TWN Info Service on WTO and Trade Issues (Jul16/22)
25 July 2016
Third World Network

US, EU and Australia want "hefty payment" for PSH and SSG
Published in SUNS #8289 dated 25  July 2016

Geneva, 22 July (Ravi Kanth) -- The Cairns Group of farm exporting countries led by Australia along with the United States and the European Union seem determined to seek a hefty payment from the G-33 group of developing countries for the permanent solution for public stockholding programs for food security and the special safeguard mechanism (SSG)for developing countries, several negotiators told the SUNS.

The Nairobi Ministerial Conference of 2015 has mandated the WTO's eleventh ministerial meeting to reach a solution on Public Stockholding for Food Security in developing countries, and a Special Safeguard Mechanism that developing countries could use.

During the dedicated negotiating sessions on public stockholding programs for food security (PSH) and the special safeguard (SSG) mechanism on 19 and 21 July at the WTO, members of the Cairns Group as well as the United States and the European Union among others raised several questions, and mooted conditions that would make it difficult for the G-33 group of developing countries to secure credible outcomes on these two issues.

(see separate comment by Jacques Berthelot on US domestic food aid and US AMS)

The chair for Doha agriculture negotiations, Ambassador Vangelis Vitalis convened the two separate dedicated sessions to discuss the permanent solution for PSH on 21 July and SSM on 22 July as mandated by trade ministers in the Nairobi Ministerial Declaration.

At the meeting on PSH on Tuesday (19 July), the chair informed members that he has held 49 bilateral sessions and 15 meetings with group coordinators until now. There is no change in the fundamental positions on PSH among the G-33 proponents led by Indonesia on the one side, and the non-proponents led by Australia, Brazil, Argentina, the US and the EU among others on the other, the chair suggested.

The G-33 members made a strong case that the permanent solution for PSH is linked to addressing the problem of poverty in their countries. Indonesia on behalf of the G33 demanded the permanent solution should be a stand-alone outcome for the WTO's eleventh ministerial meeting, the chair said, according to negotiators who attended the meeting.

Ambassador Vangelis maintained that the non-proponents such as Australia, Brazil, Argentina, the United States, the European Union, and Norway among others expressed their concern over the G-33's demand to create a special annex in the Green Box to exempt market price support programs from commitments on the ground that would create unintended consequences and systemic implications, negotiators said.

The chair suggested four principles - parallelism, transparency, no presumption, and no prejudice - for members to follow during the negotiations on all issues in the Doha agriculture negotiating body.

On behalf of the Cairns group, Australia had circulated a set of questions for the G-33 to answer on PSH over two months ago. The questions include:

How do you see the way forward?

How do you see the basis for taking the issue forward?

What are the elements you consider should be part of a permanent solution?

How can any outcome address the unintended consequences on trade and food security of other Members?

What, if any, safeguards are currently in place to assure that "stocks procured under such programmes do not distort trade or adversely affect the food security of other Members"?

How much production procured under these programmes has been exported in practice?

In response to the questions, Indonesia, which is the coordinator for the G-33, emphasized the importance of PSH for G-33 and developing countries. Indonesia said a permanent solution for PSH must be negotiated in an accelerated timeframe. Indonesia said it had already submitted detailed proposal on how to arrive at the permanent solution for PSH by creating a separate annex in the green box to cover market price support (MPS) programs that would be exempt from any commitments.

Indonesia maintained that the agreement on agriculture does not provide any policy space for addressing food security challenges. It maintained that the G-33 is ready to answer questions on the unintended consequences, including safeguard provisions, with any members.

The Philippines emphasized the importance of PSH for developing countries to implement poverty-alleviation programs.

China said PSH is important for all developing countries to sustain the livelihood of poor farmers. China urged all members to make a sustained effort to arrive at the proposed permanent solution by the time trade ministers meet for the eleventh ministerial meeting next year. China said the G-33 members are ready to answer questions on how to prevent stocks procured for PSH from entering into the export market.

Korea said it is important to take the concerns of domestic constituents into consideration for addressing the permanent solution.

India made a detailed statement on the importance of the permanent solution for G-33 and other developing countries to address growing poverty and rural development concerns. India spoke about the need to rectify the shortcomings of the AoA, particularly for including PSH programs in the green box measures.

In sharp contrast, the Cairns group members - Chile, Australia, Pakistan, Mexico, Colombia, Argentina, Canada, Thailand, and Brazi among others - ruled out any inclusion of market price support programs in the green box. Australia said it is surprised that the interim solution which was concluded at the ninth ministerial meeting in Bali in December, 2013, is not working.

Australia said several issues such as transparency, safeguards to protect international markets and methodologies must be discussed before considering the permanent solution. Australia also raised several issues concerning the India's exports of wheat procured from alleged public stockholding stocks.

Brazil and Argentina emphasized the importance of safeguards to ensure there are no slippages from the PSH programs into exports. Pakistan said it concurred with the concerns raised by Australia on wheat and rice that were released from the public stockholding programs in the international market.

The US said while it remains committed to the Nairobi ministerial decision for working on the permanent solution for PSH, it is concerned about unintended consequences. The US said it is important to ensure that governmental actions for PSH do not result in increasing trade distorting support.

The US supported a suggestion from Canada under which PSH programs should focus only for small emergencies, income support, and other difficulties.

Canada argued that the permanent solution can create a broad outcome which will be vulnerable for abuse. The European Union said the permanent solution cannot be based on the green box programs. The EU also called for adequate safeguards as well as monitoring framework for PSH. Norway said it is not proper to include PSH programs in the green box.

In his concluding remarks, the chair admitted that there are diverging views on how to arrive at the permanent solution for PSH. He suggested that while the G-33 stuck to its proposal circulated in 2014, the non-proponents are not comfortable with that proposal. "We are stuck and we need to be constructive," said Ambassador Vangelis.

During the meeting on SSM on Thursday (21 July), the G-33 members led by Indonesia argued that SSM cannot be linked with market access negotiations as per the July 2004 framework and the 2005 Hong Kong Ministerial Declaration. The G-33 maintained that it had circulated proposals for simple and effective SSM based on price and volume triggers.

The Philippines said SSM cannot be based on special safeguards which are availed of by the developed countries. China said the G-33 proposal offered a simple solution as to how SSM can be constructed on the basis of price and volume triggers.

In sharp opposition, Argentina, Australia, Brazil, New Zealand, and Japan among others said SSM can only discussed in the context of market access because of the inherent linkage between the two issues.

The chair said while members are not opposed to any discussion on SSM as per Nairobi ministerial declaration, some members want to discuss the issue in isolation and other members link to the market access. Ambassador Vangelis said the SSM issue is not a North-South issue but one that centers around South-South Trade.

He said there is no fundamental change in the positions on the SSM arguing that market access linkage is a divide between members.

In nutshell, the discussions on PSH and SSM clearly revealed that the G-33 members face an uphill battle to secure credible outcomes at the eleventh ministerial meeting next year. Major developed and several developing countries are not prepared to adhere to the previous Doha ministerial mandates and agree to any outcomes on these two issues without payment, several negotiators said. +