The chair of the Doha Round farm trade negotiations on 7 November released a set of potential changes to WTO rules aimed at preventing countries from pursuing policies that effectively subsidise the export of agricultural products.

The three 'working documents' updated the terms of the draft deal Ambassador Crawford Falconer (New Zealand) circulated to Members in July, in order to reflect subsequent convergence.

Unlike the negotiations on farm subsidies and market access, the export competition talks are widely seen as near resolution. This is not least because governments had less to do: they already agreed to eliminate export subsidies by 2013 at the Hong Kong Ministerial Conference nearly two years ago. They have spent the time since debating how to discipline food aid practices, export credits, and the functioning of exporting state trading enterprises to ensure that they do not have an 'equivalent effect'.

One official reported that the updates to the July draft mostly reflected discussions in Falconer's discussions with a group of 36 representative delegations (the so-called 'Room E' talks) since early September. Delegates were unlikely to be surprised by the changes, the source said.

Given the technical nature of the paper, negotiators indicated that they needed to examine it further before reaching conclusions about its implications.

Export credits

One trade diplomat noted that the export credit negotiations were "so legalistic, people probably want their lawyers to have a look at it" before coming up with more detailed responses. In his new draft provisions on this issue, Falconer had removed a number of terms and conditions that had figured in his July text (for instance, a stipulation requiring, interest payments, premiums, and risk-sharing to relate to market conditions). Instead, he left only a requirement for such programmes to be self-financing over a set maximum period - the two options proposed for developed countries were four or five years.

In the absence of the extra conditions, the chair's intention was reportedly for Members to use provisions in the existing WTO Agreement on Subsidies and Countervailing Measures (SCM) that discipline government loans that act as subsidies. However, some negotiators indicated that they were still analysing the new text to see whether its disciplines would be sufficiently rigorous to specifically target trade distortion resulting from agricultural financing support.

A proposed 180 day maximum repayment period for export financing support remains highly divisive.

State trading enterprises

In the talks on exporting state trading enterprises (STEs), the US and the EU have been keen to prohibit the monopoly powers of STEs in Canada, New Zealand and Australia, a move that the latter three resist. The only substantive change Falconer has made is to the definition, which now refers to the definition of STEs in Article 17 of the General Agreement on Trade and Tariffs (GATT), This is significant because the GATT definition refers to enterprises which affect exports and imports "through their purchases or sales." The US does not like the reference to 'purchases', since this broader definition could potentially curb the activities of agencies such as its own Commodity Credit Corporation, one of whose functions is to purchase food domestically for donation to foreign government and international relief agencies.

One delegate suggested that the question of whether or not to prohibit STE monopoly powers should be left up to ministers.

The chair also restructured provisions on 'special and differential treatment' for developing and least-developed countries, to make them more clear.

Food aid

Differences on food aid have hinged on ensuring that in-kind donations of food (as opposed to cash grants) do not distort recipient markets or serve as a pretext for subsidising exports. The US is the world's main donor of in-kind food aid. One of the key outstanding issues is 'monetisation' -- the sale of food aid to raise funds -- in non-emergency situations. While the US is keen to allow the practice, other Members, such as Australia and Argentina, argue that it contributes to commercial displacement and should be severely curtailed. Falconer's working document provides two options for monetisation in non-emergency situations: prohibited except to raise funds for distribution, or permissible but discouraged.

The paper underlines that recipient governments must be involved in all stages of the food aid process - a key point of concern for many African countries. Sources say that Falconer has suggested that Members were near consensus on allowing regional or non-governmental organisations to play a role in assessing countries' needs in terms of food aid - so long as a relevant United Nations agency ultimately approved the assessment.

The text stipulates in a footnote that, if a Member sought to provide food aid involving monetisation outside the general rules of the draft agreement, it would have to submit a written request to the WTO's agriculture committee. If the committee could not reach an agreement, the request would be sent on to a standing panel of experts who would deliver a binding judgement. "I think the US will kick back very strongly," said one delegate of this provision, whilst suggesting that it was nonetheless a fairly reasonable procedure to set in place.

Delegates were due to discuss the text in greater detail in meetings planned for 12 November (see related story, this issue).

ICTSD reporting.