SSM blocked by US, EU, Australia and Brazil

Third World Network

Published in SUNS #8143 dated 26 November 2015

Geneva, 25 Nov (D. Ravi Kanth) -- The United States, the European Union, Australia, and Brazil on Tuesday (24 November) blocked a major deliverable concerning the special safeguard mechanism (SSM) for the developing countries at the World Trade Organization's tenth ministerial meeting in Nairobi beginning on December 15, several trade envoys told the SUNS.

The G-33 group of developing countries led by Indonesia have consistently demanded the SSM in the Doha agriculture negotiations for safeguarding the interests of their hundreds of millions of poor farmers from unforeseen surges in imports of agricultural products, particularly those supplied by heavily-subsidizing developed countries.

The chair for Doha agriculture negotiations Ambassador Vangelis Vitalis of New Zealand convened a closed- door meeting on Tuesday with ten countries to explore the outcome on SSM for the Nairobi ministerial meeting.

Ambassador Vitalis called the trade envoys of the US, the EU, Australia, Japan, China, India, Indonesia, the Philippines, and Turkey to discuss the G-33 proposal.

Indonesia made a detailed presentation of the G-33 proposal on SSM explaining the central features of the proposed instrument, including the volume and price triggers.

Indonesia suggested that the volume-based SSM "shall be applied on the basis of a moving average of imports in the preceding three-year period", hereafter "base imports".

On this basis, the applicable triggers and remedies shall be set as follows:

a. Where the volume of imports during any year exceeds 110% but does not exceed 115% of base imports, the maximum additional duty that may be imposed on applied tariffs shall not exceed 25% of the current bound tariff or 25 percentage points, whichever is higher;

b. Where the volume of imports during any year exceeds 115% but does not exceed 135% of base imports, the maximum additional duty that may be imposed on applied tariffs shall not exceed 40% of the current bound tariff or 40 percentage points, whichever is higher;

c. Where the volume of imports during any year exceeds 135% of base imports, the maximum additional duty that may be imposed on applied tariffs shall not exceed 50% of the current bound tariff or 50 percentage points, whichever is higher;

Indonesia spoke about other features such as the calculation of volume and price triggers and the application of volume-based and price-based SSM, and the exceptions.

The Philippines explained the importance of the SSM for developing countries in general, and their farmers in particular. The SSM, according to the Philippines, is essential for its farmers in the current context of volatile global farm prices.

For a while during the meeting, there was silence as major developed countries did not speak.

After considerable prodding by Ambassador Vitalis for constructive discussion, Australia said it will reject the SSM because it is a balancing element for the proposed deliverables in the export competition pillar. Australia maintained that it cannot agree to SSM without discussing issues in the market access pillar.

Australia said the SSM cannot be addressed without discussing the trade involving free trade agreements, according to trade envoys familiar with the meeting.

Turkey said the SSM is not linked with market access according to the Hong Kong Ministerial Declaration of 2005 in which trade ministers did not draw any linkage between the SSM and market access, according to trade envoys present at the meeting.

The Hong Kong Ministerial Declaration maintained that "developing country Members will also have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers, with precise arrangements to be further defined," Turkey pointed out.

The EU praised the G-33's work on the revised SSM proposal but maintained that the developing country coalition did not address the central issue of the linkage with market access.

Without addressing the market access, members can't engage in the SSM, the EU maintained.

The US said many developing countries do not want SSM without market access. The US said that it cannot agree for SSM without "new market access," according to the trade envoys present at the meeting.

China lamented the lack of proper engagement despite the G-33 having explained all the features of the SSM.

China said it is concerned about the fate of the SSM, emphasizing that political willingness is more important.

Brazil said that it will not question the motives of the members who have tabled the G-33 proposal. However, it cannot accept SSM without market access, emphasizing that without market access it cannot accept a mechanism that is more trade restrictive, Brazil argued.

From the statements made by Australia, the EU, the US, and Brazil, it is very clear that they are determined to stonewall the negotiation, India maintained, according to the trade envoys present at the meeting.

If this is the level of engagement that members are showing on the SSM, then, they must be prepared for the same level of engagement in other areas, India warned, according to the trade envoys present at the meeting.

In response to India's statement, the US maintained that disagreement doesn't mean non-engagement. The US sought to know whether the G-33 will allow export competition to progress or not, said a trade diplomat familiar with the discussion.

Later in the afternoon, the chair convened a meeting of trade envoys of the United States, the European Union, China, India, Brazil, Australia, and Japan to discuss the proposals tabled by Brazil and the EU on export competition and the US proposals on food aid and the state-trading enterprises.

At the meeting, India objected to the process involving only seven countries but not a larger group of countries to discuss the proposals on the export competition pillar. India suggested that the chair must adopt a parallel process involving a larger group of countries as he had suggested at the SSM meeting, according to the trade envoys present at the meeting.

In short, the US, the EU, Australia, and Brazil want to pocket outcomes in the export competition pillar at the Nairobi meeting without yielding ground on SSM and the permanent solution for public stockholding programs for food security for developing countries. This will be a repeat of the Bali meeting in which they grabbed a binding Trade Facilitation Agreement while offering only best endeavour outcomes to the least-developed and developing countries, a developing country trade envoy said. +