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Info Service on WTO and Trade Issues (Jun22/04) Geneva, 1 Jun (D. Ravi Kanth) – Members of the African Group, the ACP (African, Caribbean, and Pacific) group and the G33 coalition of developing countries on 31 May tabled their proposal seeking a permanent solution for public stockholding (PSH) programs for food security at the WTO’s 12th ministerial conference (MC12), scheduled for 12-15 June, in what appears to be a counter to the WTO DG’s proposal to push the PSH issue to MC13, said people familiar with the development. The WTO DG, Ms Ngozi Okonjo-Iweala, would certainly not have visualized that around 80 countries have joined forces to push back against her proposal to postpone a decision on the PSH issue until MC13, which is scheduled to be held in 2024. In her revised draft decision on PSH issued on 31 May, the DG stated: “Recalling the Ministerial Decision of 7 December 2013 (WT/MIN(13)/38 – WT/L/913), the General Council Decision of 27 November 2014 (WT/L/939) and the Ministerial Decision of 21 December 2015 (WT/MIN(15)/44 – WT/L/979), and recognizing the importance attached to public stockholding programmes for food security purposes by some developing country Members, including least developed and net food importing developing countries and mindful of the food security of other Members, we undertake to continue our negotiations and make all concerted efforts to agree to a permanent solution to the PSH issue by MC13.” The DG also resurrected the paragraph that states that “these comprehensive negotiations shall consider relevant elements including the review of the external reference price of relevant products, programme and product coverage, limits on Public Stockholding programmes, transparency and safeguards/anti-circumvention, and legal certainty.” Apparently, members of the Cairns Group of farm-exporting countries exerted pressure on the DG to include a footnote that says that the review of the external reference price “would be considered more broadly in the context of current AoA (Agreement on Agriculture) negotiations,” implying that it would be considered in preparing the domestic support modalities, said people, who asked not to be quoted. As reported in SUNS #9586 dated 1 June 2022, the DG’s mention in her draft decision of the importance attached to public stockholding programmes for food security purposes by “some” developing country Members, including least developed countries has been proved to be false, as 80 countries, with the support of many other countries, that called for a permanent solution for PSH programs at MC12, would surely not constitute by any means “some” countries, said people familiar the draft ministerial decision on PSH from the large majority of developing countries. Despite the DG’s draft decision to defer the permanent solution for PSH programs until MC13, the 80 countries, comprising the African Group, the ACP, and the G33, which includes India, China, and Indonesia, demanded that a decision on their proposal be concluded at MC12. The co-sponsors of the proposal on the permanent solution for PSH programs include Antigua and Barbuda; Barbados; Belize; Benin; Bolivia; Botswana; China; Congo; Cote D’Ivoire; Cuba; Dominica; Dominican Republic; Grenada; Guyana; Haiti; Honduras; India; Indonesia; Jamaica; Kenya; Madagascar; Mauritius; Mongolia; Mozambique; Nicaragua; Nigeria; Pakistan; Saint Kitts and Nevis; Saint Lucia; Saint Vincent and Grenadines; Senegal; Sri Lanka; Suriname; Tanzania; Trinidad and Tobago; Turkey; Uganda; Venezuela; Zambia; and Zimbabwe. The proposed ministerial decision on the permanent solution for PSH programs has been opposed by the United States, the European Union, and the Cairns Group of farm-exporting countries led by Australia during the Doha agriculture negotiating body meetings over the past one year. A certain member of the Cairns Group is understood to have strongly urged one of the co-sponsors of the permanent solution for PSH programs to withdraw the proposal, apparently warning that there would be severe consequences, said people familiar with the development. In their nine-page restricted proposal (Job/Ag/229), the 80 co-sponsors stated unambiguously, in the chapeau, that “having regard to paragraph 1 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization” and “taking note of the Ministerial Decision of 7 December 2013 (WT/MIN(13)/38 – WT/L/913), the General Council Decision of 27 November 2014 (WT/L/939) and the Ministerial Decision of 21 December 2015 (WT/MIN(15)/44 – WT/L/979),” the ministers, “recognizing the importance of public stockholding for food security purposes for developing country Members, including Least-Developed and Net Food Importing Developing Countries (NFIDCs)”, decide as follows: “1. Members agree to a permanent solution as set out in this Decision, for the use of public stockholding for food security purposes by developing country Members. 