TWN Info Service on WTO and Trade Issues (Mar17/21)
31 March 2017
Third World Network

Prospects for credible outcomes at Buenos Aires bleak
Published in SUNS #8434 dated 31 March 2017

Geneva, 30 Mar (D. Ravi Kanth) - Efforts are currently underway to nominate Kenya's trade envoy Ambassador Stephen Ndung'u Karau as the chair of the Doha agriculture negotiating body, with the African Group, at the behest of some powerful developed and South American countries, apparently asking Ambassador Karau to chair the Special Session on agriculture to break the current impasse.

That impasse arose after major industrialized countries - the European Union and Canada with their allies - blocked the nomination of Ms Irene B. K. Young of Hong Kong (China) on grounds of affiliation to China.

The Asian Group had proposed Ms. Young to chair the Special Session on agriculture.

The Asian Group's nomination was blocked, following sustained attempts by major developed and some developing countries to deny a credible permanent solution for public stockholding programs at the World Trade Organization's eleventh ministerial meeting in Buenos Aires later this year, trade envoys told SUNS.

Ms Young, who is currently the chair for the WTO Trade Policy Review Body, was nominated by the Asian Group of developing countries on grounds that the chair for the Doha negotiating body on agriculture ought to be from a developing country.

In a bid to stall Ms Young's appointment, the developed and a few developing countries in South America first proposed Uruguay's ambassador Gustavo Miguel Vanerio Balbela.

Despite Uruguay being a strong member of the Cairns Group of farm exporting countries, the industrialized countries insisted that the Uruguay ambassador would be a good choice instead of the Asian Group's nominee.

But, for some inexplicable reasons, Ambassador Balbela withdrew from the race.

Subsequently, Ambassador Balbela's sponsors opted for Mexico's new trade envoy Ambassador Roberto Zapata Barradas.

They argued that Ambassador Barradas is not affiliated to any coalition or country despite Mexico's close proximity to major industrialized countries.

When the Asian Group remained firm on its choice, some powerful developed and a few South American countries approached Morocco to nominate an African candidate to chair the Doha agriculture negotiating body, according to trade envoys familiar with the development.

Morocco, which is the coordinator for the African Group, asked Ambassador Karau of Kenya whether he would be willing to chair the Doha agriculture Special Session knowing full well that Ambassador Karau is currently chairing the negotiating body for improving various provisions in the Dispute Settlement Understanding.

At a time when the Doha agriculture negotiating body is tasked with finding the permanent solution for food security and the special safeguard mechanism at the WTO's eleventh ministerial conference, the African choice of Ambassador Karau has come as a surprise, said several trade envoys familiar with the development.

"Unfortunately, Ambassador Karau's nomination has revived the ugly memories of the WTO's tenth ministerial conference in Nairobi, Kenya, in December 2015, when the chair of the conference, Kenya Trade minister, Ambassador Amina Mohamed, along with the WTO Director-General Roberto Azevedo navigated five major countries - the United States, the European Union, China, India, Brazil - to produce a dubious outcome," according to participants who took part in the Nairobi meeting.

"Our ministers were relegated to coffee cup bearers instead of negotiating their trading rights," Uganda complained after the ministerial meeting.

"We were never consulted," Uganda said, commenting on the questionable Nairobi ministerial declaration.

As a fallout from the Nairobi ministerial meeting, Kenya suffered a setback when its candidate Amina Mohamed was not elected for the top executive job in the African Union last year, said an African trade envoy familiar with the development.

Kenya, which is a major user of public stockholding programs for food security, had campaigned hard for a credible and strong permanent solution for public stockholding programs at the WTO's ninth ministerial meeting in Bali, Indonesia, in December 2013.

At present, Kenya, which is suffering a major drought, has crossed the limits for de minimis support for maize. Kenya is also a key member of the G-33 farm coalition of developing countries led by Indonesia.

