On 24 April, the EU tabled an informal paper setting out far stricter disciplines for in-kind food aid than those proposed earlier by the US (see BRIDGES Weekly, 26 April 2006). WTO Members are currently developing rules to protect flows of bona fide food aid during emergencies -- the so-called 'safe box' -- while attempting to ensure that such assistance cannot serve as a pretext to circumvent disciplines on export subsidies. The EU must phase out its own export subsidies by 2013; it has consistently called for this to be accompanied by new rules on donations of food. The US is the world's largest donor of in-kind food aid.

The EU proposed some general rules for all food aid: it should be provided on a fully grant basis (as opposed to concessional sales at lower-than-market prices); it should not be re-exported (except under limited exceptions associated with emergency 'safe box' aid); and should not be commercially tied to the provision of other commodities or services. The US, in contrast, has been keen to ensure that non-emergency food aid may be provided "in fully or less than fully grant form."

With regard to the safe box, the EU proposal would make "all untied cash-based aid" eligible, thus exempting it from disciplines. However, it places far stricter conditions than the US on the eligibility of in-kind emergency food aid for the safe box.

For instance, the EU would require emergency situations to be defined by UN agencies. In contrast, the African and Least-Developed Country (LDC) Groups' joint proposal suggested that a 'declaration' of emergency by the recipient country in collaboration with a relevant humanitarian assistance body would be sufficient. The US proposal is more expansive still, envisaging such a declaration being made by "a Member, a country, the UN, a relevant regional or international intergovernmental agency or organisation, a non-governmental humanitarian organization, or a private charitable body."

Furthermore, the EU would require in-kind aid to be delivered in response to a multilateral emergency trigger, such as the UN Consolidated Appeals Process, in order to qualify for the safe box. In addition, the EU proposal explicitly prohibits aid flows triggered by bilateral or non-governmental organisation (NGO) mechanisms from qualifying for the safe box.

The EU also calls for in-kind food aid in the safe box to be provided in compliance with the multilateral needs assessments of the World Food Programme (WFP), in cooperation with other UN agencies.

Unlike the US and the African/LDC Group submissions, the EU seeks to place a finite limit on the length of time for which in-kind emergency food aid would qualify for safe box status -- a to-be-negotiated number of months after the crisis, emergency or disaster.

In another departure from the other two proposals, the EU would explicitly prohibit the monetisation of safe box aid, on the grounds that all such aid is for free distribution to recipients anyway. Re-export is contemplated only as a limited exception.

EU wants actionable disciplines for non-emergency aid

The EU emphasised that "genuine food aid which only partially meets the 'safe box' criteria shall remain permitted," but called for the development of actionable disciplines on food aid outside the safe box in order to prevent commercial displacement.

It proposed that in-kind food aid outside emergency situations should be phased out and replaced with untied cash contributions. Monetisation would also be phased out over the Doha Round implementation period. While the African/LDC group proposal contemplated monetisation of non-emergency food aid only under "exceptional circumstances," the US submission said that such aid "may be monetised" if the donor prepares a market analysis report to demonstrate that selling aid would not affect commercial import trends or domestic production. Finally, the EU would prohibit re-exports of non-safe box food aid.

For food aid that does not qualify for the safe box, the EU proposed notification and monitoring requirements that would place the burden of proof on the donor Member to establish the humanitarian and developmental objectives of its donation, along with the apparent absence of commercial displacement.

Although negotiations in this area are now taking place around a structure established by the original African/LDC Groups' proposal, and further defined by the agriculture chair's reference paper on the issue, further convergence will be necessary for Members to reach consensus in this sensitive area.

ICTSD reporting.