2. Notwithstanding any provision of the Agreement on Agriculture (AoA), domestic support provided by a developing country Member pursuant to public stockholding programmes for food security purposes, shall be deemed to be in compliance with Articles 3.2, 6.3 and 7.2(b) of the Agreement on Agriculture (AoA), provided that the conditions set out in paragraphs 5 to 9 of this Decision are met. 3. Where public stockholding programmes for food security purposes of a developing country Member include programmes under which stocks of foodstuffs are acquired and released at administered prices, then, for the purposes of footnote 5 of Annex 2, the Aggregate Measurement of Support (AMS) shall be calculated based on the actual quantity of foodstuffs acquired at administered prices, and the external reference price in this regard shall be either of the following: (a) the three-year average price (f.o.b for a net exporter or c.i.f for a net importer) based on the preceding five-year period excluding the highest and the lowest entry for that product; or (b) adjusted for excessive inflation as per the methodology given in Annex Z. 4.1. This Decision does not preclude developing country Members from introducing public stockholding programmes for food security purposes in accordance with the relevant provisions of the Agreement on Agriculture. 4.2. For greater clarity, paragraph 5 to 9 of this Decision applies when a developing country Member concerned exceeds the applicable Aggregate Measurement of Support (AMS) limits under the AoA, i.e., the Member’s Bound Total AMS or the de minimis level, as applicable, as a result of the public stockholding programmes for food security purposes covered under paragraph 2 of this Decision. (The de minimis limit for developing countries is 10% as per the AoA or Agreement on Agriculture. India has already breached the 10% limit for rice and sought protection under the perpetual “peace clause”). ANTI-CIRCUMVENTION/SAFEGUARDS 5.1. Stocks acquired under public stockholding programmes for food security purposes covered under paragraph 2 of this Decision shall not substantially distort trade or adversely affect the food security of other Members. 5.2. Upon reference to the Understanding on rules and procedures governing the settlement of disputes (DSU), sub-paragraph 5.1. shall be applied only in accordance in full conformity with the meanings provided under relevant provisions of Part III, Part VIII and Article 31 of the Agreement on Subsidies and Countervailing Measures. 6. A developing country Member shall endeavour not to export from acquired stocks, except for the purposes of international food aid, or for non-commercial humanitarian purposes, or when requested by Net Food Importing Developing Countries and least developed countries in the same geographic region or in any other region, or any member facing food shortages and higher food inflation during international food crisis. NOTIFICATION AND TRANSPARENCY 7. The operation of programmes referred to in paragraph 2 above shall be transparent and conducted in accordance with officially published criteria. 8. A developing country Member shall notify domestic support under these programmes on an annual basis in accordance with their domestic support notification requirements under the AoA in accordance with document G/AG/2 of 30 June 1995. Supporting Table DS:5 shall be notified in accordance with paragraph 3 above. 9. Any public stockholding programmes for food security purposes covered under paragraph 2, or modification thereof, shall be notified promptly under Article 18.3 as a DS:2 notification in accordance with document G/AG/2 of 30 June 1995. CONSULTATIONS AND DISPUTE SETTLEMENT 10. Any Member who has reason to believe that a developing country Member benefitting from this Decision has not met the conditions set out in paragraphs 5 to 9 of this Decision, may request consultations. The provisions of Articles XXII and XXIII of the GATT 1994 as elaborated and applied by the Dispute Settlement Understanding (DSU) shall apply to such consultations and consequent settlement of disputes under this Decision. The consulted developing country Member shall use the Annex to this Decision to provide information which shall serve as the basis for consultations. FINAL PROVISIONS 11.1. The Agreement on Agriculture shall be amended by inserting a new Annex 6 as provided in Attachment 1 to this Decision and for consistency purposes amendments as provided in attachment 2. 11.2. The Protocol of Amendment contained in Attachment 3 to this Decision is hereby adopted. 11.3. The Protocol of Amendment shall remain open for acceptance until [XXXX]. 11.4. The Protocol shall enter into force in accordance with Article X:3 of the WTO Agreement. 