Farm Subsidy Data Gaps Hampering Progress in WTO Talks, Chair Says

12 May 2016

“Troubling” delays in reporting farm subsidies to the WTO are holding up efforts to negotiate new trade rules, the chair of the organisation’s agriculture talks said on Monday.

Around six out of seven – or 85 percent – of the trade body’s 162 members are currently behind in their commitments, said New Zealand Ambassador Vangelis Vitalis, at an informal meeting of the WTO’s agriculture negotiating committee that was open to the full membership.

Only two dozen countries are up-to-date in reporting domestic support levels, the chair said.

Most trade negotiators consider that better global rules on domestic support for agriculture should be a priority, reported Vitalis, with many seeing the topic as a potential outcome for the WTO’s upcoming ministerial conference at the end of next year. (See Bridges Weekly, 10 March 2016)

At a separate informal meeting with the heads of Geneva delegations the same day, WTO Director-General Roberto Azevêdo urged countries to move quickly “towards identifying concrete outcomes” for the ministerial.

But Vitalis warned that data gaps could hamper members’ efforts to do so.

“We cannot negotiate in the dark,” he said.

Major economies behind

A number of major economies are among those behind in their notifications, a new document from the Cairns Group of farm exporting nations suggests.

The analysis, which was tabled as an input for the agriculture negotiating meeting on Monday, showed that Japan and the US had not reported any data for years since 2012, while the EU has most recently notified its farm support for the 2012/2013 marketing year. China and India have only reported their farm subsidy spending up to the year 2010.

Brazil and Russia have both provided data on their farm support in 2014, with Moscow doing so in recent weeks. (See Bridges Weekly, 4 May 2016)

The Cairns paper, a copy of which has been seen by Bridges, looks at domestic support spending among the top ten agricultural traders at the WTO, without explicitly drawing any conclusions about the trends that the subsidy notifications show.

“It’s a factual document,” one source familiar with the analysis said.

Fully compliant: Norway and New Zealand, Cambodia and Congo

Trade sources told Bridges that Norway and New Zealand are the only developed countries among the two dozen WTO members that have fully complied with their reporting commitments.

The other countries that are up-to-date include smaller developing countries such as Cambodia, Chad, Congo, Costa Rica, Fiji, Guatemala, and Tunisia.

One official noted that the US had also not notified its support since it enacted the 2014 Farm Bill.

“That would have added value,” the source said.

However, another official said that, while tackling late notifications was important, it was not the main barrier to achieving progress in the talks.

“I don’t buy into the argument that we can’t do anything without proper notifications,” the delegate said.

Clash of visions?

While many countries have echoed the call for an outcome on agricultural domestic support at the WTO’s 2017 ministerial conference, there seems to be less consensus on what this would mean in reality.

“All major subsidisers should find ways to contribute to lessening distortions on global markets,” said US Ambassador Michael Punke at the Monday meeting for heads of delegations.

However, developing countries that provide domestic support have continued to argue that they should benefit from gentler tariff and subsidy cuts in any negotiated outcome, as part of the “special and differential treatment” from which they have traditionally benefited.

EU Ambassador Marc Vanheukelen told the same meeting that agricultural domestic support talks are “closely linked” to separate talks on public stockholding for food security purposes.

WTO members agreed at last December’s ministerial conference in Nairobi, Kenya, that they would find a “permanent solution” to the problems some developing countries say they face under current farm subsidy rules when buying food at government-set prices as part of their public food stockholding schemes.

At the December gathering, trade ministers agreed that these talks would take place in dedicated sessions that were “distinct from the agriculture negotiations under the Doha Development Agenda.”

Vitalis called a separate meeting to discuss this issue on Tuesday morning, negotiators said, though they told Bridges that they made little headway in achieving progress.

What is practical and doable?

Vitalis told members on Monday that he had identified “a gradual but discernible shift” in what trade officials believe is practical and doable.

Many were in favour of looking into the possibility of cutting “water” – meaning the gap between, on the one hand, a given country’s maximum permitted level of subsidies or tariffs at the WTO, and, on the other, the actual level applied in practice.

However, the chair also acknowledged that many negotiating groups continued to seek “real cuts” in both tariffs and subsidies in the talks.

“Others are saying ‘leave us alone, this is all too difficult’,” one negotiator told Bridges, suggesting that these constituted a third set of countries.

The source suggested that although both the US and China seemed reluctant to accept lower ceilings on their trade-distorting agricultural support, some recent reforms to national policies could represent an opportunity for countries to make new concessions in specific areas. (See Bridges Weekly, 4 February 2016)

“Members are saying domestic support is a priority, because you can’t deal with it in preferential trade negotiations,” one African trade official said.

Another delegate said that expectations about likely future trends that may reflect changes in domestic support meant that it was important to negotiate new disciplines now.

“It’s what’s coming in ten or fifteen years,” the source told Bridges.

Market access: a new trade landscape

In contrast, Vitalis made clear that the rapid increase in regional trade deals outside the WTO had had consequences for negotiating dynamics in the area of market access.

Last October, twelve large and small economies concluded talks on a new Trans-Pacific Partnership (TPP), and a number of major economies have also inked bilateral trade pacts. (See Bridges Weekly, 8 October 2015)

Some members were now concerned that these preferential market access gains could be eroded under a multilateral trade deal, Vitalis said, while others perceived such types of  deals as the best way to pursue further market access opening.

The chair said that a set of questions tabled by members of the Cairns Group could help others to reflect further on the direction of talks in this area.

The group had also put forward similar sets of questions on domestic support, public stockholding, and on a new “special safeguard mechanism” which members have agreed to negotiate, with a view to enabling developing countries protect domestic producers from sudden import surges or price depressions.

Safeguard “linkages” resurface

While the G-33 coalition pushed hard for an outcome on the special safeguard mechanism (SSM) in the run-up to the Nairobi ministerial, agricultural exporting countries insisted that they were unable to make concessions in this area in the absence of a broader deal on market access.

Trade officials told Bridges that the same “linkage” was made by negotiators in a special negotiating meeting on the topic which Vitalis convened on Wednesday morning.

“We think that talks on the SSM, even at an exploratory level, should be linked to market access,” one developing country negotiator from an agricultural exporting nation said.

A G-33 official told Bridges that they did not think the discussion at the meeting had achieved much.

Export competition: unfinished business?

A negotiating submission from Canada argued that negotiators also needed to continue developing stronger disciplines on export competition.

“Nairobi introduced important new disciplines on export financing support, but more work remains to be done,” the communication argued.

Ottawa used the example of US export credits provided under Washington’s GSM-102 programme to make the case that current rules still allow governments to distort trade in farm goods. The programme provides credit guarantees to encourage financing of commercial exports of US agricultural products.

Vitalis told Monday’s meeting that “at least two members” do not consider a focus on export competition to be helpful or fruitful at this point in the talks. Officials suggested that these countries might have been the US and China.

However, he also underscored that the Nairobi declaration included clear instructions from trade ministers to continue work in this area.

Political direction needed

One negotiator told Bridges that the talks were still “in a very embryonic process.”

Another suggested that the chair of the negotiations was advancing cautiously. “He doesn’t want to rush people into a polarised debate,” the source said.

An African negotiator said that presidential elections in the US this November were also casting a shadow over the talks in the immediate future.
“Until you have political direction, it makes it difficult for experts here to move,” the source said.

ICTSD reporting.

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