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TWN
Info Service on WTO and Trade Issues (Nov21/13) Geneva, 11 Nov (D. Ravi Kanth) – The chair of the Doha agriculture negotiations at the WTO has proposed draft textual suggestions on domestic support, public stockholding programs for food security, market access, and on transparency, but they failed to garner consensus among the eight countries that are currently engaged in closed- door meetings, said people familiar with the development. Over the past several days, the chair, Ambassador Gloria Abraham Peralta from Costa Rica, has held closed-door meetings with the United States, the European Union, Canada, Australia, Brazil, China, India, and South Africa on the proposed “deliverables” to be decided on at the WTO’s 12th ministerial conference (MC12), scheduled to begin in Geneva on 30 November. The draft textual suggestions circulated among the eight countries last week have apparently sparked off protests from various members who are being excluded from the consultations. It appears that the Group of 10 (G10) farm-defensive countries led by Switzerland and the G33 coalition of developing countries led by Indonesia, as well as other groups seem to have complained about the small-group consultations, said people familiar with the discussions. The chair’s textual suggestions, seen by the SUNS, apparently failed to garner consensus among the eight countries over one issue or the other, said people familiar with the development. Even a cursory glance at the textual suggestions (which are outlined below) seems to demonstrate that the interests of the developing countries in the domestic support pillar are being particularly targeted, said people familiar with the discussions. According to the textual suggestions, the very first paragraph (on domestic support) states that “members shall negotiate modalities [by MC13] with a view to reducing substantially and permanently overall entitlements under domestic support categories that have trade distorting effects or effects on production under Article 6 of the Agreement on Agriculture within a timeframe to be decided by Members [and guided by a goal to reduce such entitlements by [x% by 20yy]].” Interestingly, the above formulation appears to bear the imprint of the Cairns Group of farm-exporting countries led by Australia. More disturbingly, even though the negotiations are being conducted under the Doha Trade Negotiations Committee (TNC), the chair’s suggestions appear to be diametrically opposed to the Doha Development Agenda (DDA), especially as set out in the fourth revised draft agriculture modalities text issued by the former agriculture chair Ambassador Crawford Falconer from New Zealand in 2008. According to the chair’s textual suggestions, “all categories of support under Article 6 shall be addressed on the understanding that they will not be treated equally. The negotiations shall take into account the potential distorting effects on trade and production of each category of support and also AMS (aggregate measurement of support) above de minimis with the aim of reducing subsidy concentration.” Effectively, the developing countries could suffer the most in terms of their specific entitlements under Article 6.2 of the WTO’s Agreement on Agriculture (AoA) as well as their de minimis provision of 10% in product support and 10% in non-product support, said people familiar with the discussions. Under Article 6.2 of the AoA, the developing countries are exempted from any reduction commitments in their input and investment subsidies in agriculture. This particular Article refers to the “development box” for the developing countries. It states: “In accordance with the Mid-Term Review Agreement that government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries, investment subsidies which are generally available to agriculture in developing country Members and agricultural input subsidies generally available to low-income or resource-poor producers in developing country Members shall be exempt from domestic support reduction commitments that would otherwise be applicable to such measures, as shall domestic support to producers in developing country Members to encourage diversification from growing illicit narcotic crops. Domestic support meeting the criteria of this paragraph shall not be required to be included in a Member’s calculation of its Current Total AMS (aggregate measurement of support).” The developing countries could also come “under the hammer” on their de minimis support which is currently under 10% for both product and non-product support in Article 6.4(b) of the AoA. For the developing country Members, the de minimis percentage under this paragraph shall be 10 per cent. Apparently, China, which has only 8.5% de minimis support, is likely to be the main target given its huge volume of agriculture production of close to $2 trillion, said an analyst, who asked not to be quoted. The chair’s textual suggestions have also not touched on the hundreds of billions of dollars of “green box” subsidies provided by the United States, the EU, and other developed countries. According to several studies, the “green box” subsidies also have a distorting effect on farm trade. PSH PROGRAMS On the public stockholding programs for food security (PSH), the chair’s draft textual suggestions call for an interim agreement, instead of the mandated permanent solution as demanded by the Group of 33 (G33) led by Indonesia. The functional paragraph on the interim decision on PSH in the chair’s textual suggestions states: 1. In the interim, Members agree to extend the Interim Solution established by the Ministerial Decision of 7 December 2013 (WT/MIN(13)/38 – WT/L/913) and the General Council Decision of 27 November 2014 (WT/L/939) to public stockholding programmes for food security purposes of least developed countries enacted after 7 December 2013 provided the conditions in the Decisions are satisfied. 