WTO Farm Talks Chair Welcomes Negotiating "Shift in Gear"

24 November 2016

The chair of the WTO agriculture talks has welcomed what he called a “shift in gear” as members tabled several new proposals ahead of negotiating meetings held last week.

Vangelis Vitalis, the New Zealand ambassador who chairs the negotiations, told members that an “overwhelming majority” of countries favour an outcome on farm subsidies at the global trade body’s ministerial conference in Buenos Aires in December 2017.

However, he also said that key countries were “signalling difficulties” in this area.

Trade sources told Bridges that continued differences between the US and China are one key factor affecting the negotiations.

Beijing insists that a 2008 draft text should form the basis of talks in this area, while Washington argues that this would allow China to avoid meaningful cuts in its fast-growing farm subsidy programmes.

Vitalis said that negotiators were still “some way away from knowing” what the content or contours of a farm subsidy deal would look like for the Buenos Aires conference.

However, he also said that there was “broad agreement” that agriculture should form part of any outcome from the ministerial meeting.

Cap subsidies, say African, Caribbean, and Pacific countries

A new proposal tabled by the African, Caribbean, and Pacific (ACP) group of countries calls for placing an overall cap on farm subsidies. The group argues that farmers in the group have been negatively affected by imports of highly subsidised agricultural goods, while ACP exports have also had to face unfair competition in markets abroad.

The group argues that new rules should establish a “binding overall comprehensive limit to the sum of all trade-distorting domestic support,” as well as setting product-specific limits to avoid subsidies being concentrated on particular farm goods.

The proposals echo approaches suggested by Brazil and a group of other Latin American countries in a separate submission. (See Bridges Weekly, 17 November 2016)

“Domestic support is a priority,” one negotiator familiar with the ACP view told Bridges.

The group also called for special treatment to be granted to developing countries. Small, vulnerable economies, net food-importing developing countries, and least developed countries would benefit from additional flexibilities.

Existing rules allowing developing countries to be able to provide input and investment subsidies should remain unchanged, the group said.

Targets for Buenos Aires

The ACP argues that, by the time of the Buenos Aires ministerial, members should agree to new, lower caps on developed countries’ maximum permitted “amber box” support – the category of highly trade-distorting state aid which certain countries are currently allowed to provide under existing WTO rules so long as this does not exceed an agreed ceiling.

By the same date, a cap should also be established for other countries’ maximum permitted levels of overall trade-distorting support. At the WTO, this has traditionally been defined as amber box payments, plus production-limited payments in the so-called “blue box,” as well as trade-distorting “de minimis” payments. The latter are allowed as long as they do not exceed a certain percentage of the value of farm production.

WTO members should also seek to agree “substantial reductions of, with a view to eliminating” all trade-distorting domestic subsidies for cotton production, the group said. West African countries in particular have long sought cuts in trade-distorting support for cotton, which they argue harms poor farmers that depend on the crop for their livelihoods. (See Bridges Daily Update, 19 December 2015)

Exporting countries call for end to farm safeguard

A separate proposal tabled by eight farm exporting countries calls for the elimination of the “special agricultural safeguard” – an instrument that was agreed as part of the existing WTO Agreement on Agriculture when this was concluded over two decades ago, but which many exporting countries see as creating an unwanted barrier to farm trade.

“Article 5 of the Agreement on Agriculture shall expire from the date of adoption of this decision,” propose the sponsors.

The proposal, which is dated 11 November, is co-sponsored by Paraguay, Argentina, Australia, Colombia, New Zealand, Pakistan, Uruguay, and Vietnam.

As the special agricultural safeguard is only available to a limited number of countries that converted non-tariff measures to tariffs during the previous Uruguay Round of trade talks, many developing countries have separately argued that a new “special safeguard mechanism” should be agreed so that they can protect poor farmers from sudden import surges and price depressions.

At the Nairobi ministerial conference last December, trade ministers agreed to this demand in principle, but without spelling out any details of how the new mechanism might work.

A separate negotiating session held last week discussed the issue, but without making any significant progress, sources told Bridges.

Public food stockholding

Another negotiating meeting convened by Vitalis last week sought to make progress on problems that some developing countries say they face under WTO rules when buying food at government-set prices as part of their public stockholding programmes for food security purposes.

WTO members have agreed to work towards a “permanent solution” to the issue before the end of next year – although trade sources told Bridges that little common ground was apparent at the negotiating session last week.

China, India, and other countries in the G-33 developing country coalition have argued that these food purchases should be permitted without limits under WTO rules, warning that food price inflation since original farm subsidy rules were first agreed could now mean that some countries are at risk of breaching their commitments in this area.

However, many other developed and developing countries have warned that doing so could distort trade, potentially also undermining food security in other parts of the world.

“There might be another deadlock here,” said one trade negotiator who attended the meeting.

Sustainable Development Goals

Vitalis told the meeting that increasing numbers of WTO members were expressing an interest in how the trade body’s talks on farm trade could contribute to achieving the Sustainable Development Goals – a set of commitments which governments agreed on at a United Nations summit in New York in September 2015. (See Bridges Weekly, 30 September 2015)

“These leader-level objectives contain several commitments directly relevant to our negotiations,” Vitalis said.

The WTO’s Nairobi ministerial conference in December 2015 made progress on one component of the new global agenda, by reaching an agreement on eliminating agricultural export subsidies. (See Bridges Daily Update, 19 December 2015).

Vitalis reminded negotiators that the goals also commit countries to “correct and prevent trade restrictions and distortions in world agricultural markets,” as part of a number of measures which seek to end hunger and malnutrition by 2030.

ICTSD reporting.  

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