AGRICULTURE AT THE WTO: MEMBERS DISCUSS SUBSIDY, TARIFF NOTIFICATIONS WHILE NEGOTIATIONS REMAIN AT A STANDSTILL

3 November 2006

AGRICULTURE AT THE WTO: MEMBERS DISCUSS SUBSIDY, TARIFF NOTIFICATIONS WHILE NEGOTIATIONS REMAIN AT A STANDSTILL

Extensive delays in Members' notifications of their farm subsidies and tariffs are undermining the WTO's ability to promote transparency and are creating obstacles to progress in the negotiations themselves, according to Christian Häberli (Switzerland), Chair of the WTO Committee on Agriculture (CoA).

While the Doha round negotiating meetings remain suspended due largely to Members' differences over agriculture (see BRIDGES Weekly, 2 August 2006, http://ictsd.iisd.org/weekly/06-08-02/story2.htm), regular committee meetings are continuing.

At a meeting on 31 October, a number of countries, including Australia and Brazil, voiced support for the views of the Chair, calling on Members to submit their notifications of agricultural subsidies and tariffs. Documents circulated by the WTO showed significant delays in notifications, with 70 Members (almost half of the WTO Membership) failing to provide some or all of the required information for the 1995-2000 period. Heavy subsidisers such as the EU and the US have not submitted domestic support notifications since 2001, and Japan has not done so since 2002. Other major players in the negotiations, such as Argentina, Canada, Korea, Norway and Switzerland, are just as far behind.

It was noted that the absence of accurate, comparable and up-to-date information exacerbated existing inequalities between Members, and presented particular problems for smaller developing country delegations in the negotiations. Brazil, which had managed to notify despite being a developing country, noted that developed countries should be in a position to do so as well. Chair Häberli also suggested that governments should use staff members that have been 'freed up' by the suspension of the negotiations to try to rectify the backlog in notifications.

The EU said that it would soon submit domestic support notifications for 2002 and 2003. The reason for the delay was that the addition of 10 new member states, which had meant that the calculations had had to be adjusted, the EU claimed.

No further meetings of the Agriculture Committee are planned until March 2007, although, if governments agree to restart the Doha round, special negotiating sessions could be held before then.

Background on domestic agricultural subsidies

Cutting domestic agricultural subsidies -- especially those that impact trade -- are among the key issues within the Doha negotiating agenda. These subsidies are grouped into three categories: Amber Box, Blue Box, and Green Box subsidies.

The Amber Box includes most domestic support measures that are considered to distort production and trade. These measures are slated for reduction, if not complete elimination.

Blue Box measures are an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal (de minimis) levels. The measures typically include production limiting programmes, i.e. payments made according to acreage -- for instance, compensation for leaving part of the land fallow -- or animal numbers on condition that milk/ meat production quotas are not exceeded. The only Members that have notified Blue Box measures to the WTO are the EU, Iceland, Norway, Japan and the US.

Green Box measures should not have distorting effects in agricultural markets; at the very worst, their effects must be minimally trade-distorting. They include funds for research, allow for the promotion of food security reserves, direct payments to producers that are decoupled from current prices or production levels, structural adjustment assistance, safety-net programmes, environmental programmes and regional assistance programmes. These measures, which tend not to be aimed at particular products, must be funded from government revenue, and must not involve price support. Overall, once negotiations progress, governments are likely to allocate an increasing proportion of their agricultural funding to Green Box programmes, and developing countries have raised concerns over the potential for "box shifting". Box shifting implies that the same money is simply renamed, without the introduction of fundamental changes to ensure that the subsidies are not trade distorting. In addition, countries worry that if overall subsidies remain as high as at present, their share volume will lead to increased production and thus distorted global markets.

Support for environmental measures in the area of agriculture are thus categorised within the Green Box of permitted subsidies (green does not refer to environmentally-friendly in the trade context). In practice, however, they make up a limited component of Green Box subsidies, although this may change in the future. According to the latest reports, the US, EU and Japan are by far the largest providers of Green Box subsidies. The distribution of the subsidies varies significantly, however. While the US focuses heavily on domestic food aid (spending more than half of its Green Box support this way), the EU directs a significant proportion of its Green Box subsidies towards the 'general services' category, investment aids, environmental programmes and regional assistance -- and is expected to substantially increase spending on 'decoupled income support'. Japan also focuses heavily on the 'general services' category. This information is, however, not fully up to date, as noted in the recent Committee on Agriculture meeting.

ICTSD reporting.

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