WTO Members Submit New Proposals to Move Farm Negotiations to “Solution-Finding” Phase

At a meeting of the WTO’s Committee on Agriculture in Special Session on 15 July, members put forward several new submissions to give a push to the agriculture negotiations and to move into a “solution-finding” phase once negotiations resume in September.

A summary of all the negotiation options on domestic support submitted since the 11th Ministerial Conference (MC11) in December 2017 was tabled by the Cairns Group (a group of agriculture exporting countries). In the ensuing debate, many members identified domestic support as the top priority in the negotiations.

Eyeing the 12th Ministerial Conference in June 2020 as a possible conclusion for the negotiations, Australia said: "This is not for members to check whether their position or their most hated positions are on the list … It is to lay the ground work for members to discuss what is doable and what is not doable (in September)."

Benin, on behalf of the Cotton-4, introduced a new proposal on cotton, including a plan to reduce trade-distorting cotton subsidies in incremental steps between 1 January 2021 and 31 December 2025.

Members also examined a new submission by the least-developed countries (LDC) group on the agriculture negotiations as well as new suggestions by Russia on market access as they continued discussions on six key topics, namely: domestic support, market access, export competition, export prohibition/restriction, public stockholding, and cotton. The issue of the special safeguard mechanism (SSM) will be discussed at the next meeting.

In conclusion, the chair, Ambassador John Deep Ford from Guyana, provided his preliminary assessment on the state of play on all seven topics, covering the committee's meetings and the special Working Group process, which wrapped up in June. He thanked the Working Group coordinators for the excellent work undertaken in these groups, in which members had the opportunity to hold in-depth discussions on all the issues covered in the negotiations. Looking ahead, he declared the time for reflection is over and "it is now time for actions and movement".

The Chair confirmed his intention to circulate by the end of the month a Reflections and Options Paper summarizing his assessment of the state of play. He invited members to "take advantage of the summer break to read carefully the paper and prepare concrete and practical options and proposals for negotiation".

Domestic support

Members heard presentations on two new submissions. First, Chad presented the LDC group's new paper circulated on 6 July (JOB/AG/159) which flagged some principles and parameters the group considers essential in the negotiations on domestic support, including its long-standing position on cotton.

Australia, Canada and Brazil introduced the joint paper (JOB/AG/160) on behalf of ten Cairns Group members. The paper compiled various options on domestic support raised by members into three themes: (1) developing new disciplines through limits and reductions, (2) clarifying existing rules, and (3) enhancing transparency. Canada said the proponents are open to include new options and the intention is to facilitate discussions towards pragmatic ways forward in negotiations on domestic support.

The Cairns Group said: "The options outlined in the paper are not proposals, nor should they be interpreted to preference or prioritize any one particular option. Rather this paper should be viewed as a non-exhaustive list of options to be further discussed (after the summer)."

A few members echoed the sense of urgency and called for starting the negotiation as soon as possible. One member welcomed the paper as a "timely dedication to the committee" but argued the committee should continue the technical discussions rather than getting into the negotiation.

Some developing members reiterated that eliminating aggregate measurement of support (trade-distorting subsidies) beyond de minimis entitlement remained their top priority and referred to the China-India joint paper as a way to address this issue. There was a call to preserve the special and differential treatment as stipulated in Article 6.2 of the Agreement on Agriculture. Several members called again for "proportional contribution", meaning that members creating the most distortion to trade in agricultural products should also contribute more in their domestic support reduction.

The chair said that the key objective members seem to agree on is to address trade distorting domestic support, but there are differences on how that objective might be achieved. The chair noted numerous developing members called for a level playing field and to correct what they perceive as existing imbalances in the Agreement on Agriculture.

The views put forward so far to address domestic support have centred on existing limits and entitlements, new limits and disciplines, such as overall limits or product-specific disciplines and taking into account more disaggregated information such as support: by farmer or by hectare; by type of beneficiary (e.g. poor farmers vs. commercial farmers); by “destination” (e.g. domestic consumption or export); and by the type of support provider (e.g. net food importer or net food exporter). The chair also noted a call by several members for proportionality in making contributions to the reform efforts relative to the role of the support in causing trade distortions.

Market access

Based on its assessment of the situation regarding country-specific Tariff quota (tariff rate quota) (TRQs), Russia emphasized the need for a clearer procedural elaboration of TRQ reallocation requirements to address cases of quota underfill. Proposing a detailed step-by-step elaboration of a possible reallocation mechanism for country-specific TRQs, Russia expressed willingness to collaborate with members interested in developing a TRQ reallocation mechanism including in respect of global TRQs.

In continuation of its previous efforts to seek enhanced transparency of applied tariffs, Russia presented a set of questions concerning members’ practices in effecting changes in applied tariffs and the treatment of the products en route. Russia proposed discussing these questions within a round table-style dialogue among interested members to identify possible solutions.

