|
||
|
TWN
Info Service on WTO and Trade Issues (Jul23/09) Geneva, 18 Jul (D. Ravi Kanth) — Many members drawn from the developing countries as well as the farm- exporting countries, including the United States and the European Union on 17 July apparently welcomed the Doha agriculture chair’s initiatives at the World Trade Organization to convene discussions on difficult issues such as the fixed external reference price (FERP) based on 1986-88 prices. For almost ten years, the developing countries drawn from the G33 group, the ACP (African, Caribbean and Pacific) group, and the African Group repeatedly called for the FERP to be based on dynamic prices, as part of their demand for a permanent solution for public stockholding (PSH) programmes for food security purposes in developing countries. At a Doha special session dedicated to the issue of PSH, convened on 17 July by the chair of the Doha agriculture negotiations, Ambassador Alparsian Acarsoy of Turkiye, members discussed the external reference price of 1986-88 used in relation to the current Aggregate Measurement of Support or AMS. A large majority of developing countries, led by the G33, supported a proposal to discuss the existing FERP because of the distortions it had created in the calculation of AMS as well as in the PSH programmes that are based on the calculation of AMS. The United States apparently said at the meeting that it is willing to discuss new approaches as suggested by the chair, while seemingly remaining silent on the issue of the permanent solution for public stockholding programmes for food security. The US has all along argued that it is ready to discuss new approaches but with a caveat that Washington will not agree to public stockholding programs based on the Bali format, said people familiar with the discussions. The Bali format referred to by the US in a previous meeting connotes the WTO’s ninth ministerial conference held in Bali, Indonesia, in December 2013, where members first agreed to an interim “peace clause” on public stockholding programmes for food security purposes in developing countries. Surprisingly, during the Doha special session on PSH that focused only on the crucial issue of the fixed external reference price, the US apparently said that it is willing to discuss the approaches as suggested by the chair while remaining silent on its earlier refrains that it will not agree to PSH in the Bali format, said participants, who asked not to be quoted. CHAIR’S APPROACHES In a note sent by two WTO Agriculture and Commodities Division officials (Ms Ulla Kask and Mr Cedric Pena) on 7 July, members were informed that the special sessions on “Public Stockholding for Food Security Purposes (PSH) and the Special Safeguard Mechanism (SSM) will take place on Monday 17 July and Tuesday 18 July.” Further, members were told that the meetings “will start with (1) the Dedicated Session on PSH on Monday 17 July at 10:30, followed by (2) the Dedicated Session on SSM, and continue on Tuesday 18 July at 10:00 with (3) the Special Session of the Committee on Agriculture.” Members were also informed that “several submissions have been tabled recently by some Members, and I (the chair, Ambassador Acarsoy) have taken good note of the request by many Members to engage in text-based negotiations as quickly as possible.” The chair indicated that “there are divergent views as to whether any of the texts submitted after MC12 could be regarded as an acceptable basis to engage in such an exercise.” Ambassador Acarsoy said that he therefore “decided that it would be very useful at this stage if we had a more focused exchange on Public Stockholding and Domestic Support, which are probably among the most contentious issues in the negotiations and to which most of you have ascribed priority.” “To structure our discussions on these two topics,” the chair said, “I have listed certain key elements deriving from Members’ recent submissions, as well as in the Bali Decision in the case of PSH.” The chair acknowledged that “these elements are not meant to be exhaustive nor representative of all Members’ positions, and are without prejudice to Members’ positions.” He said that these approaches are “just meant to stimulate discussions and provide an opportunity for Members to express their views, and identify possible convergences on which Members can build upon to achieve agreement on elements of a future permanent solution in the case of PSH, and guiding the negotiations on future modalities in the case of Domestic Support.” The chair emphasized that “all the remaining negotiating topics are also important and it is my intention to adapt our working method to each topic, depending on the status of the negotiations, but with the same objective for all topics, namely to achieve the best possible outcome at MC13.” He assured the members that they “will also have the opportunity to continue the discussions on submissions tabled at our previous meetings on other topics and to introduce new inputs or submissions on any topic under negotiation, as per the well-established practice.” “I intend to give the floor first to Members who would be tabling new submissions, and proceed later with the discussions,” the chair said in the email sent to members on 7 July. Finally, the chair said he will “invite Members at the end of each meeting to take stock of the current state of play in the negotiations and indicate their views on the process forward after the summer break.” THE FERP It is against this backdrop that members on 17 July discussed the importance of resolving the differences on the FERP, which remains based on 1986-88 prices, even though prices of several farm commodities had skyrocketed over the past thirty years due to persistent high inflation. At the meeting, members, including the US, the EU and even some South American Cairns Group members appear to have cautiously welcomed the chair’s initiative to hold focused discussions on issues like the FERP, said participants familiar with the discussions. Interestingly, members who took differing positions on the issue of FERP at an information session