WTO Negotiations: Members Debate New Farm Trade Proposals on Domestic Support, Transparency

9 November 2017

Over the past fortnight, a series of WTO members have put forward new proposals involving different aspects of the agriculture talks, including on trade-distorting domestic support, public stockholding for food security purposes, and on the quality and enforcement of notification requirements.

In the thorny area of domestic agricultural support, Argentina has tabled a proposal aimed at forging “convergence” among members before ministers arrive in Buenos Aires, Argentina for the WTO’s ministerial conference. The high-level meeting is set for 10-13 December, just over four weeks away.

Under the 2 November proposal, Argentina has called for WTO members to agree to new ceilings and cuts to their trade-distorting farm subsidies.

The communication from Argentina came shortly after the chair of the agriculture negotiations, Kenyan Ambassador Stephen Karau, circulated a document which set out alternative negotiating options in matrix format.

Several countries have encouraged the chair to prepare a draft negotiating text as the next step forward in the talks. While some delegates told Bridges that negotiating positions remain entrenched, others said that various countries were making a final effort to help build consensus. (See Bridges Weekly, 19 October 2017)

New negotiating proposals on agriculture were also tabled by Paraguay and Russia on public stockholding for food security purposes, and by Tunisia on tariff simplification.

The US has also tabled a proposal on transparency, which addressed delays in notifying information to the WTO in several areas, including agriculture. This document was not submitted under the agriculture negotiations themselves, but via the General Council and the Council for Trade in Goods.

Argentina: draft WTO decision

The Argentine paper is presented as a draft ministerial decision on domestic support. Sources told Bridges that the proposal drew on various elements put forward by other countries in the talks in recent months.

It sets out proposed new limits on overall trade-distorting support, which would cover highly trade-distorting “amber box” support as well as payments classified as “de minimis” at the global trade body. The latter are essentially amber box payments which fall below a minimum threshold, which is defined as a share of the value of agricultural production.

It also sets out proposed cuts to countries’ existing ceilings on amber box support under their WTO commitments, as well as disciplines on cotton. The C-4 group of West African cotton producers, comprised of Benin, Burkina Faso, Chad, and Mali, have long argued that cotton subsidies have particularly harmful effects on the livelihoods of their citizens, making it harder to compete against foreign producers.

Under the draft decision, Argentina also says that other issues of negotiating interest could form part of a work programme for future reforms. These could include talks on further cuts to the limit on overall trade-distorting support, measures to address production-limiting “blue box” support, and limits on the concentration of trade-distorting support on specific products. These negotiations would aim to deliver outcomes by the next ministerial conference, which is expected in 2019.

Public stockholding: building on Bali?

Another draft decision for the ministerial has been put forward by Paraguay and Russia, focusing on the question of a “permanent solution” on the issue of public stockholding for food security purposes.

The G-33 developing country coalition has called for more flexibility in WTO farm subsidy rules to make it easier for developing countries to buy food at subsidised prices as part of their public food stockholding schemes. Agricultural exporting countries have nonetheless cautioned that exempting all subsidised purchases, as the G-33 have proposed, could distort trade and undermine food security in other countries.

The Paraguay and Russia proposal seeks to build off an earlier deal that was reached on this issue at the WTO’s Bali ministerial conference in 2013. Under this agreement, countries agreed not to challenge these programmes under the WTO’s dispute settlement mechanism, so long as certain conditions are met, such as more detailed notification requirements. (See Bridges Daily Update, 7 December 2013)

Paraguay and Russia propose that the permanent solution should include additional conditions and safeguards, such as a ceiling on the level of tariffs applied to products procured under the public stockholding programme.

Russia, as is the case with other grain exporting countries, is concerned that subsidised food purchases under public stockholding schemes would eventually cause adverse effects for their exports to global markets.

US: strengthen notification requirements

In a wide-reaching proposal on transparency and notifications, the US has called for members to agree stronger action on members that are persistently late in complying with their reporting requirements at the WTO.

Reports to the trade body’s committees on agriculture, rules, and technical barriers to trade are singled out for special attention in the proposal, which includes a draft ministerial decision for adoption at Buenos Aires. The rules negotiating group is the forum where members are negotiating disciplines on harmful fisheries subsidies. (For more on the fisheries subsidy talks, see related story, this edition)

Washington proposes a series of measures that it says would improve the quality of notifications, as well as the timeliness of members’ compliance. This includes penalties for WTO members that fail to comply with reporting rules.

Regarding the Agreement on Agriculture, these include, after a 720-day or two-year delay, subjecting them to a set of potential penalties. This includes, within an additional year, barring the country’s representatives from presiding over WTO bodies; not providing documentation to the government’s Geneva mission or authorities in the capital; and discontinuing the country’s access to the members section of the WTO website.

After a second year of delays, the member would be designated as an “inactive member,” and denied access to training or technical assistance. It would also be “identified” as an inactive member when making interventions at the WTO’s General Council, the organisation’s highest-level meeting outside the ministerial. Notifications under the WTO’s various other agreements would face similar timeframes, without the same delay.

The proposal also sets out “interim” steps for the ministerial. With regards to agriculture, it proposes that WTO members “re-commit to complying with their existing notification obligations under the Agreement on Agriculture and to commit to further strengthening the Committee on Agriculture as a forum for members to discuss members’ implementation of agricultural policies.”

While many members welcome this long-due attention to the very damaging record of lax observance of notification obligations at the WTO, some suggested that the proposed penalties may be disproportionately stringent.

Tunisia: tariff simplification

The Tunisian proposal calls for tariffs that are expressed in a complex form – for example, those that vary depending on the weight of the imported product – to be simplified. A draft ministerial decision annexed to the proposal would see members agree to express all tariffs as a share of the product value within one year.

Developing countries would be granted additional flexibility, according to the proposal. All WTO members would negotiate the share of developing countries’ tariffs that would not need to be simplified, and would agree on a longer implementation period for those that would be converted from more complex forms. Countries would also have to modify their WTO commitments accordingly, and be able to demonstrate that the changes would not involve an effective increase in the original tariff.

Intensive consultations

Karau is due to convene an informal agriculture negotiating session open to all WTO members on Friday 10 November, following a series of intensive small-group consultations.

The Friday meeting is meant to allow for a report back to the WTO membership on progress in the consultations, along with providing countries with an opportunity to react, trade sources said. That same day, WTO members are also due to convene under the Council for Trade in Goods, one of the forums where the US has tabled its transparency proposal.

Negotiating coalitions were also meeting during the week to explore options in the farm trade talks, with some countries or groups expected to submit further negotiating proposals.

ICTSD reporting.

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