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Info Service on WTO and Trade Issues (Apr23/11) Geneva, 17 Apr (D. Ravi Kanth) — After repeatedly blocking the G-33 proposal on the outstanding mandated issue of the permanent solution for public stockholding (PSH) programs for food security and the special safeguard mechanism (SSM) at the World Trade Organization, the United States along with Australia, Canada, Paraguay, Thailand, and Ukraine now seem to have adopted a “bellicose” strategy against India, said people familiar with the development. The strategy apparently adopted by the US and its allies involved issuing several counter-notifications against India at the WTO, without addressing the mandated issues of PSH and SSM since 2015, said people, who asked not to be quoted. Given the asymmetrical warfare launched by the US and its allies, the real issues such as the restoration of the two-stage dispute settlement system or the permanent solution for PSH programs for food security and several other mandated issues appear to have been ignored, said people, preferring not to be quoted. Meanwhile, the chair of the Doha agriculture negotiations, Ambassador Alparslan Acarsoy of Turkiye, has posed several questions to members on resolving the outstanding mandated issue of the permanent solution for public stockholding programs for food security purposes, the special safeguard mechanism, as well as the issue of food security. The permanent solution for PSH programs for food security has been repeatedly blocked by the US since the WTO’s tenth ministerial conference (MC10) held in Nairobi in December 2015 on one ground or the other. At the WTO’s eleventh ministerial conference (MC11) in Buenos Aires in December 2017, the US again blocked the PSH issue as well as any other decision on agriculture. During the WTO’s 12th ministerial conference (MC12) held in Geneva last June, the US along with several other members of the Cairns Group of farm-exporting countries made it almost impossible for any decision either on the permanent solution for PSH programs for food security or on the way forward in agriculture, said people familiar with the meeting. At the recently-held Doha agriculture negotiating body meeting, differences between more than 100 developing countries seeking a permanent solution for PSH on the one side, and the Cairns Group members on the other came into the open again for the umpteenth time, said people familiar with the proceedings. Apparently, the opponents to the permanent solution for PSH continued to adopt an obdurate position making it difficult for any progress on this vital issue for developing countries, said people, who asked not to be quoted. The US and some of its allies are seemingly keeping busy in filing counter-notifications against India (see below) on grounds that its de minimis spending for rice and wheat, which falls under the interim solution of the WTO’s ninth ministerial conference (MC9) held in Bali, Indonesia, in December 2013, is much higher than the allowed 10 percent of the AMS (aggregate measurement of support), said several people from the Group of 33 (G-33) developing countries. Yet, when it comes to respecting the mandate of MC10, the same countries have apparently created numerous hurdles and invariably blocked decisions either in the run-up to a ministerial conference or at the final meeting itself, said people from the G-33. CHAIR’S QUESTIONS It is against this backdrop that Ambassador Acarsoy has scheduled a meeting on 3-4 May to discuss three issues, namely, the permanent solution for PSH programs for food security, the special safeguard mechanism that has been blocked by the US since 2008, and food security. Ahead of the proposed meeting, the chair has circulated the following questions for the dedicated sessions on these three issues. The question on PSH is as follows: “Given the continued divergences among the positions, what are the three most important elements that should be addressed in order for Members to agree on a mutually agreeable solution consistent(ly) with the Ministerial Mandate on Public Stockholding?” On the issue of SSM, the chair asked: “Based on the discussions during the previous SSM Dedicated Session on 30 March, would Members be willing to organize technical thematic discussions in the SSM Dedicated Session starting with the following two topics: (i) experience with the implementation of the special agricultural safeguard (SSG), and (ii) possible design of a safeguard mechanism to countervail distorting subsidies?” Ambassador Acarsoy has also convened a special session of the Committee on Agriculture to discuss two issues. They include:
In his note sent to members, an option was also provided to “share their main takeaways from the seminars on Market Access and Export Restrictions to be held on 2 May (further information to be provided in due course) and express their views on the way forward in the negotiations, including the possible organization of further seminars on other topics under negotiation and identification of relevant technical issues on which further work would be required.” In conclusion, the chair said, “let me once more take this opportunity to invite Members to engage with each other with a view to narrowing gaps and identifying possible landing zones.” THE ISSUE OF PSH As regards the question of the permanent solution for PSH programs for food security, the G-33 group of developing countries proposed several solutions, including placing the issue of PSH in a “peace (green) box”, as it is aimed at addressing the resource-poor, livelihood, and subsistence farmers. The last G-33 proposal was submitted a month before MC12 last June but it was vehemently opposed by the US and key members of the Cairns Group. The G-33 proposal, in restricted document Job/Ag/229, was made in tune with a narrower version of the proposal that was submitted at MC11. 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:
