World Bank stance on SPs, SSM assailed at WTO meet

The World Bank has claimed at an agriculture meeting of the WTO that the use of "special products" and "special safeguard mechanism" which had been proposed by many developing countries in the Doha negotiations could undermine food supply to the world's poor.

This claim is in line with a World Bank paper published on its website that has been severely criticized by the Group of 33, a grouping of over 40 developing countries that promote food security, farmers' livelihoods and rural development in the WTO agriculture negotiations.

The G33 had sent a letter to World Bank President Paul Wolfowitz, complaining about the paper written by Will Martin (lead economist in the Bank's Development Research Group) and Maros Ivanic. The G33 asked the Bank to withdraw the paper. (See SUNS #6126 dated 25 October 2006.)

However, at the regular meeting of the WTO's Committee on Agriculture held on 31 October, the Bank's representative seems to have repeated at least some of the claims of the disputed paper. The Bank's statement received critical comments from some developing countries at the meeting.

Although meetings relating to the Doha negotiations have been suspended at the WTO, the regular meetings of its committees and Councils are continuing as usual.

At least two items on the agenda of this regular Committee meeting dealt with issues which relate to the Doha negotiations.

One was the statement by the World Bank which touched on Special Products and Special Safeguard Mechanism, which are two of the most important aspects of the agriculture negotiations. The other issue relates to the failure in recent years of many WTO members, including the major countries, to notify their domestic supports in agriculture to the WTO.

The delay in notifying domestic support has great relevance to the agriculture negotiations, as WTO members are unable to verify whether other members, especially the major subsidizing countries, have been following their obligations to reduce their subsidies as mandated by the Uruguay Round agreements, and also to verify whether the classification into the various "boxes" have been correctly done.

The World Bank comment was made during discussion on the agenda item ''net-food importing developing and least developed countries''.

The FAO warned that strengthening world prices, caused by tight supply and increasing demand, could raise food import bills by 7% in 2006 for least developed countries and "low income food deficit countries", and by under 5% for net food-importing developing countries.

Globally, the food import bill could rise by 2% for all countries and by 3.5% for all developing countries, the FAO said.

In its statement, the World Bank said that "Agricultural trade liberalization in particular can reduce poverty, not only by spurring growth, but by keeping the price of food staples of the poor at affordable levels."

Outlining its projects to help developing countries deal with income shocks, the World Bank said that improved efficiency and openness in global and regional food trade are important.

Citing its research, the Bank stressed "the importance of liberalizing reforms in agricultural trade on the part of both developing and industrialized countries, and the potential for the concepts of sensitive and special products to create significant exemptions, which would undermine this objective".

In a critical response, the Philippines and Cuba objected to the Bank's statement and said that they would raise the issue again at a future meeting after examining the statement.

The failure of major WTO members to notify to the WTO their domestic support spending was the other major issue of the meeting.

The Chair of the Committee, Christian Haberli of Switzerland, expressed deep concerns that several major agricultural trading members have not supplied up-to-date information, particularly on their domestic support, for several years.

Haberli told members that this ''creates an additional imbalance between delegations with substantial human resources available to seek information from other sources, and the small delegations that simply lack the means to obtain the information''.

Data compiled up to 30 October and circulated at the Committee meeting on 31 October showed that 70 members - almost half of the membership - still have not supplied some or all of the required information for 1995-2000 on their export subsidies, domestic support and market access measures (including tariff quotas and special safeguards).

According to the report, major players in the agriculture negotiations such as Argentina, Canada, the EU, Korea, Norway, Switzerland and the US have not notified domestic support spending since 2001. Japan has not notified since 2002.

According to trade officials, Chairperson Haberli said that this causes two problems:

(1) Difficulty in meeting the Committee's transparency objectives leading to an imbalance in rights and obligations between those who notify and those who do not; and

(2) Imbalance between members in the negotiations and a need for negotiators to base their calculations on information outside the WTO, which could be less reliable and is not available equally to all members.

The Chair urged members to consider this an urgent task which is their own responsibility, and suggested that they use staff who have been "freed up" by the agriculture negotiation's suspension.

According to trade officials, Australia and Brazil expressed agreement with the Chair's assessment.

Brazil said that while it understands the difficulty in compiling the information, since it (a developing country) managed to notify, developed countries should do so too.

The EU said that it is about to submit domestic support notifications for 2002 and 2003. The reason for the delay was partly caused by adjusting calculations to include the expansion from 15 to 25 members.

Canada also said that it is preparing its notifications.

The Agriculture Committee also discussed under the notifications and review part of the agenda, the EU's future alterations to its commitments as it expands further to reach 27 states.

According to trade officials, Australia said that the question remains unresolved on how to adapt the EU's export subsidy commitments for its enlargement to 25 members, and that the EU has not tabled draft schedules of commitments for this and for domestic support.

Australia also asked how the EU proposes to handle the further expansion to include Bulgaria and Romania.

The EU said that it will notify the "EU-25" commitments using methods that it has agreed with Australia and others.

Australia responded that while it accepts the methods, it does not consider this to be a unilateral right - the schedules of commitments have to be negotiated and agreed. The US and Canada shared Australia's concerns.