Agriculture: WTO Members still far from convergence on key issues, says Chair
TWN Info Service on WTO and Trade Issues (Apr15/10)
30 April 2015
Third World Network
Published in SUNS #8011 dated 28 April 2015
Geneva, 27 Apr (Kanaga Raja) -- The Doha trade talks and efforts to reach an accord on a post-Bali work programme are stuck on agriculture issues of domestic support and market access, with members standing firm on their positions and are a "long way" to meet the July deadline, the Chair of the agriculture negotiations said on 24 April.
In his report at an informal meeting of the Special Session of the Agriculture Committee, Chairperson Ambassador John Adank of New Zealand gave a rather sombre assessment of his latest round of consultations held this month, and said that in key areas "we are, as of yet, far from convergence on certain threshold issues."
According to trade officials, the Chair's consultations had focused on key issues under the domestic support, market access, and export competition pillars, including on the special safeguard mechanism, de minimis and blue box support, public stockholding for food security purposes, and cotton.
The WTO Director-General has been pushing for a roadmap for the post-Bali work programme by end of July and completing the Doha Round by end of 2015 in time for the Nairobi Ministerial Conference.
Adank told the informal agriculture meeting last Friday that the lack of convergence on certain threshold issues in key areas of agriculture was "inhibiting progress on other issues".
"The intensive process in which we have been engaged has still not seen delegations move from entrenched positions or find acceptable ways around them. Doing so is the urgent challenge that is still ahead of us."
According to trade officials, among the threshold issues cited by Ambassador Adank were, possible spending caps on overall trade-distorting support (OTDS) and the coverage and extent of any reductions in existing limits on de minimis support, under the domestic support pillar; the overall approach to be taken on tariff reductions, under the market access pillar; the export competition pillar; and public stockholding programs for food security.
Participants in these talks said that the US, EU and other developed countries want, with heavily subsidised agriculture (though disguised in various ways), a "calibration" in the market access pillar and to resile from the 2008 Rev. 4 revised draft modalities.
Many developing countries, the very large majority of the WTO membership, have on the other hand demanded a balanced outcome based on the 2008 Rev. 4 draft modalities document.
At Friday's meeting, differences among members came into sharp focus when the United States reiterated its demand that all members (meaning mainly China, India and other large developing countries) make contributions (thus opening their markets to the heavily subsidised exports of US and European agri-export corporations).
Several other developed countries spoke about the need for re-calibration in the market access pillar, with a more simplified approach to reduction of tariffs.
[Such an approach has been put forward by Argentina and Paraguay. Norway reportedly has presented an informal paper identical to the Paraguay one, according to some participants. Research work done at the South Centre bring out that when all elements are taken into account, the Paraguay paper (as the Norwegian one) will imply that on average developing countries will cut tariffs more than the developed, a reverse S&D treatment so to say. SUNS]
According to trade officials, Brazil (for the G-20), Indonesia (for the G-33), India, South Africa, the Philippines, Kenya, Lesotho (for the African Group), Barbados (for the African, Caribbean and Pacific group) and the Dominican Republic (for the small and vulnerable economies group) underlined the importance of maintaining the 2008 Rev. 4 text as the basis for concluding the agriculture negotiations.
CHAIR'S ASSESSMENT
In his statement at the informal meeting, the Chair said that since the previous informal meeting on 20 March, he had intensified his consultations on key aspects of the negotiations.
Ambassador Adank said, "I have to be frank with you: my assessment today is a sombre one. We are a long way from where we should be given the July deadline. In key areas we are, as yet, far from convergence on certain threshold issues. This in turn inhibits progress on other issues. The intensive process in which we have been engaged has still not seen delegations move from entrenched positions or find acceptable ways around them. Doing so is the urgent challenge that is still ahead of us."
Reporting on his consultations in each of the key areas, the Chair said in domestic support it has become clear in the consultations that the nature and extent of disciplines on the Overall Trade Distorting Support (OTDS) is likely to be a key determinant of the possible outcomes across this pillar as a whole.
This has in fact become one of the threshold issues, he said, adding that the core of the issue is whether numerical OTDS limits should apply to all Members, with appropriate Special and Differential treatment, or whether, as in Rev. 4, there should be an exemption for Recently-Acceded Members (RAMs).
"This question arouses strongly divergent views. Efforts have been made to try to find a way to reconcile the opposing positions, for example, by encouraging parties to look for, or offer up, compensatory adjustments elsewhere, but so far no convergence is in sight. There is a strong view on the part of a large number of delegations that efforts to resolve these issues must continue given the consequences if that proves impossible."
