Dim prospects for outcome on farm subsidies at MC12

Agriculture in countyside- Food Tank

Washington DC, 28 May (D. Ravi Kanth) – Members have offered sharply divergent views and conflicting narratives on what needs to be addressed in the unfinished Doha farm trade negotiations on trade-distorting domestic support at the WTO’s 12th ministerial conference (MC12) to be held in Geneva end-November, said people familiar with the development.
At a virtual meeting of the Doha negotiating body on agriculture on 26 May, several papers were circulated with little clarity about the way forward.
The papers include: (1) a joint proposal by the Cairns Group and African Group on addressing domestic support; (2) Costa Rica’s paper on the proportionality-based methodology on reducing domestic support; (3) Canada’s proposal on “transparency issues in domestic support notifications”; and (4) a framework for negotiations on market access.
The joint proposal by the Cairns Group and the African Group sought to address “trade and production domestic support in agriculture”, emphasizing that the “ministerial decision must be of sufficient ambition and specificity to enable meaningful reform of trade and production domestic support” for enabling fair trade.
The Australian trade envoy Ambassador George Mina claimed that the joint proposal signifies a common resolve for “ambitious, concrete, and equitable” agriculture reform in the context of the COVID-19 pandemic.
Yet, given the opposition of many African countries to any negotiations that could undermine the development box in Article 6.2 of the WTO’s Agreement on Agriculture and the de minimis, the joint paper, when it goes into the substantive elements, will remain bogged down in differences, said an African negotiator, suggesting that the two groups can only work towards a low-ambition outcome.
Article 6.2 of the WTO’s Agreement on Agriculture says that, “in accordance with the Mid-Term Review Agreement that government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries, investment subsidies which are generally available to agriculture in developing country Members and agricultural input subsidies generally available to low-income or resource-poor producers in developing country Members shall be exempt from domestic support reduction commitments that would otherwise be applicable to such measures, as shall domestic support to producers in developing country Members to encourage diversification from growing illicit narcotic crops. Domestic support meeting the criteria of this paragraph shall not be required to be included in a Member’s calculation of its Current Total AMS (aggregate measurement of support which signifies the most trade-distorting subsidies).”
Despite the considerable hype attached to the joint paper by the Cairns Group and African Group, the prospects for an agreeable outline still remains a distant dream, the negotiator said.
In sharp contrast, the G-33 coalition led by Indonesia said that members should focus only on mandated issues such as public stockholding programs for food security and the special safeguard mechanism.
The G-33 asked its counterparts not to “re-invent the wheel” or divert attention to non-mandated issues.
Surprisingly, while a lot of concerns were raised about disciplining Article 6.2 (the development box) and de minimis support (all developing countries are allowed less than 10 percent of the value of the product under consideration (specific aid) or of total agricultural production (non-specific aid) to be excluded from the current AMS), the developed countries appear to have brushed aside the call for eliminating/reducing the most trade- distorting subsidies in the Amber Box, said several participants, who preferred not to be quoted.
The United States made a brief statement underscoring the need for more analytical and research papers.
The US, which was the first to target Article 6.2 and the de minimis through its former US trade envoy Ambassador Michael Punke about six years ago, welcomed all new submissions as a good approach to grasping new trends in global trade, said participants familiar with the deliberations.
“Members must consider all the policy measures that are affecting markets and producers’ decisions in order to have a meaningful and effective result,” the US delegate said.
China pointed to several alleged flaws in the new submissions made by the Cairns Group members such as (a) ignoring the fact that the AMS entitlement covers the most trade-distorting subsidies, (b) failure to understand the nature of the subsidies provided by developing members, and (c) ignoring the per capita subsidies provided by the developed countries.
The European Union, which has the highest Amber Box subsidies or most trade-distorting domestic support to the tune of around $70 billion, seems to have endorsed Brazil’s observations about the developing countries taking recourse to Article 6.2 of the Agreement on Agriculture.
Nigeria, which is now coordinating the African Group on agriculture-related issues, Jamaica, which is the coordinator for the ACP (African, Caribbean, and Pacific) group, and South Africa stressed that an outcome on domestic support should lead to the elimination of the AMS.
India said that several developing countries did not use Article 6.2 subsidies before, suggesting that it does not mean that they will never use it. India said Article 6.2 provided policy space for developing countries.
Given the sharp divide on several issues such as Article 6.2 of the Agreement on Agriculture that allows an exemption for developing countries from production-related support to their low-income and resource-poor farmers, attempts to reduce the de minimis support in order to target China, and failure to address the structural inequities built into the Uruguay Round Agreement, the prospects for any credible outcome appear somewhat bleak, said people, who asked not to be quoted.
It appears that the US and the EU do not want to agree on the permanent solution for public stockholding programs for food security at MC12 and instead are trying hard for an outcome on transparency and compliance-related issues, said people, who asked not to be quoted.
Published in SUNS #9355 dated 31 May 2021