WTO Ag Talks: Negotiators Close to Final Bali Deal

21 November 2013

Trade officials are close to clinching a final deal on agriculture for the WTO's ninth ministerial conference in Bali, Indonesia, sources confirmed to Bridges this week. However, a few key issues remain to be resolved in the coming days and could still affect the final outcome for the December conference, they warned.

Intense talks through the weekend and in the first part of this week saw negotiators strive for a breakthrough ahead of a planned General Council meeting, which had originally been scheduled for today and has now been postponed until further notice.

Yesterday morning, at a "room W" meeting open to all delegations, negotiators largely indicated they could accept new agriculture draft texts as a basis for consensus at the ministerial, although some did indicate that they still had some reservations or wished to check on their position with their capitals. Some also emphasised that any final agreement would be conditional to progress on other issues beyond agriculture.

The revised texts include a draft "peace clause" on public food stockholding, likely to take the form of a ministerial decision, and a draft declaration that would exempt from WTO ceilings certain subsidies that cause only minimal trade distortion.

They also include what is likely to be another draft declaration on export subsidies and equivalent measures, and a draft "understanding" on tariff rate quota administration - aimed at simplifying import licensing procedures for firms that export farm goods.

Import procedures: unexpected controversy

Sources told Bridges that the talks on tariff rate quota administration had sparked heated discussion in recent days - even though officials had previously expected negotiations in this area to be among the more straightforward in the Bali package.

The G-20 developing country group had last year proposed that developed countries ease market access in cases where import quotas persistently remained unfilled: however, the US in particular had expressed concern that the draft text would exempt developing countries such as China from similar obligations. (See Bridges Weekly, 3 October 2012)

Washington and Beijing have now largely overcome their differences on this subject, by creating a special list that would allow developed countries to opt out from providing enhanced market access under the new rules after the WTO's twelfth ministerial conference, set to be held in 2019. This new compromise text had raised fresh concerns in other developing countries, however. While the US is the only one currently seeking to be on this list, some G-20 members were reportedly worried that other developed countries, such as Japan, could follow suit.

"People can live with it if the US is there," said one source, who warned that developing countries may not feel comfortable with the compromise if other developed countries now choose to join them.

However, Japan told yesterday's meeting that - although it was not happy with the arrangement - it would join consensus on the draft text as long as countries could conclude an ambitious deal on trade facilitation. Other developed country members such as Canada, the EU, Norway and Switzerland also said they would not join the US in opting out of the post-2019 requirements.

Food stocks: "peace clause" to apply until 2017

Negotiators are also close to reaching a deal that would see WTO members agree to refrain from bringing trade disputes on food stockholding schemes that could cause developing countries to exceed current ceilings on trade-distorting farm subsidies, in exchange for more information and transparency about how these programmes function.

India, supported by other developing countries in the G-33 coalition, has been adamant that WTO farm subsidy rules should be updated to account for price inflation since thresholds for measuring support were agreed some twenty years ago. New Delhi is keen to ensure it can purchase food at administered prices when implementing its recently-approved food security law, and that it will be able to do so without sparking legal challenges in Geneva. (See Bridges Weekly, 12 September 2013 and 17 October 2013, respectively)

Many developed countries have nonetheless expressed concern that countries should not be allowed to provide unlimited amounts of trade-distorting farm subsidies to build public food stockpiles - with some developing countries also worried that the proposal could undermine their own farmers' livelihoods and food security if proper safeguards are not included.

At yesterday's meeting, Pakistan, Thailand, Ecuador, and Uruguay expressed fears that the duration and product coverage outlined in the draft text were too expansive. India warned against upsetting the "delicate balance" reflected in the text as currently drafted, while Bolivia and Cuba spoke in support.

According to the latest draft text, the new agreement would remain in force until the global trade body's eleventh ministerial conference in 2017: governments would then "decide on next steps" on the basis of a report from the General Council, and the outcome of a work programme on this issue aimed at making recommendations for a permanent solution.

The previous draft text, issued two weeks ago, had contained two discrete options - either a permanent solution or an end date, which was not defined.

Trade sources also told Bridges that negotiators in Geneva had scrambled to resuscitate an outline deal on food stocks that seemed to have been placed in jeopardy following a letter from Indian commerce minister Anand Sharma to his US counterpart Michael Froman.