Another key issue is the treatment of de minimis support, where the question is the coverage and extent of any reductions in existing limits. This is seen as a critical issue by many, considering increasing current, as well as potential, use of de minimis support, said the Chair.
Adank said the point was also made, though, that de minimis subsidies in developing countries serve a different purpose from those used by developed countries. Developing Members without AMS or with relatively low AMS consider de minimis an essential tool for them in the absence of other possibilities, while others, mostly exporters, would like to see the de minimis entitlements reduced and capped by the OTDS, especially as they grow with the value of production.
[Both the issue of RAMs' contributions, and de minimis support are being pushed by the US, with an eye to hitting China and India among others, so as to secure markets for US agri-exports in these large markets. SUNS]
Other developed participants have stated that it would be hard to envisage reducing their de minimis in the absence of progress elsewhere in agriculture and in NAMA. While here again there have been efforts to find ways forward, such as a suggestion to focus on non-product-specific de minimis, there is no convergence on the basic question.
Given these unresolved issues, discussions on other areas have not yet gone as deep as they need to go, said Ambassador Adank, noting that the issue of product-specific limits is one such case.
These limits were seen as important by many, for some more important than the AMS, but there is little clarity so far on what limits could be agreed and how they would be applied.
The same is true of the AMS, which was also considered important by many. Some felt it should still be the main focus of reduction, while others saw it as relatively less important than the OTDS or product-specific limits. Several members stressed the importance of a tiered formula for AMS cuts. Some others indicated the possibility of accepting this but not with the level of cuts envisaged in Rev 4.
There appeared to be a widely-shared readiness to discuss what was doable in this connection and possibly to re-calibrate as necessary, although here again this issue appears to bound up with some of the broader threshold issues - another reason why seeking progress on those issues is so crucial.
According to the Chair, the discussion of the Blue Box was also rather limited, though there was a clear divergence between those delegations who saw it as useful for the reform process to maintain it and those who argued for eliminating it, leaving AMS as the sole future base for what otherwise would have been Blue Box payments.
The situation in market access is quite similar to domestic support, where there is at least one major threshold issue that remains unresolved and that is impeding progress in other areas, said the Chair.
Broadly speaking there are two main positions: those delegations who prefer a tiered formula approach as in Rev. 4 and those who reject this approach, of whom many favour an alternative based on average cuts. Some who do not favour Rev. 4 have yet to be very clear about their preferred approach and we need this clarification urgently.
The inputs from Paraguay and Argentina in particular address the question of the overall modalities for tariff reduction. The Paraguay non-paper describes a hybrid approach for agriculture market access, combining average cuts and additional elements, including a request/offer stage.
Eight additional elements are seen as needing to be addressed in order to deliver a meaningful outcome: average tariff reductions, minimum tariff reductions by line, tariff peaks, TRQs, escalation, tariff simplification, tropical products and implementation periods. The contribution from Argentina focuses on a request/offer process as the main tariff reduction modality.
The Chair reported that reactions to these inputs has been mixed. Some Members considered that an average cut approach could be interesting, each expressing specific preferences on what additional elements would be needed for a balanced outcome. However, a range of concerns was also registered, including safeguards, the treatment of S&D and RAMs, and consistency with the 2004 framework and the Hong Kong Ministerial Declaration.
Few saw a stand-alone request/offer process as realistic. However, many were supportive of the idea of request-offer as a supplement to other tariff reduction modalities. Some had lingering doubts about its complexity, the time it would consume and whether it would disadvantage smaller economies.
The question of safeguards continues to be a difficult one, said Ambassador Adank, noting that the G33 has made two submissions concerning the proposed SSM, and that in his consultations they reiterated the importance they attach to it.
"The discussion was handicapped by differing views on whether any outcome on safeguards would need to be calibrated against the level of ambition in the market access pillar, or whether it should be approached as a stand-alone issue. There nonetheless were some indications of willingness to seek compromise."
A few Members suggested that existing safeguard provisions in the AoA (Agreement on Agriculture) could be a good basis for discussions on an SSM. Others underlined the importance of eliminating the SSG (special safeguard) for developed countries, as envisaged in Rev 4.
"Again there is a clear need for members on all sides to think about what is realistic in this area in current circumstances," said Ambassador Adank.
On export competition, the Chair reported that there is a general consensus that this pillar remains a key priority of the negotiations, as reflected in the Bali Ministerial Declaration, and that an outcome on this pillar should be envisaged in parallel with the other areas in the negotiations.
