Reporting on consultations held since the first dedicated session
on 28 January, the Chair reminded members that trade ministers had
agreed in Bali that a permanent solution to the issue should be found
by the 2017 Ministerial Conference and that the membership subsequently
agreed in November 2014 that the permanent solution should be pursued
as a priority, with the goal of securing a deal by the end of this
year.
According to trade officials, the Chair said that his latest consultations
have shown that a "wide gap" exists between the proponents
of the G-33 proposal and more sceptical members (among them the European
Union, Australia, the United States, and Japan) who had expressed
concerns about the G-33 initiative.
In particular, said the Chair, the consultations highlighted two broad
concerns about the G-33 proposal:
* the impact on the "architecture" of the Agriculture Agreement
in allowing programs based on government-guaranteed prices for farmers
(market price supports) into the Green Box, which covers domestic
support with little or no impact on trade, and;
* the "unintended consequences" of public stockholding programs
on the domestic market of the country with the program, on export
markets, and on the food security of other members.
"There is a clear need for further consultations aimed at getting
deeper into the substance of a possible outcome," said the Chair,
adding that "greater willingness from members on all sides is
needed to make them go anywhere."
He also said that the ideas expressed so far by the non-proponents
on how to resolve these issues have been fairly diverse and rather
preliminary in nature. Some of the ideas expressed by the opponents
of the G-33 proposal include finding a solution on the basis of the
AMS calculation method.
The Chair further said that it was also suggested that it should be
possible to find ways of guaranteeing fair prices for producers and
feeding the poor without leading to distortions of markets. The views
expressed are quite divergent and rather tentative, he said.
At the session, the US tabled a new proposal on "elements for
discussion" on public stockholding for food security.
According to trade officials, the US said that its purpose was to
"provide a common and basic understanding of the various facets
surrounding the issue ... and assist in providing a basis for recommending
a permanent solution to the issue," focusing on:
* reviewing the efficacy and trade effects of public stockholding
for food security purposes, including the experiences of members with
existing food security and public stockholding policies;
* reviewing public stockholding for food security policies and the
WTO, including evaluating policies currently permitted by WTO rules
and how existing policies are constrained by those rules;
* developing best practices and recommendations, including identifying
practices that address food security objectives within the constraints
of current WTO rules and recommending a permanent solution to the
issue of public stockholding for food security.
According to trade officials, the US said that it was committed to
moving forward on the issue but that the Agriculture Agreement already
provides room for pursuing food security objectives.
Trade ministers had already examined the G-33 proposal and could not
come to an agreement on it, thus resubmitting the same proposal without
changes would seem to be a "fruitless pursuit," the US said.
Amongst others, the US proposal calls on Members to consider developing
a set of best practices for public stockholding policies, specifically
to:
i. identify any practices in implementing public stockholding programme
that would address Members' food security objectives within the constraints
of current WTO rules;
ii. identify those practices that achieve Members' food security objectives
in the most economical, targeted, and effective manner;
iii. identify those practices that are not trade-distorting, do not
adversely affect the food security of other Members, and avoid unintended
consequences; and
iv. establish a comprehensive list of notification and enhanced transparency
procedures.
According to trade officials, members of the G33 said that they would
study the US proposal. They however said that the mandate given by
trade ministers was to find a permanent solution to the public stockholding
issue, and not to expand the discussions into a review of existing
programmes, which would delay the permanent solution.
China said that members should be alert against the risk of expanding
the scope of the discussions. The best way to move forward at this
critical juncture is to focus on the discussions as mandated by Bali,
it added.
Indonesia, on behalf of the G-33, said that it would need time to
study the proposal. It said that there needs to be a clear mandate
to find a permanent solution to the issue of public stockholding for
food security purposes, and not to expand the discussions into a review
of existing programmes.
If members were to go along the road (set out by the US), it would
look like a lot of work will need to be done before they come up with
a permanent solution, it added.
According to trade officials, India said that the US proposal may
result in an outcome where members are being advised as to what kind
of food security policies they should adopt, which is not part of
the mandate. Time is running out, it said.
In response to Australia's remarks that since the meeting of 28 January,
there hasn't been anyone from the G-33 coming around and offering
to discuss the issue, India said that "it is not our responsibility
to go banging on the doors of others, and asking ‘what's wrong with
our proposal'".
It's a collaborative effort, and is not the responsibility of one
side or the other to initiate the negotiations on this, it added.
According to trade officials, G-33 members defended the G-33 group's
proposal, with India saying that the current rules allow public stockholding
programmes to be classified as green box support (Annex 2, paragraph
3 of the Agriculture Agreement).
Several G-33 members including India and the Philippines also said
that they were willing to discuss concerns about the potential spill-over
of public stockholding programmes onto international markets and how
these concerns could be addressed through appropriate safeguards.
The EU said that the "integrity" of the Green Box needed
to be maintained and trade-distorting market prices support kept out
of it.
Australia said that it could never accept price support programmes
being transferred to the Green Box.
According to trade officials, it highlighted its concerns about one
unnamed member which it said stockpiled purchased wheat for food security
and had also exported more than 4 million tons in the first six months
of 2014, or 20% of Australia's total annual wheat exports.
Japan said that it had systemic concerns regarding the G-33 proposal,
particularly the unintended consequences of such programmes.
There was also a debate at the meeting on whether a ‘Friend of the
Chair' should be appointed on this issue.
According to trade officials, G-33 members were of the view that it
would be a good idea for the Chair to appoint a Friend of the Chair
to deal specifically with this issue, while mainly developed countries
including the EU were of the view that this wasn't really an issue.
The Chair concluded that what was seen this afternoon is some elaboration
of the points that members have been making.
On the US submission, he said that a number of members want to look
at it in more detail, adding that there are now two submissions on
the table for discussion - the G-33 and US proposals. There is no
monopoly on a solution to this issue, he added.
The Chair noted that there is a lot of debate about whether the US
proposal was within the mandate or not.
Obviously, the mandate makes it clear that the goal is to reach agreement
on a permanent solution. Exactly what that comprises of is up to members,
he said.
It seems necessary for members to listen carefully to what each other
is saying, said Ambassador Adank, adding that it is a collective responsibility
for everyone to participate.
"We won't arrive at an agreement without that kind of engagement,"
he said, adding that he will continue to consult with members on this
issue and how to take this forward. +