11.5. Pending entry into force of the Protocol and the amendment, developing country Members may use the provisions under Attachment 1 to this Decision and Members shall not challenge through the WTO Dispute Settlement Mechanism the compliance of a developing country Member with its obligations under Articles 3.2, 6.3 and 7.2(b) of the Agreement on Agriculture with respect to any use by that Member of these provisions. 12. In the event of a conflict between a provision of this Decision and any other instrument of the Multilateral Trade Agreements of the WTO or any other decision of the Members, the provisions of this Decision shall prevail to the extent of the conflict.” Apparently coming under pressure from the Cairns Group of farm-exporting countries, the DG and the chair of the agriculture negotiations, Ambassador Gloria Abraham Peralta of Costa Rica, said that the review of the external reference price “would be considered more broadly in the context of current AoA (Agreement on Agriculture) negotiations.” Effectively, it implies that the external reference price will be reviewed in the context of the domestic support negotiations, said people familiar with the development. Meanwhile, in a joint letter to members on 31 May, seen by the SUNS, the DG and the agriculture chair said that for “the vast Majority of Members, food and agriculture is a core priority in the WTO negotiations ahead of MC12.” “But the truth is that negotiations have been at an impasse because of a lack of consensus on the Chair’s text,” the DG and the chair acknowledged in their covering letter. It says that “the world is now also confronted with a looming food crisis that requires the WTO to deliver a credible response”. “In this context, we have consulted Members over the last two weeks, building upon the intensive work and discussions undertaken by Members thus far, with a view to supporting Members’ efforts to develop draft texts that could serve as a useful basis to reach a positive outcome on Food and Agriculture at MC12,” Ms Okonjo-Iweala and Ambassador Peralta claimed. BRAZIL’S ATTEMPT TO UNDERMINE PSH In what appears to be an attempt to support the DG’s draft decision on PSH, Brazil also issued a proposal on 31 May that says: “Since food security-related issues are multi-faceted, they can only be dealt with by the adoption of a comprehensive approach.” Brazil said that “public stockholding (PSH) is but one of the elements of a comprehensive package, and food security is but one of the possible objectives of public stockholding programmes.” It argued that “the decision-making process on public stockholding is a complex task and has to take into account several aspects related to the implementation of those programs, such as over-reliance on institutional markets; operational effectiveness; fiscal sustainability; cost efficiency vis-a-vis other approaches; effects on international markets.” According to Brazil, “market price support is the most distortive agricultural policy.” It said that “due to the well-documented negative effects on the international agricultural system, the curbing of market price support policies was one of the most important achievements of the Agreement on Agriculture. When procurements to build stocks are made through market price support, they cannot be left unchecked.” Brazil, which is a non-demandeur on PSH, underscored the importance of providing “Ministers a base for continuing discussions on a compromise solution on PSH for MC13 that focus on those Members that need the most help in fighting food insecurity.” This is why, since 2013, most of the non-demandeurs raised the following three issues: (i) Build a common understanding of the role of PSH programmes in achieving food security through open dialogue and exchange of experiences; (ii) Identify the implications of public stockholding programmes and related policy measures on producers, consumers, government budgets and global markets, and evaluate these measures against alternative policies and measures in each context; and (iii) Ensure that the policy measures adopted towards achieving national food security objectives do not undermine food security objectives in other countries. Brazil said that it “understands that the demandeurs’ approach throughout the years and their respective proposals have not addressed non-demandeurs’ concerns.” “For that reason,” said Brazil, its proposal “provides Ministers a base for continuing discussions on a compromise solution on PSH for MC13 that focus on those Members that need the most help in fighting food insecurity. The following proposal also seeks to preserve the WTO at the core of the multilateral trading system. It provides rights but also obligations.” The three proposals – the DG’s draft decision, the African Group-ACP-G33 proposal seeking a permanent solution for PSH programs, and the Brazilian proposal that allegedly undermines the permanent solution – will come up for discussion at the Doha agriculture negotiating body meeting on 1 June, and it remains to be seen what will happen at that meeting.
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