However, if many members support an immediate commitment within the July work programme to deliver on this pillar by the 10th Ministerial Conference as a first building block in constructing a post-Bali work programme, some other Members flagged their opposition to an early harvest on export competition only.
On substance, the Chair said, Members agree on the level of ambition to be reached in the final outcome, i. e. the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect, which has been regularly reaffirmed during the last ten years.
Many Members consider that the Rev. 4 draft modalities effectively constitute an appropriate outcome in this regard but some have expressed an interest in adjusting some sections of this text - but it remains unclear in a number of cases exactly what would be suggested here.
Several participants insisted on the importance to preserve the special and differential treatment provisions, in particular for LDCs and NFIDCs (net food importing developing countries), and Cuba has also reintroduced its proposal from 2010 in relation to export credits.
As regards the phasing-out timetable for all forms of export subsidies, the Chair reported that most members favour a quick, if not immediate, implementation but a couple of participants asked for some time to adapt domestically. Different views were also expressed as regards the phasing-out timetable for export subsidies granted by developing countries under article 9.4 of the Agreement on Agriculture.
Ambassador Adank also noted that two specific themes were raised under "other issues": export restrictions and prohibitions, and GIs (geographical indications).
On export restrictions, he said, importing Members and some others linked the issue to food security objectives and argued in favour of additional disciplines. Others argued that the "import" side of agricultural trade was still subject to heavy distortions and an outcome was required on such issues prior to taking up the "export" side and that in any case the issue was already under consideration in the regular Agriculture Committee.
A couple of Members saw a link between the negotiations on agriculture and the issue of Geographical Indications. This view was strongly opposed by others. There appeared to be agreement that, in any event, the appropriate forum to discuss GIs was in the TRIPS context.
On his consultations on the issue of cotton, the Chair underlined that cotton is an important cross-cutting issue which Ministers have regularly committed to address ambitiously, expeditiously and specifically.
The meeting saw some useful exchanges and discussions, including on data. One Member noted that the situation has dramatically changed in the world cotton market and insisted on the need to adopt a new approach in the negotiations to ensure that all Members, both developed and developing, effectively contribute to the final outcome.
Some other Members noted their support for the Rev. 4 draft modalities as reflected in the Bali Cotton Decision and reiterated the need to clearly differentiate between developed and developing Members.
Following a suggestion by the C-4 (Cotton-4 countries) which was widely supported, the Chair said that he intends to pursue actively the discussions on cotton in the coming months, in particular at a technical level, with a view to consider possible ways forward in a focused manner.
On the issue of Public Stockholding for Food Security Purposes, which is under a separate, dedicated track, the Chair reported that despite more active engagement among delegations, "we have yet to move into focused work on solutions."
The proponents have primarily referred to their original proposal of November 2012 and clarified that they were seeking policy space through amended rules, although the Chair said he saw some opening from them to refer to other potential ideas that they circulated prior to Bali.
The non-proponents have identified two broad concerns relating respectively to the architecture of the AoA through any potential transfer of market price support to the Green Box, and unintended market consequences of such public stockholding programmes for other Members.
"I also saw some hints in the discussions that the current interim solution adopted at Bali may also assist the search of a permanent solution, especially by offering guidance on the issue of safeguards."
Ambassador Adank told delegations: "I repeat my advice firstly to keep in mind the collective mandate, that is to find a permanent solution, and secondly to move beyond the assertion of well-stated positions. It's high time that negotiating energies are aimed at identifying concrete ideas and solutions so as to meet the timing that we all set for ourselves to find a permanent solution. I will of course pursue these consultations and convene another Dedicated Session at an appropriate time."
In concluding his report, the Chair said that there is an urgent need to move from repeating positions to working for solutions.
"There have been signs that a number of delegations are trying to do this, and I encourage them - and everyone else - to continue. However there is no escaping the fact that any possible progress towards convergence is being seriously impeded by the standoff among some major players over the threshold issues I have mentioned."
They need to find ways to bridge the gaps between them and everyone needs to help as much as they can to enable this, he added.
VIEWS OF MEMBERS
According to trade officials, Australia (for the Cairns Group) said that despite efforts to engage, there was "little or no progress made in any areas", while Chinese Taipei said time was "definitely not on our side."
Canada shared the serious concerns expressed by the Chair, especially on the issue of domestic support. It said that the centrality of the issue of domestic support cannot be overestimated.
Consultations have not moved members closer to an outcome, it said, adding that in fact, it is difficult to see a clear path forward.
