WTO talks: Developing countries propose reforms on agriculture, cotton, safeguards

29 October 2015

Three separate developing country groups have tabled negotiating proposals on agriculture at the WTO, only weeks ahead of the global trade body’s tenth ministerial conference in Nairobi, Kenya. However, trade sources cautioned that the dwindling package of issues on the negotiating table could limit the chances of progress on the broader agenda that developing countries have highlighted for action.

The three proposals, copies of which have been seen by Bridges, all raise negotiating issues that are central to the Doha Round of talks that was first launched in the Qatari capital in 2001. However, the US and increasingly also other developed countries have had less and less appetite for the wide-ranging agenda in recent months, particularly after an earlier effort to reach a Doha Round work programme by July failed to bear fruit.

One group of mainly agricultural-importing developing countries, the G-33, has tabled a proposal calling for an “accessible and effective” special safeguard mechanism that developing countries would be able to use to raise tariffs temporarily in the event of a sudden surge in import volumes or a price depression.

Another group, the C-4 group of West African cotton-producing countries, has tabled a draft decision on cotton.

Finally, the African Group at the WTO has tabled a set of “elements on agriculture” which they argue must be delivered in the Doha talks.

The proposals come only weeks after WTO Director-General Roberto Azevedo recommended that the trade body’s members explore options for a slimmed-down package for the Nairobi ministerial, which he said could focus on agricultural export competition, least developed country (LDC) and development issues, and improved transparency. (See Bridges Weekly, 8 October 2015)

Trade sources told Bridges that the chair of the WTO agriculture negotiations, New Zealand Ambassador Vangelis Vitalis, had convened a meeting this coming Friday to discuss the new proposals and update members on his latest consultations with negotiators.

Special safeguard mechanism

The G-33 proposal identifies four new areas of flexibility which the group indicates could help foster agreement on an earlier proposal they circulated in July 2014. (See Bridges Weekly, 23 July 2014)

The proposal, which was submitted by group coordinator Indonesia, says that negotiators could explore whether a time-bound limit on the number of products eligible for enhanced protection under the mechanism might help promote consensus.

It also suggests that the WTO could establish a consultation mechanism to exempt from safeguard duties those exports coming from least developed countries and those classified as small, vulnerable economies.

The G-33 also proposes that limits could be set on the number of consecutive times a country could apply safeguard duties, or the length of time for which the mechanism would be applied.

Finally, the group suggests revisiting the existing special agricultural safeguard agreed at the end of the Uruguay Round as a possible model for resolving other outstanding issues, such as whether safeguards would be allowed to breach pre-Doha ceilings on tariffs that had previously been agreed at the WTO.

“It’s a gesture from the group,” one G-33 official familiar with the proposal told Bridges. “We’re willing to discuss some of the concerns raised by the members.”

However, another delegate suggested that the political dynamics of the talks would make it hard for the group to win acceptance of their proposal.

“It’s crystal clear that market access will not be part and parcel of the deal,” the source said.

Cotton: African countries seek reforms

The C-4 group of African countries tabled a wide-ranging draft decision on cotton for Nairobi, which includes proposed action on the product in the area of market access, domestic support, export competition, and development assistance. The C-4 includes Benin, Burkina Faso, Chad, and Mali.

If the decision were to be adopted, developed countries would have to cut their trade-distorting “amber box” payments in half by 1 January 2016, with three-quarters of the amount cut a year later, before eliminating these subsidies completely at the start of 2018.

Production-limiting “blue box” payments would also be reduced according to the proposal, which would cap this type of support at one-third of the limit that would otherwise have been applicable for product-specific amber box payments.

Developing countries would be allowed to make gentler cuts, in five successive tranches of 20 percent to be made between 2017 and 2021.

The proposal would also require developed country members to provide duty-free, quota-free market access to LDC cotton exports from the beginning of 2016 onwards. Developing countries “in a position to do so” would undertake the same commitment, but would not undertake a binding commitment to increase market access.

If adopted, the proposal would require major trading powers such as the US to make immediate changes in its existing legislation – which some trade sources warned would make the proposal hard for the US to accept in its current form.

“It’s a red flag to the Americans,” the source told Bridges, who also cautioned that the limited concessions being sought from large developing countries would also make the proposal unpalatable to Washington.

In recent months, Washington has consistently argued that Beijing in particular would need to make reductions in its own trade-distorting domestic support payments as part of any eventual Doha deal.

African Group: a “fair and equitable outcome”

The African Group proposal argues that a “fair and equitable outcome” is needed across all three pillars of the agriculture negotiations: market access, domestic support, and export competition.

It argues that a monetary limit on developed countries’ overall trade-distorting support (or OTDS) is needed, as set out in the most recent draft Doha negotiating text tabled in 2008. Earlier this year, a Norwegian non-paper suggested that new domestic support disciplines could be adopted without including a ceiling on OTDS. (See Bridges Weekly, 16 July 2015)

The 2008 draft should also be the model for cuts to trade-distorting “amber box” payments, the proposal says, as well as for the percentage of such support that would be allowed under the WTO’s “de minimis” provision.

However, the group also argues that stricter rules should be established on payments that are currently allowed as “decoupled income support payments” in the WTO’s green box. Currently, these payments are allowed without any limits, on the basis that they cause no more than minimal trade distortion.

On export competition, the proposal calls for export subsidies to be eliminated and for export credit and food aid to be subject to the disciplines set out in the 2008 draft Doha text. Trade sources told Bridges that the US is anxious to secure greater flexibility for these types of support than is currently provided in the draft.

The proposal also says that new public stockholding programmes should benefit from a “peace clause” agreed at the trade body’s last ministerial conference, which was held in Bali, Indonesia, in 2013. (See Bridges Daily Update #5, 7 December 2013) The deal – which allowed developing countries more flexibility to purchase food at administered prices under existing farm subsidy rules – only applied to existing programmes.

Glass half full or half empty?

While Ambassador Vitalis was reported to have invited members to submit comments and suggestions on agricultural export competition that could help him with the drafting process, some trade sources told Bridges that they were disappointed that negotiators were not working towards progress on a more wide-reaching agenda for the Nairobi ministerial.

“Our preference would’ve been for a comprehensive package,” said one.

Another said negotiators were still grappling with the crucial question of what happens after the ministerial in December. The source said that the WTO Director-General may need to help draft language on the controversial question.

“For the US, the single undertaking is an absolute no-go,” said one, who added that Washington was reluctant to continue negotiations under the existing Doha framework. The US has recently indicated, however, that it is open to discussing those Doha issues, as well as new ones, outside of this framework.

Another said that the recent conclusion of the Trans-Pacific Partnership (TPP) between 12 major trading powers – including the US – was likely to change the dynamics in Geneva.

One developing country delegate told Bridges that they were disappointed with the direction the talks had taken, and tended towards pessimism about the likely outcome from Nairobi. “For LDCs, the glass is half full,” he said. “For us, it’s half empty.”

ICTSD reporting.

 

This article first appeared in the Bridges Weekly, 29 Octobre 2015

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