The letter - reported by Reuters in New Delhi, seemingly before a copy had reached Washington - cautioned that the proposed outline deal "falls well short of our requirements and would place onerous conditions which would restrict its use significantly."

Revised text: cautious optimism

Nonetheless, negotiators familiar with the talks in this area told Bridges they were cautiously optimistic that a deal could be reached on the basis of a revised text, barring any last-minute surprises.

Draft texts circulated on Monday and Tuesday had removed an earlier reference proposing a limit on the number of traditional staple food crops that would be covered by the deal.

They also included new language on "anti-circumvention" and safeguards aimed at avoiding trade distortion.

This now specifies that developing countries relying on the new peace clause agreement ought to ensure that stocks procured under these programmes "do not distort trade."

Sources familiar with the talks in this area told Bridges that an earlier proposal to exempt these farm subsidies from rules under the WTO's agreement on subsidies and countervailing measures had ultimately not been included.

Another clause would commit countries to refrain from increasing trade-distorting support in other areas to take advantage of the special treatment being granted to food stockholding programmes.

New "general services" schemes to be recognised

There were minimal changes to a separate text which clarifies that a number of support programmes should be included in the WTO's "green box" - intended to cover farm subsidy measures that are exempt from any ceiling on the grounds that they cause no more than minimal trade distortion.

Developing countries had pressed for recognition of these programmes, arguing that the current rules mostly reflected the types of programmes that developed countries use. However, the proposal had not generated much controversy among WTO members.

The new language would cover general services programmes related to land reform and rural livelihood security, such as land rehabilitation; soil conservation and resource management; drought management and flood control; rural employment; issuance of property titles; and farmer settlement programmes.

Export subsidies and similar measures

The G-20 developing country group had also proposed that ministers agree to cut ceilings on export subsidies and other measures with equivalent effects, as a step towards the goal of eliminating these payments. At the WTO's Hong Kong ministerial conference in 2005, governments had agreed that all such subsidies would have ended this year.

The latest drafts would commit WTO members to "ensure, to the maximum extent possible," that progress is maintained towards the elimination of all forms of export subsidies and other measures with equivalent effects. It would similarly commit members to keep these measures "significantly below" current commitments.

A new annex also spells out in detail "elements for enhanced transparency" that would form the basis of a WTO secretariat questionnaire for members. This would be used to inform an annual discussion in the Committee on Agriculture.

However, sources said that Argentina, which has consistently argued in favour of an ambitious outcome in this negotiating area, remains concerned that the draft text tabled to date is still too weak.

General Council meeting postponed

Trade sources told Bridges that a move to postpone today's General Council meeting was not a sign of any unexpected hiccup in the process. Instead, WTO Director-General Roberto Azevedo had decided to focus negotiators' efforts on achieving progress in parallel talks on trade facilitation.

Some sources have suggested that the General Council meeting - which was meant to be a final deadline for concluding the Geneva-based ministerial preparations - could now be rescheduled for sometime this weekend or early next week.

"The Director-General clearly feels he can pull this all together," one source said, who admitted there were "a few wrinkles that still need to be ironed out."

"There's a very fragile equilibrium, and the delegates are conscious of that," another negotiator said.

However, several sources told Bridges that the bulk of the negotiations on agriculture had now largely been completed, barring any unexpected surprises at the ministerial.

Meetings on trade facilitation are likely to resume in the coming days, having been in a "holding pattern" for most of this week, a negotiator said. Sources familiar with those negotiations note that various difficulties still remain, particularly involving Section 2, which deals with implementation flexibilities for developing countries.

Some elements of Section 1, such as transit, also remain open and require significant work, one source said. While there have been some reductions in brackets in that section, which deals with the commitments that WTO members will take on to ease customs procedures and expedite trade flows, one source attributed these to "proponents reducing their ambition, rather than achieving compromise."

"It certainly got people a bit concerned as to where things are tracking," the source commented, while adding that last week's agreement on customs cooperation did remove a major roadblock.

ICTSD reporting; "India warns US over food stockpiling as WTO deal goes down to wire," REUTERS, 13 November 2013.

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