Uncertainty Over WTO Negotiating Chair Overshadows Farm Trade Talks

31 March 2017

A continued disagreement among governments over who should chair the WTO’s farm trade negotiations overshadowed talks in the global trade body’s regular committee on agriculture this week, sources said.

New Zealand Ambassador Vangelis Vitalis, who was appointed to chair the farm trade talks in September 2015, returned to Wellington in January, leaving vacant a key role in the global trade body’s negotiating machinery.

Sources told Bridges that efforts to overcome the deadlock have so far been unsuccessful, after different country groups put forward officials from Hong Kong, Uruguay, and Mexico as possible alternatives.

WTO Director-General Roberto Azevêdo called a meeting to try to break the deadlock last Friday; however, sources said that so far little progress had been achieved.

Trade sources speaking to Bridges stressed the urgency of finding a new chair and restarting talks promptly, warning that the issue was taking away precious negotiating time ahead of the upcoming WTO ministerial conference, which is scheduled to be held in the Argentine capital of Buenos Aires this December.

While the next regular session of the Committee on Agriculture is scheduled for 7 June, there are currently no planned meetings of the negotiating body, in the absence of any agreement on the chair.
 

Delayed notifications

Trade officials said that delays in reporting farm subsidy levels and other data to the WTO was also hampering negotiations, as well as limiting the regular Committee on Agriculture’s ability to review the implementation of countries’ commitments.

Officials at the committee’s regular meeting on Monday 27 March asked Egypt, India, Indonesia, Thailand, and Turkey why their agricultural domestic support notifications were overdue, sources said.

“It is quite difficult to understand what they’re doing without the notifications,” said one source, who noted that China and India in particular have not reported their farm subsidy spending for the years since 2010.

While the EU, Russia, and the US have all provided recent notifications to the committee, almost all major economies are still behind schedule with their reporting commitments, according to the WTO. (See Bridges Weekly, 16 February 20179 February 2017, and 26 January 2017)
 

US: subsidies to large farms

At Monday’s meeting, China asked the US to provide a breakdown of its agricultural domestic support payments by farm size – information which Washington said it did not collect. Beijing had requested data on support for sugar, corn, cotton, soybean, and wheat, broken down by the categories of farm size used in the United States census.

Australia, Brazil, Canada, the EU, Guatemala, and Japan also asked for additional information on US farm support at the same meeting, sources confirmed.
 

India: minimum support prices

Australia asked why the Indian government had continued to raise minimum support prices for wheat to close to US$320 per tonne, given that world wheat prices remain much lower at around US$147 per tonne. Purchase prices depended on cultivation costs as well as market prices, New Delhi responded.

Canada, the EU, Ukraine, and the US were among the WTO members also expressing interest in this question.

In a separate question, the US also conducted a detailed breakdown of the cost of wheat exported from India’s stocks, estimating that this was US$35 more per metric tonne than the minimum export price established by the government.

Canada also asked why India was creating a two million tonne buffer stock of pulses. 
 

EU livestock: emergency support package

At the meeting, New Zealand also quizzed the European Union over the emergency support package it announced in September 2015. (See Bridges Weekly, 17 September 2015)

Wellington questioned whether the aid would be reported as trade-distorting “amber box” subsidies under WTO rules, as well as how much support was provided by the Commission or by individual EU member states.

The EU told the meeting that it is currently unable to say how much support was provided, as member states had been allowed to set up their own schemes. However, it clarified that outlays would nonetheless be reported under the bloc’s domestic support notifications in the future.

The most recently reported data from Brussels, which was submitted to the WTO in February this year, does not cover the 2015 emergency package as it only addresses the 2013-14 marketing year. (See Bridges Weekly, 16 February 2017)
 

Brexit: Indonesia asks about market access

A question from Indonesia asked how developing countries would be affected when the United Kingdom leaves the EU. The Brexit process was formally triggered this week. (For more, see related story in this edition)

Indonesia asked what procedure would apply to grant preferences to developing countries under the Generalised Scheme of Preferences (GSP), the system under which the EU provides tariff cuts or full elimination for various goods from those economies.

Currently, as an EU member, the UK applies the same GSP scheme as other countries within the bloc, as well as granting least developed countries with duty-free, quota-free market access for all goods under the EU’s “Everything But Arms” arrangement.

Another issue raised by Indonesia was the need for additional clarity on what Brexit will mean for the United Kingdom’s “tariff-rate quotas,” referring to the tool that involves charging lower tariffs for importing a good as long as the quantity remains below a certain quota. Sources say this question drew interest from Argentina, China, Russia, and the United States.

The EU responded to both questions from Indonesia, noting that “the EU common external trade policy applies to all its member states and the UK is still a member of the EU.” The bloc pledged to reply in further detail “in due course.”
 

Zambia, Mali, and Togo in the spotlight

In addition to the questions for major agricultural trading powers, officials also asked for more information about the programmes in place in three least developed countries in Africa.

The EU asked whether Zambia had exported public stocks of maize at prices below the level at which it was purchased, repeating a question it had asked at the previous meeting which the bloc said had remained unanswered.

The EU also asked Mali about its input subsidies, while the US commended Bamako on its efforts to update its domestic support notifications, along with asking why some kinds of subsidies had been discontinued.

Similarly, the US recognised the efforts made by Togo to update its domestic support notifications, and asked how the country defines “low-income or resource-poor producers” – a category of farmers which are eligible to receive input and investment subsidies under Article 6.2 of the WTO’s Agreement on Agriculture.
 

Questions on US policy direction

Some trade officials told Bridges that they were concerned about whether major economies were investing all their efforts in the reporting and negotiating processes at the WTO.

One developing country negotiator characterised Monday’s meeting as “good questions, but not such good answers.”

Another suggested that continued uncertainty over the new US administration’s stance on the WTO was affecting prospects for progress at the global trade body.

“It’s more important than the chair, I believe,” the source said, referring again to the disagreement among members over who should facilitate the agriculture negotiations.

US President Donald Trump has nominated international trade lawyer Robert Lighthizer to serve as the country’s next US Trade Representative (USTR), with his appointment pending Senate confirmation. Many other key trade positions, including that of US Ambassador to the WTO, have not yet been filled. (See Bridges Weekly, 16 March 2017)
 

ICTSD reporting. 

This article first appeared in Bridges Weekly, 30 March 2017.

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