(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 programs 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 programs 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 programs 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 of rules and procedures governing the settlement of disputes (DSU), subparagraph 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 endeavor 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 an international food crisis. NOTIFICATION AND TRANSPARENCY 7. The operation of programs 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 programs 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 programs 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 that shall serve as the basis for consultations.” In a similar vein, the G-33 group of developing countries submitted several other proposals, each time making their proposal more appealing to the opponents. But, so far, there has been no outcome due to the allegedly rigid positions adopted by the US and the Cairns Group members, said people, who asked not to be quoted. COUNTER-NOTIFICATIONS BY US & ALLIES In a spate of counter-notifications, the US and its allies seem to have targeted India on grounds that its de minimis support for rice and wheat has exceeded the 10 percent limit as allowed for under the provisions of the Agreement on Agriculture. In their counter-notification filed last week, these countries called upon India to enter into consultations under Article 18.7 of the AoA, which states that “Any Member may bring to the attention of the Committee on Agriculture any measure which it considers ought to have been notified by another Member.” These countries maintained that India did not provide full details of its market price support (MPS) for rice and wheat. They argued that India’s notification “is limited to the specific issues of India’s MPS for rice and wheat. The document does not attempt to identify the full value of India’s Current Total Aggregate Measurement of Support (AMS) or even the full amount of product-specific domestic support provided for rice and wheat.” “The limited scope of this document should in no way be taken to suggest that no additional product-specific support was provided for rice and wheat in the relevant years, that MPS or other types of product-specific domestic support was not provided for other commodities, or that India did not provide non-de-minimis non-product specific domestic support in the years in question.” The US and its allies claimed, “India appears to be providing significant market price support, both in terms of absolute value and as a percentage of the value of production, for rice and wheat.” The US and Australia apparently filed another counter-notification on cotton. The “MPS has been calculated in accordance with the domestic support provisions of Annex 3 of the AoA [Agreement on Agriculture],” Australia claimed, arguing that “under Article 6, paragraph 4 of the AoA, India is limited to providing a product-specific AMS for sugarcane no greater than 10% of the total value of production of sugarcane.” India is one of the developing countries that have not scheduled subsidy payments for sugar or any other commodity under the AMS (aggregate measurement of support) reduction commitments. In fact, India and China had called for the elimination of AMS by the developed countries early this year, for starting a discussion on the reduction commitments for all farm subsidies. But the US, the European Union, Japan, Norway, and Switzerland among others fiercely opposed the joint proposal from China and India for the elimination of AMS by the developed countries. The calculation of market price support involves “using the gap between a fixed external reference price (prevailing in 1986-88) and the applied administered price multiplied by the quantity of production eligible to receive the administered price.” As previously reported in the SUNS, several farm trade analysts said that the calculation of AMS based on the external reference price of 1986-88 does not provide a proper gauge because of a massive rise in inflation since then and other factors such as population growth between 1986 and 2017. Clearly, Australia and the US prefer to use the external reference price that was decided more than 30 years ago because it suits their calculations for “naming and shaming” countries, said a Geneva-based farm trade analyst who asked not to be identified. Earlier, India had dismissed the counter-notification issued by the US on rice and wheat on grounds that it is based on flawed assumptions and methodologies. India, for example, calculates the AMS in dollar terms as well as on the basis of procured production but not total production, the analyst said. Further, the US and other farm-exporting countries had refused to accept any change in the external reference prices. Australia has also targeted India on pulses, alleging that India’s subsidies for pulses have caused distortions in global trade. It remains to be seen whether Australia will issue a counter-notification on pulses along the lines of what it has done on sugarcane, the analyst said. “Clearly, India will come under intense pressure from the US, Australia, the European Union, and Brazil among others, as witnessed in the recent meetings of the WTO’s Committee on Agriculture where India was pointedly challenged on its farm subsidy programs,” the analyst argued. This appears to be a new trend at the global trade body where a “sovereign” notification is being questioned and ridiculed, said an African trade envoy who asked not to be quoted. In short, the developing countries are facing an escalating assault on their rights at the WTO. Unless the developing and least-developed countries adopt a common united front against the intrusive proposals by the developed countries on transparency and counter-notifications, they will soon find themselves eclipsed on all fronts at the WTO, trade envoys said. +
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