WTO Agriculture Negotiators Weigh New Proposals as Buenos Aires Meet Approaches

19 October 2017

A slate of new negotiating proposals on farm subsidies and cotton reflect different views on how to balance ambitious demands with realism in the run-up to the WTO’s eleventh ministerial conference in Buenos Aires, Argentina, this December, trade sources have said.

As negotiators prepare to meet this week in Geneva, three new negotiating documents are on their desks – although the proposals reflect different assessments of the policy landscape following a mini-ministerial meeting in Marrakech, Morocco, earlier this month. (See Bridges Weekly, 12 October 2017)

The submissions include a paper on cotton from the C-4 group of West African cotton producers; a submission on domestic support from the African, Caribbean, and Pacific (ACP) group; and a paper on domestic support from New Zealand and four other agricultural exporting nations.

The proposals are due to be discussed on 19-20 October in negotiating sessions open to all WTO members.

WTO Director-General Roberto Azevêdo expressed cautious optimism about the chances of progress during remarks this week at the Washington-based Council on Foreign Relations. “Agriculture is a prominent theme – with a strong focus on domestic support and issues related to food security in developing countries,” he said.

Cotton: support limits proposed

The C-4 countries – Benin, Burkina Faso, Chad, and Mali – tabled a long-awaited proposal last week calling for capping the overall level of trade-distorting support for cotton, as well as measures on “green box” support. The latter is required to be only minimally trade-distorting under WTO current rules.

The proposal is among various recent submissions calling for a cap or ceiling on farm subsidy levels to reduce distortions in global markets. (See Bridges Weekly, 27 July 2017)

The C-4 calls for cutting developed countries’ trade-distorting support to cotton, with deeper cuts for countries that have committed to a ceiling on highly trade-distorting “amber box” support at the WTO. The cuts would range between 70-90 percent, depending on how high subsidies were in a historical reference period.

The proposal would cover “amber box” support, trade-distorting payments classified as production-limiting “blue box” support, and “de minimis” payments, which are essentially amber box support that falls below a minimum share of the value of agricultural production.

Developing countries which have committed to a WTO ceiling on amber box support would face lesser cuts, at around two-thirds of what the C-4 proposes for developed countries.

Because only some developing countries have amber box commitments, not all of them would be affected by the C-4 proposal. WTO members such as Brazil or Turkey would face cuts, while others such as China and India would not, trade sources said.

The C-4 also called for tighter measures on green box support for cotton. Although cotton farmers could benefit from support that is generally available to producers under the green box, trade sources told Bridges that governments would normally be unable to provide product-specific support under this category.

ACP: eliminate amber box subsidies

Echoing a negotiating submission tabled in July by China and India, a separate proposal from the ACP group calls for the elimination of amber box subsidies, while also arguing in favour of enhanced flexibility for developing countries.The submission builds on a previous proposal from last November, with more detail and various new elements. (See Bridges Weekly, 20 July 2017 and 24 November 2016)

In their new paper, the ACP group argues that amber and blue box support in developed countries should not exceed ten percent of the value of agricultural production – a threshold composed of five percent for product-specific payments and another five percent for non-product-specific support. The ceiling is equivalent to the current WTO limit on developed country de minimis support.

Developed countries facing “critical difficulties” in complying could be granted longer implementation periods on an exceptional basis, the proposal says. The G-10 coalition of countries with highly-protected farm sectors, such as Japan, Norway, and Switzerland, have warned that they would find it difficult to accommodate steep cuts in their trade-distorting farm subsidies.

De minimis and blue box support in developing countries should also not exceed existing de minimis limits, the paper says. At 20 percent of the value of production, these are currently double the allowance for developed countries.

Due to commitments undertaken when it joined the WTO, China currently has a ceiling of 8.5 percent for trade-distorting support in the de minimis category, although the most recent official figures it has reported to the WTO indicate that actual support levels are much lower. (See Bridges Weekly, 13 May 2015)

Exporting countries such as the US have long argued that large developing countries such as China should also limit their trade-distorting support as part of any eventual deal, although Beijing has pointed to the low per capita level of its farm subsidies and their importance for food security. As China does not have a commitment on amber box support, the ACP group’s proposal would not require it to undertaken any cuts in its maximum permitted subsidy levels.

The ACP group also calls for setting the new ceiling on trade-distorting support at a higher level for developing countries with a low value of production and who allocate most support to subsistence and resource-poor producers.

Agricultural exporters: three fixed cap options

New Zealand, Australia, Canada, Chile, and Paraguay have proposed exploring options for a fixed cap on overall trade-distorting support levels, in a paper tabled earlier this week.

The paper advocates adopting a fixed monetary ceiling on support levels, rather than a limit expressed as a share of the value of production. In July, the EU, Brazil, and three other agricultural exporters proposed capping support as a share of farm output. A separate negotiating submission from China and India also proposed limiting trade-distorting support, while using a different approach. (See Bridges Weekly, 20 July 2017)

The New Zealand proposal suggests three types of fixed caps which members could consider. The categories would be set as follows: major members, such as the US; countries such as the G-10, with high support levels relative to their value of production; and developing countries with a low value of agricultural production and low spending levels. Least developed countries would be exempt from any ceilings.

According to the proposal, major WTO members would need to respect a ceiling based on a percentage of historical value of production levels. Other countries with high support levels and low farm output would respect a ceiling based on current farm subsidy levels, with a small “buffer.” Finally, developing countries with low subsidy spending and low levels of agricultural production would be bound by a fixed value ceiling, such as US$2 billion, set at a level that is higher than current limits for most WTO members.

Significant gaps remain

Despite the flurry of new proposals, many negotiators are unsure how much progress can be achieved at Buenos Aires, given how far apart members are on domestic support.

Negotiating meetings convened this week by the chair of the WTO farm trade talks, Kenyan Ambassador Stephen Karau, might provide greater clarity on possible ways forward, sources said.

Others said that a WTO General Council meeting, scheduled for 26-27 October, might also give more direction to officials as they try to delineate the contours of an eventual agriculture-related outcome in Buenos Aires.

ICTSD reporting.

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