According to trade officials, Canada said it was difficult for others to find negotiating space for a deal as long as the two largest trading members - the United States and China - were unable to find a "zone" for agreement on some of the threshold issues, notably domestic support.
The point is not to lay blame but to make an honest assessment, it added.
Brazil (on behalf of the G20) said that agriculture is the centrepiece for an outcome on Doha, and that the Rev. 4 text remains the basis of the negotiations.
On behalf of itself, Brazil said that domestic support has a strong distortive effect on trade in agricultural products, which are practically indistinguishable from export subsidies.
Indonesia (on behalf of the G-33) reiterated the importance of its proposals on Special Products (SP), Special Safeguard Mechanism (SSM) and on food security, saying that these are critical outcomes for the negotiations.
According to Indonesia, the group's proposal on public stockholding for food security purposes is a legitimate basis for discussions on a permanent solution. It expressed regret that during the consultations, some members still questioned the mandate for these negotiations.
It is important to preserve the hard-won gains under the Rev. 4 text, Indonesia added.
According to trade officials, the US said that it agreed with the Chair's sombre assessment. The US is ready to contribute to an outcome but it is not realistic to ask it and a few select members to make real contributions and carry the load of the round alone.
According to the US, real outcomes are needed on market access in exchange for cuts in domestic support, and emerging markets have to carry their weight in the negotiations commensurate with their bigger role in the world economy.
According to trade officials, the US said that in order to find a way forward, solutions must be simple and fair. It will also require a re-calibration of expectations.
The US said it was "deeply disappointed" that its original aspirations for the Doha Round have not been realised but that this "can't be wished away" and that there was a need to adapt collective expectations or face the failure of Doha.
On the other hand, Brazil said there was a limit to this adjusting ambitions and that the whole exercise "ceases to make sense" below this limit, while Argentina said it was concerned that the adjustment process downward on market access "seems to be leading us to a zero result or cosmetic improvements" rather than reducing barriers to farm trade.
According to trade officials, India underlined that the alternative proposals tabled by some members have not received much support. It had rejected these proposals as the basis for future negotiations.
Since time is short, the best way forward for a modalities-like work programme is to concentrate on the Rev. 4 text as the basis, said India.
Referring to talk about re-calibration (of ambition), India said that the re-calibration of one member appears to be raising the ambitions of others. It warned against any attempts to dilute the S&D principles which are central to any outcome.
India said it supports the idea of an early harvest on LDC issues and cotton. The SSM proposal is critical to rebalancing elements of existing inequalities. Hence, it sees the SSM and SP proposals as critical outcomes for the Nairobi ministerial conference (this coming December).
On public stockholding for food security purposes, India said that the G-33 proposal is the only credible proposal on the table so far. An outcome on this is critical for the Nairobi conference.
The EU said that it was "clear the discussions haven't moved so far" on domestic support, adding that some developed country members had "no appetite for an ambitious outcome" in this area. The best members can hope for is a round that respects current policies, provides adequate policy space and seeks to avoid excessive increases in support.
According to the EU, the approach on market access must mirror the direction on domestic support. There should be a much simpler approach. Most promising is the average tariff cut approach, and the Paraguay paper provides a useful start.
On export competition, the EU said that the work done so far provides a good basis.
On public stockholding for food security purposes, it said that a solution that pushes these programmes into the green box will not fly with many members including the EU.
Looking at the text that members already have, the EU said that the interim peace clause agreed to at Bali could be used as a basis, with some improvements being made to make it more user-friendly and avoid spillover effects.
According to trade officials, China said that it still firmly believes that the Rev. 4 text is the only reasonable and practical basis for pushing forward the negotiations towards a successful conclusion.
Referring to suggestions by some on lowering the ambition of the negotiations, China believed that there should be a proportionate and parallel adjustment, if that is the case.
It rejected any re-calibration that gives more to members in areas which it believes are undoable for others.
Any requirement that China do more beyond what is in the Rev. 4 text is unacceptable. It is also not in line with the mandate that we have agreed to for these negotiations for China to accept a cap on OTDS. No government would make any such decision on capping without knowing what their future needs are, it added.
According to trade officials, Lesotho (on behalf of the African Group) said it continues to recognise Rev. 4 as the basis for the negotiations. Food security is a critical issue for most African countries, it added.
Barbados (on behalf of the ACP) underscored the importance of Rev. 4 as the basis for concluding the agriculture negotiations. The group is not convinced that the alternatives (that have been proposed) are superior and that they address the concerns of all members. +