2. Alternative 1: [Members also agree to extend the interim Solution to programmes of other developing country Members enacted after 7 December 2013 for a [X] year period following the entry into force of this Decision, provided the conditions in the above mentioned Decisions as well as those in this Decision are satisfied.] Alternative 2: [Developing countries which do not have programmes covered under the Interim Solution as of 7 December 2013 may also have recourse to the Interim Solution for PSH programmes enacted after that date for a [X] year period following the entry into force of this Decision, provided the conditions in the above mentioned Decisions as well as those in this Decision are satisfied.] The first alternative implies that all developing countries can avail of the Bali decision, which was further clarified by the WTO General Council in November 2014, for all new programs, while the second alternative is that those who did not have access to the Bali decision can now avail of it for the new programs, said people familiar with the development. According to the textual suggestions on market access, “members agree to reinvigorate comprehensive negotiations on agricultural market access with a view to substantially and progressively improving market access opportunities. Technical discussions on all elements of the market access pillar shall feed into these negotiations to facilitate enhanced participation of all Members and the adoption of informed decisions.” MEMBERS’ RESPONSES The European Union, for example, appeared to be unhappy with the language on market access, while Australia, Brazil, and Canada seemed unhappy over the interim decision on public stockholding programs for food security. India also raised sharp reservations over the suggestion to consider an interim decision while not addressing the permanent solution for public stockholding programs for food security, said people familiar with the development. China seemed to be concerned over the language in the textual suggestions on domestic support, while South Africa appeared to be concerned over reviewing Article 6.2 of the Agreement on Agriculture that exempts input and investment subsidies of developing countries from reduction commitments, said people, who asked not to be quoted. CHAIR’S DRAFT TEXTUAL SUGGESTIONS – DOMESTIC SUPPORT According to the chair’s textual suggestions, Members agree on the following principles for the negotiation of new disciplines on Domestic Support: 1. Members shall negotiate modalities [by MC13] with a view to reducing substantially and permanently overall entitlements under domestic support categories that have trade-distorting effects or effects on production under Article 6 of the Agreement on Agriculture within a timeframe to be decided by Members [and guided by a goal to reduce such entitlements by [x% by 20yy]]. 2. All categories of support under Article 6 shall be addressed on the understanding that they will not be treated equally. The negotiations shall take into account the potential distorting effects on trade and production of each category of support and also address AMS above de minimis with the aim of reducing subsidy concentration. 3. Special and differential treatment for LDCs and developing countries particularly the needs of low-income or resource poor farmers shall also be taken into account. 4. The contributions by individual Members in these reductions will need to be proportionate to the size of those Members’ current entitlements, taking into account the individual circumstances and development needs of Members. 5. Members note the importance of the implementation of existing notification obligations under Article 18 of the Agreement on Agriculture and undertake to make the necessary efforts to provide all outstanding DS:1 notifications to enhance transparency with respect to existing domestic support commitments. Members undertake to provide the value of production data as part of their DS:1 notifications and to provide the required information in a complete and comprehensive manner. 6. Members shall review and consider updating Annex 2 criteria and related transparency requirements, while ensuring that relevant domestic support measures have no or at most minimal trade-distorting effects or effects on production. 7. [Members also commit to simplifying and updating the current transparency requirements in G/AG/2, taking due account of the capacity constraints of some Members.] PUBLIC STOCKHOLDING FOR FOOD SECURITY The chair’s textual suggestions state: 1. Pursuant to the Nairobi Ministerial Decision (WT/MIN(15)/44 – WT/L/979), Members shall continue to pursue negotiations and make all concerted efforts to agree and adopt a permanent solution to the issue of public stockholding for food security purposes in dedicated sessions of the Committee on Agriculture in Special Session (CoA-SS) based on the following principles: (a) the Public Stockholding programmes should be for the purpose of enhancing the food security of developing country Members; (b) such programmes should not distort trade or adversely affect the food security of other Members; (c) transparency requirements should not be more burdensome than necessary and take into account the capacity constraints of developing countries. 2. In the interim, Members agree to extend the Interim Solution established by the Ministerial Decision of 7 December 2013 (WT/MIN(13)/38 – WT/L/913) and the General Council Decision of 27 November 2014 (WT/L/939) to public stockholding programmes for food security purposes of least developed countries enacted after 7 December 2013 provided the conditions in the Decisions are satisfied. 