A number of members expressed reservations about the targeting of country-specific TRQs and considered that those TRQs were not covered by the Bali TRQ decision and the underfill mechanism. Further examination of issues surrounding changes in applied tariffs and the treatment of consignment en route was supported by several delegations.

Some members commented on Paraguay's paper (JOB/AG/157) of June 2019 which focused on the interaction between the pillars of domestic support and market access. They specifically referred to the notion of proportionality and the representativeness of the year 2011 used for analysis in the Paraguayan paper. The issues of special and differential treatment, non-trade concerns and the contribution of Article XII members (new WTO members since 1995) were also raised. Linkages both within and outside agriculture were invoked in some interventions.

The chair said there has been enhanced technical engagement among members in the market access pillar assisted by a number of detailed written contributions, especially since 2018. He also recognized the challenge often referred to by members of achieving a balance within this pillar which, in turn, raises the issue of linkages both within and outside agriculture. “Doability is now the important criteria for focussing our work if we are to have an outcome on market access by MC12,” the chair reminded members.

Export competition

A few members reiterated their interest on export financing, international food aid programmes and agricultural exporting state trading enterprises but no proposals were submitted.

The chair noted in his conclusion that many members had stressed in the discussions the need to focus as a first step on how to enhance transparency to properly monitor and possibly improve the disciplines in export competition, resulting in particular from the December 2015 Nairobi Decision on Export Competition.

Export prohibition/restrictions

One delegation, supported by several other members, strongly advocated reaching an outcome on a possible export restriction exemption granted to the World Food Programme (WFP) for humanitarian aid. One member expressed reservations and considered that other topics related to food security should be given priority in the negotiation.

The chair concluded that more negotiations and work were needed in this area, covering export restriction exemption for humanitarian purchases by the WFP, the timeframe for advance notice and other transparency and clarification elements. The chair said he will "continue to find ways to achieve an outcome".

Cotton

Benin introduced the Cotton-4's first proposal since MC11.

The proposal suggests an incremental reduction of cotton aggregate measurement of support (AMS) for developed members over five years following a tiered formula. The approach would also apply to developing country members with Final Bound Total AMS but with a lower level of reduction.

The Cotton-4 proposal also suggests a reduction of blue Box subsidies relative to that of the AMS reduction, as well as provisions on the application of the de minimis threshold to trade distorting support. It also incorporates provisions aimed at avoiding so-called box shifting and provisions on monitoring and transparency of green box support measures.

The presentation of this proposal was commended by several members who said they would study it over the summer break. Some members asked for preliminary clarifications on some elements of the proposal. Members also reaffirmed the importance they gave to this topic while expressing diverging views on how to address it.

Benin provided initial replies to some of the questions and explained that the reduction formula had been established based on past members' notifications. Benin further added that the Cotton-4 was ready to clarify some elements of its proposal, especially in relation to the Green Box.

In concluding discussions on cotton, the chair noted that domestic support remains the central issue in the negotiations on cotton, which he saw as a "gateway issue" for a breakthrough in the negotiations overall. The chair also commended the data compilation work carried out thus far in the cotton technical "Quad Plus" meetings.

The chair asked members to take the summer break to study further the new Cotton-4 paper and get ready for a deeper discussion in September, bearing in mind the upcoming important cotton event - the World Cotton Day Launch - scheduled for 7 October 2019 at the WTO.

Public stockholding

In the dedicated session on public stockholding, the Working Group Coordinator, Mr Alf Vederhus from Norway, made a statement providing his views on the public stockholding issue based on his experience from the Working Group process.

Proponents and non-proponents both repeated their positions in the discussions. Many developing members lent their support to the G33 (a coalition of developing countries pressing for flexibility for developing countries to undertake limited market opening in agriculture), which reiterated the need to fulfil the Bali and Nairobi mandates to reach a permanent solution that would cover both existing and new public stockholding programmes, and that would be applicable to all developing countries without additional burdensome requirements.

Some members raised again their concerns regarding the potential negative impact that these programmes might have internationally as overstocked food could be sold at cheaper prices on the global markets and cause trade distortion.

Noting the impasse in the discussions, the chair asked members to find new and creative ways to proceed. "We will need to find a way to address the concerns of the non-proponents about the potential impact on trade flows and food security of other members, while at the same time not imposing strict requirements that would make it de facto impossible to use the Permanent Solution. Appropriate safeguards acceptable to all seem to hold the key," he said.

Special safeguard mechanism

The chair highlighted two main challenges: the first is to achieve the required degree of technical maturity in the special safeguard mechanism (SSM) discussions supported by written contributions; and secondly, addressing in a constructive spirit the market access-related concerns of the exporting members.

The chair asked both sides to "invest their best efforts in this important file" of the negotiations.