WTO Members Try to Break Farm Subsidy Logjam

Farm exporting countries have tabled a new informal paper on domestic agriculture subsidies at the WTO, in an attempt to move beyond the increasingly acrimonious stand-off between the US and China on farm subsidy spending.

The unofficial “non-paper,” sponsored by Australia and Canada and dated 19 June, argues that the effectiveness of current WTO ceilings on trade-distorting support is being rapidly eroded as the value of farm production in key countries increases. Proposed new caps on these payments would not necessarily require immediate policy changes in either the US or China, the paper claims.

China has repeatedly argued that recent US demands for a cap on its overall trade-distorting domestic support (OTDS) are unacceptable.

The latest draft Doha text, tabled in 2008, would establish a ceiling on OTDS. This would be calculated by adding a country’s heavily trade-distorting “amber box” payments to its “de minimis” support – a minimal amount of amber box payments, expressed as a share of the country’s value of production – and its production-limiting “blue box” payments, which are seen as slightly less trade-distorting under WTO rules.

In return, the US has argued that the 2008 draft Doha deal is unacceptable, because it would require farm subsidy concessions from developed country members but not lead to significant cuts from large developing countries.

The paper looks at farm subsidy spending in five key members – the US, the EU, China, India, and Brazil – and compares reported outlays with current WTO ceilings.

The paper finds that the US is using only 21 percent of its permitted ceiling on support, the EU is using 10 percent, China is using 12 percent, India is at four percent, and Brazil is at six percent.

Countries would therefore not immediately have to change current policies if they accepted a cap or ceiling on farm subsidy spending, the sponsors argue.

Disciplining export restrictions

A separate proposal calls for stronger rules on agricultural export prohibitions and restrictions as part of the post-Bali work programme.

The paper, which has been seen by Bridges, is sponsored by a group of four food-importing WTO members: Japan, Korea, Switzerland, and Chinese Taipei.

The sponsors propose that WTO members agree to improve transparency around export prohibitions and restrictions, for example by consulting with other countries in advance and reporting on any measures that have been imposed.

They also propose that new export prohibitions or restrictions should not last for more than 12 months, or 18 months with the agreement of affected importing members.

Finally, least developed countries and net food importing developing countries should be excluded from the effects of export prohibitions or restrictions imposed by other countries, the sponsors say.