held on 26 June, seemed ready to discuss the FERP issue in upcoming meetings, said people familiar with the discussions. Several members, including farm-exporting countries of the Cairns Group, the US, the EU, even some G10 farm-protectionist countries, and a large majority of developing countries, apparently endorsed the chair’s initiative to discuss the crucial elements that go into the calculation of AMS, said people, who asked not to be identified. SUMMARY NOTE ON FERP BY G33 Ahead of the meeting on 17 July, the G33 group of developing countries, coordinated by Indonesia, issued a restricted document (Job/Ag/246) on 14 July, providing a summary of the discussions held on the FERP at the information session (on 26 June). The restricted document, seen by the SUNS, refers to a proposal on the Permanent Solution to Public Stockholding for Food Security Purposes issued by the G33, the ACP Group, and the African Group days before the WTO’s 12th ministerial conference (MC12) last June. The co-sponsors said that they organized an information session in the WTO on the External Reference Price (ERP) used in the current Aggregate Measurement of Support (AMS) under the Agreement on Agriculture (AoA). POLICY SPACE The co-sponsors argued that “the session aimed to provide better information and understanding of the historical background and technicalities of the Fixed External Reference Price (FERP), particularly its impact in the context of the Permanent Solution to the PSH and policy space implications for developing countries that intend and operate PSH programmes.” A large number of proponents and non-proponents participated in the information session chaired by Indonesia’s trade envoy Ambassador Dandy Satria Iswara of Indonesia. The session focused “on the history of FERP, its current relevance for PSH, and the need for changing the FERP to Dynamic ERP.” The participants, according to the summary note, “largely acknowledged that there is scope for deepening engagement around this issue, building up to MC13.” Explaining the Uruguay Round negotiations in relation to the history of ERP, the note suggested that “some of the main points highlighted were that the Members had the intention to review the ERP over time and that the base period used was to be adjusted later; Members agreed to fix the ERP in Annex 3 of the AoA (Agreement on Agriculture that was negotiated during the Uruguay Round) in the context of historically low inflation after a high inflation period at the beginning of the 1980s.” The Uruguay Round negotiators had “recognized that inflation would play a role in Members’ ability to abide by domestic support commitments, hence Article 18.4 of the AoA: Members also discussed various alternatives to a FERP to deal with exchange rate movements and world market price fluctuations in the Uruguay Round negotiations, including adjusting the ERP at periodic intervals and moving multi-year averages.” The technical presentation made by the invitees of the proponents highlighted the adverse role played by “FERP in the PSH programmes.” More importantly, the speakers, on behalf of the co-sponsors, “highlighted the impact it (FERP) would have on the policy space of the developing countries and LDCs in managing their food security requirements.” “It illustrated that the support provided by developing countries for their PSH programmes results in negative support in the AMS calculation if the methodology used by OECD is used or if the actual current prices are used instead of the 1986-88 FERP.” The presentation included case studies of a few developing countries, both importing and exporting countries. Some participants drawn from the Cairns Group of farm-exporting countries led by Australia apparently contested that “fixing the base period for the External Reference Price was envisaged as an incentive for reform, automatically reducing and eventually eliminating Market Price Support (MPS) over time as a policy tool, including for PSH programmes.” However, other participants, including non-proponents of the permanent solution for PSH, according to the note, “indicated that MPS should be allowed because it has a continued role in the architecture of the AoA for food security.” According to the note, “the discussions also widely acknowledged the importance of MPS in implementing PSH programmes, given the need to increase production and assist the 2.9 billion people who face food insecurity challenges.” The need for food security is greater in the current context to achieve the objectives “such as the right to food, ensuring access to food, stabilization of prices and level of production, as a source of remunerative prices to farmers, and addressing unforeseen shocks were cited as rationales behind using administered prices to support PSH programmes.” Some of the Cairns Group members repeatedly spoke about the ramifications, “as it would likely increase the policy space to provide MPS generally.” The Cairns Group members said: “For AMS entitlement holders, it could result in unused AMS, which could be reallocated to other agricultural products (like sugar in the US). Some South American countries like Brazil apparently suggested that “updating FERP (across the board going beyond the PSH programmes) should be coupled with AMS reduction commitments.” The discussion also focused on exempting LDCs from AMS reduction commitments and on “limiting the scope of any ERP change or update to PSH programmes.” According to the summary note issued by the G33, “Overall, there was concurrence that the base period for the FERP is outdated and, as a result, does not reflect actual trade distortions relative to world market conditions.” “In most cases, the FERP significantly dwarfs the market price, which hinders developing countries’ ability to provide adequate support to assist or incentivize farmers for food security objectives,” the note emphasized. In short, “it was generally agreed that the issue of understanding the ERP is of priority in the Agriculture negotiations, as changing from FERP to Dynamic ERP is crucial for food security purposes,” the note reiterated. +
|
||