Against this backdrop, serious doubts are being expressed whether Ambassador Karau will be allowed space by major industrialized and powerful agricultural exporting countries for arriving at a credible permanent solution for the public stockholding programs for food security and an outcome on the much-hurdled special safeguard mechanism for developing countries, according to trade envoys familiar with the agriculture negotiations.

Major industrialized countries along with their allies such as Pakistan and Paraguay have already made it known in unmistakable terms that the permanent solution for public stockholding programs for food security will include numerous conditionalities that would make it nearly infructuous, according to trade envoys who attended the green room meeting convened by WTO Director General Roberto Azevedo on 17 March with 27 countries.

But Indonesia, which is the coordinator for the G-33, made it clear at the green room meeting that its members want a credible and legally sound agreement for the permanent solution.

Indonesia reminded the participants at the meeting about its proposal that offered three options.

The G-33 proposal which was first tabled on 17 July 2014 provided the following options:

(i) To add new sub-paragraph (h) to the existing Paragraph 2 of Annex 2 of the Agreement on Agriculture with a view to include certain policies and services designed to promote rural development and poverty alleviation adopted in developing countries;

(ii) To modify the existing footnote 5 of Annex 2 of the Agreement on Agriculture so as to provide that acquisition of stocks of foodstuffs by developing country Members with objective of supporting low-income or resource-poor producers shall not be required to be accounted for in the AMS [calculation of amber box measures];

(iii) To modify the existing footnote 5 and 6 of Annex 2 of the Agreement on Agriculture with a view to reinforce and supplement the proposed modification to footnote 5 and also strengthen the existing footnote 5 and 6 further so as also to cover the programs designed to lowering prices to more reasonable levels [as compared to the 1986-88 reference period prices for AMS calculation].

Indonesia also said "the existing provisions on public stockholding for food security purpose under the current WTO rules will not be able to address the real needs of developing members to effectively support their low- income or resource-poor farmers, nor to fight hunger and rural poverty."

A powerful broker of trade deals recently dropped hints about working on a country-specific permanent solution, said people familiar with the development.

It remains to be seen whether Ambassador Karau will go ahead with the proposal of the African Group to chair the Doha agriculture negotiating body or politely refuse the offer on grounds that Kenya is an active demandeur of a strong covered agreement for the permanent solution for public stockholding programs for food security at the Buenos Aires meeting later this year, trade envoys said.

In a related development to the Buenos Aires meeting, eight South American countries - Argentina, Bolivia, Brazil, Chile, Ecuador, Paraguay, Peru, and Uruguay - circulated a decision reached by their foreign ministers on the deliverables they will seek at the WTO's eleventh ministerial meeting, including the permanent solution for food security.

In a restricted document issued on 10 March, the eight countries said that the Buenos Aires meeting "provides a valuable opportunity to continue taking significant steps in the process of reforming the multilateral system for trade in agricultural products and food, eliminating the currently severe distortions that prevent agro-exporting developing countries from achieving their production potential and fully contributing to global food security."

The eight countries underscored the need to find "a permanent solution to the issue of public stockholding for food security purposes, ensuring that it does not distort international trade or production."

The South American proponents argued that "protectionist measures include tariff peaks, tariff escalation, small tariff quotas and distorting production subsidies, resulting in situations which in many cases are compounded by the proliferation of non-tariff import restrictions in the form of sanitary, phytosanitary and technical measures applied in an unjustified and arbitrary manner."

Therefore, "fairer and more transparent and open international trade is an invaluable tool for sustainably increasing food production" and is essential at this juncture, they maintained.

WTO members must focus on their discussions "primarily on trade- and production-distorting domestic support and on securing improvements in current market access conditions," the eight countries argued.

Significantly, the eight countries failed to mention the need for special safeguard mechanism (SSM) for developing countries. Barring Bolivia and Peru, the remaining six countries had opposed the SSM until now.

At a time when the United States under President Trump's administration wants to pursue bilateral agreements instead of multilateral outcomes on trade, the prospects for any credible outcomes at the Buenos Aires meeting seem bleak, according to trade envoys who asked not to be quoted.