3. Alternative 1: [Members also agree to extend the interim Solution to programmes of other developing country Members enacted after 7 December 2013 for a [X] year period following the entry into force of this Decision, provided the conditions in the above mentioned Decisions as well as those in this Decision are satisfied.] Alternative 2: [Developing countries which do not have programmes covered under the Interim Solution as of 7 December 2013 may also have recourse to the Interim Solution for PSH programmes enacted after that date for a [X] year period following the entry into force of this Decision, provided the conditions in the above mentioned Decisions as well as those in this Decision are satisfied.] 4. The General Council shall regularly review progress in these negotiations. 5. This Decision shall not be construed to impede the Uruguay Round agricultural reform programme aimed at correcting and preventing restrictions and distortions in world agricultural markets as stated in the preamble to the Agreement on Agriculture. Accordingly, developing country Members invoking this Decision for their public stockholding programmes, [and who are in a position to do so], [shall]/[shall endeavour to] undertake the necessary reforms in order to bring them back into compliance with their domestic support obligations under this Agreement. MARKET ACCESS ELEMENTS The chair’s textual suggestions state: Members agree to reinvigorate comprehensive negotiations on agricultural market access with a view to substantially and progressively improving market access opportunities. Technical discussions on all elements of the market access pillar shall feed into these negotiations to facilitate enhanced participation of all Members and the adoption of informed decisions. 1. Tariff reductions will be made from bound rates based on the negotiating modalities and parameters to be agreed and taking into account: i. [Members’ participation in global agricultural trade and potential impact on global agricultural markets.] ii. Special and differential treatment for LDCs and developing country Members to effectively take account of their development needs including food security and rural development. iii. Non-trade concerns of Members. iv. Progress on other outstanding agricultural issues. 2. Members are encouraged to notify ad valorem equivalents (AVEs) of non-ad valorem tariffs in their Schedules to the CoA SS with an explanation of data and methodology used to calculate them within [x] months after MC12. Transparency 3. [Members agree to making all efforts to comply with current notification obligations under the market access pillar. Members also commit to enhancing transparency and streamlining the existing market access notification requirements and formats in G/AG/2 through a detailed work programme to be elaborated by the Committee on Agriculture. The work programme shall, inter alia, examine the questions of consistent inclusion of the following information in the relevant market access notifications: fill rates, and bound and applied in-quota and out-of-quota tariff rates, in Table MA:2 notifications; volume of goods affected by SSG actions, and bound and applied tariff rates in effect immediately prior to the implementation of such actions, in the Table MA:5 notifications; and HS tariff lines at the national level in the product description in the MA notifications. All interests, particularly those of developing countries, shall be adequately reflected in the work programme.] Guidelines to enhance transparency in applied tariff rate changes This Decision applies to changes in MFN applied tariffs in respect of both agricultural and non-agricultural goods. 1. Members agree to establish a non-exhaustive list of good practices in the application of changes to MFN applied tariff rates as included in Annex 1 to this Decision. 2. Recognizing that Members have different domestic frameworks and customs administration practices, Members should, in a manner consistent with their domestic laws, strive to apply at least one of the practices listed in Annex 1 to this Decision. 3. Additional practices may be considered by the Committee on Market Access (CMA) for inclusion in the current illustrative list of good practices based on requests by Members. 4. Subject to available resources, Members should notify to the CMA the practice(s) they use for changes in MFN applied tariffs, including those listed in Annex 1 to this Decision. 5. Members facing resource constraints in meeting this notification requirement shall, upon request from another Member, do its utmost to provide information on the current practice(s) used by them. 6. Members agree to facilitate the provision of technical assistance and support for capacity building for developing Members, including through the Secretariat, for the implementation of this Decision. Annex 1 (illustrative list of good practices in the application of changes to MFN Applied Tariff Rates) Provide an approach for shipments or consignments en route to be eligible to benefit from the tariff treatment in effect at the time such shipments or consignments begin their final journey from the country of exportation. 1. Provide in advance clear guidance on how a tariff will change in response to defined factors, such as changes in market prices or indexation against inflation or implementation of specific provisions of international agreements. 2. Provide the ability to pre-pay customs duties on shipments, according to the domestic laws of the importing Member, so that the importer pays the tariff in effect at the time the goods begin their final journey from the country of exportation. 3. Provide a public notice prior to coming into force of a change in an applied tariff rate.
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