Geneva (D. Ravi Kanth) — Brazil has finally struck a death blow to the G20 coalition of developing countries that it had created in 2003 for reforming the global agriculture, after joining hands with its erstwhile foe – the European Union – for tabling a proposal on domestic support. The proposal leaves the two big subsidises – the United States and the EU – in the industrialized world almost untouched, several trade envoys told SUNS.
The joint proposal issued by the EU and Brazil along with Peru, Uruguay, and Colombia on 17 July covers three issues – trade-distorting domestic support, the approaches to the permanent solution for public stockholding programs for food security, and cotton.
On domestic support, the five proponents called for commitments for reducing the trade-distorting domestic support comprising amber box subsidies (aggregate measurement of support) and de minimis support.
The restricted document Job/AG/99 issued by the EU and four developing countries says that developed countries shall reduce [x%] of the total value “of agricultural production as of , while developing Members shall not provide trade distorting domestic support in excess of [X+2%] of the total value of agricultural production as of . This paragraph shall not apply to least developed Members.”
The second option provided in the proposal maintains: “Developed Members shall not provide trade distorting domestic support in excess of [X%] of the total value of agricultural production as of , while Developing Members shall not provide trade-distorting domestic support in excess of [X%] as of [XXXX]. From  until [XXXX], developing Members shall not provide trade-distorting domestic support in excess of [X+Y%] of the total value of agricultural production. This paragraph shall not apply to least developed Members.”
The proponents said categorically that “trade-distorting domestic support shall include the domestic support referred to in Articles 6.3 and 6.4 of the Agreement on Agriculture [implying the AMS and de minimis commitments]”.
On Blue Box production-limiting direct payments, it says “members agree to the objective of including Blue Box support (Article 6.5) in the overall ceiling referred to in paragraph 1, subject to the terms to be defined by [MC12].”
The negotiations to do so on Blue Box should take into account:
(a) That Blue Box support does not have the trade distorting effect of Amber Box support and so should be accounted for differently, thus ensuring a continued incentive for Members to use the Blue Box to move away from Amber Box support.
(b) The need for adequate transitional periods.
(c) The efforts already made by those Members who have used the Blue Box by the date of this decision to move away from Amber Box support in a manner that is compatible with the objectives of this decision.
Further, it says “the total value of agricultural production for a Member shall be calculated as the average value of production of agricultural products which the Member has notified for the three most recent years for which domestic support notifications have been examined by the Committee on Agriculture. The total value of agricultural production shall be updated annually on the basis of information provided by Members to the WTO Secretariat, as referred to in paragraph 5.”
It also imposes enhanced transparency notifications as well as monitoring provisions in relation to all domestic support measures.
As regards the permanent solution for public stockholding programs for food security, the five-page proposal suggests different approaches.
It says “the proponents agree that any decision on domestic support should provide for a definitive solution on the issue of public stocks for food security purposes that would cover programs that existed at the time of the Bali Declaration and new programs under certain conditions, as well as all programs of public stockholding for food security applied by least developed Members.”
The five countries said they would like to suggest the following as one of the possible approaches to that effect:
“Domestic support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes, that are consistent with the criteria of paragraph 3, footnote 5, and footnotes 5 and 6 of Annex 2 to the Agreement on Agriculture, shall not be required to be accounted for in the limit set out in paragraph 1 of the present Decision and shall not be required to be accounted for in the AMS provided that the support falls into one of the following categories:
(a) Support applied by a least developed Member.
(b) Support applied by any other developing member if the value of the stocks procured does not exceed [10%] of the average value of production of that product in that Member as notified in the three latest domestic support notifications examined by the Committee on Agriculture before the date of adoption of the current Decision. The value of production shall be updated annually on the basis of information provided by Members to the WTO Secretariat, as referred to in paragraph 8.
(c) Support provided under programmes which existed at the date of the Decision of the Bali Ministerial Conference on public stockholding for food security purposes and provided that the member concerned respects the requirements of that Decision.”
The proponents imposed several other conditions for availing the permanent solution. They include that any developing Member seeking to benefit from the permanent solution shall:
“(a) Notify the Committee on Agriculture of the value of production and value of acquired stocks of the product concerned prior to the implementation of the public stockholding programme. The value of production shall be updated annually on the basis of information provided by Members to the WTO Secretariat, according to paragraph 8.
(b) Fulfil and continue to fulfil its domestic support notification requirements under the Agreement on Agriculture in accordance with document G/AG/2 of 30 June 1995.
(c) Provide, and continue to provide on an annual basis, additional information by completing the template contained in the Annex of this Decision, for each public stockholding programme that it maintains for food security purposes and provide any additional relevant statistical information described in the Statistical Appendix to the Annex as soon as possible after it becomes available, as well as any information updating or correcting any information earlier submitted.
(d) Ensure that stocks procured under such programmes do not distort trade or adversely affect the food security of other Members. To this end, no direct export from the stocks shall occur upon the release of products from the stocks nor any release of products from the stock shall occur on the condition that they are exported.”
On cotton, it merely suggested that “in accordance with the Ministerial mandate to address cotton ambitiously, expeditiously and specifically, Members shall agree to an overall limit, as defined in paragraph 1, on all the trade-distorting domestic support provided for cotton at [W%] of the cotton value of production.”
However, issues concerning “the impact on trade of the product-specific limit for cotton” are deferred to next year.
In short, the proposal does not address the Blue Box production-limiting direct payments as well as hundreds of billions of dollars of Green Box subsidies that are also found to be trade-distorting.
Moreover, it unabashedly undermines the interests of hundreds of millions of poor and livelihood farmers in developing countries such as China, India, and Indonesia among others.
The proposal ensures that the big subsidizers who engaged in devious schemes of box-shifting will be able to continue with their subsidies regardless of their trade-distorting effect.
The US and the EU will not have anything in terms of new commitments while developing countries undertake onerous commitments to reduce their de minimis.
Even though many developing countries did not have AMS commitments in the Uruguay Round, they are now being asked to pay a price by Brazil which had created the G20 developing country coalition in August 2003. After 14 years, Brazil reversed its historic decision.
(First published in SUNS #8505 dated 19 July)