WTO Talks Begin on US-India Breakthrough

20 November 2014

Trade negotiators in Geneva are set to meet today to begin WTO consultations aimed at “multilateralising” a US-India deal on farm subsidy rules and advancing the implementation of a separate pact aimed at easing customs procedures, officials have said.

WTO Director-General Roberto Azevêdo is convening the consultations after returning from various international gatherings, including the summit of G-20 major economies in Brisbane, Australia, sources told Bridges.

Negotiators said they were hopeful that the talks could help smooth over nearly four months of uncertainty over the future of global trade negotiations, which had begun to raise serious questions about the viability of the trade body and its ability to strike deals.

A breakthrough between the US and India last Thursday effectively resurrected the Bali package of trade agreements which had been concluded at the organisation’s ministerial conference one year ago. (See Bridges Weekly, 13 November 2014)

Progress on the package had been imperilled following India’s decision in July to veto the adoption of a Protocol of Amendment that would incorporate the WTO’s Trade Facilitation Agreement (TFA) into the global trade body’s legal framework – a key step for the future implementation of the pact, which will later need to be ratified individually by members.

New Delhi had told other members in July that it would only allow the treaty implementation to advance if negotiators agreed to extend indefinitely a commitment not to challenge its food stockholding schemes under WTO farm subsidy rules.

Ambassadors to meet

Azevêdo was due to meet today with heads of delegation from over a dozen members to see if the US-India accord would be acceptable to other countries.

Trade sources told Bridges that the initial meeting would include negotiators from a cross-section of the WTO membership. Argentina, Australia, Brazil, Canada, China, the EU, India, Indonesia, Japan, Kenya, Lesotho, Switzerland, Uganda, and the US had reportedly been invited to attend.

Other meetings would then follow if the accord seemed to provide a foundation for a deal.

If there was no opposition from other countries, negotiators said they also expected that the WTO’s highest decision-making body outside of the ministerial conference, the General Council, would meet on Wednesday 26 November to finalise decisions in the two areas.

The trade body’s Preparatory Committee on Trade Facilitation would meet beforehand on the same day, sources said, with the goal of finalising the Protocol of Amendment text and associated draft General Council decision.

Continuing with “renewed optimism”

Delegates should continue their usual work “with renewed optimism,” said Miriam Chaves, the Argentine official who chairs the WTO Committee on Agriculture, in opening a meeting of the committee last week.

Though the committee’s role is to review how governments are implementing the existing WTO’s Agreement on Agriculture, rather than to negotiate new agreements, Chaves did confirm the news of the deal between Washington and New Delhi.

Trade officials told Bridges that, while specific details remained scant, last week’s India-US agreement was expected simply to reconfirm the provisions of the Bali deal, while clarifying that an interim accord to refrain from challenging developing country food stockholding schemes would apply indefinitely until a permanent solution had been found to the problems that some countries had raised.

Previously, the Bali agreement had said that this “peace clause” would apply until the permanent solution was adopted, with the aim of doing so at the eleventh ministerial conference, expected to be held in 2017.

Other concerns that India had reportedly raised in talks since September are not believed to be part of the bilateral accord, trade sources told Bridges.

These include the possibility of relaxing existing requirements to notify more detailed information about stockholding schemes in order to be able to benefit from the Bali peace clause, and the possibility of extending the peace clause to cover legal challenges under the WTO’s agreement on Subsidies and Countervailing Measures. At present, only the provisions of the trade body’s Agreement on Agriculture are covered by the deal.

The proposed clarification on the duration of the peace clause also means the agreement would still only cover “existing programmes” – a clause that some developing countries had objected to in Bali.

Farm subsidy questions

Chaves told last week’s agriculture committee meeting that she did not expect comments or questions on the deal. Instead, these should be kept “for a later moment when details are available,” she said.

Discussion in the committee nonetheless focused heavily on some of the questions around farm subsidy payments that had prompted the original proposal from developing countries. (See Bridges Weekly, 14 November 2012)

In particular, India was asked some 42 questions on its domestic support payments from 2004 to 2011, a seven-year period on which the government had submitted official figures to the WTO in September. (See Bridges Weekly, 18 September 2014)

Other countries asked for more information on India’s use of US dollars to calculate farm support, questioning whether public stockholding schemes might affect export prices, and asked for more information on key variables such as the value of farm production – used to calculate levels of trade-distorting support.

Other countries’ farm support schemes also came under the spotlight in the committee – both those classed as trade-distorting, and those notified as causing not more than minimal trade distortion.

India asked for more information about aspects of US legislation, seeking explanations about the functioning of new crop insurance programmes, irrigation schemes, and other forms of support.

Canada also asked for further explanation of why Jordan had adjusted its farm subsidy notifications to account for price inflation. A number of developing countries have proposed that price inflation in the last two decades should be taken into account when calculating levels of farm support.

Caution urged

Delegates cautioned, however, that the breakthrough on the India-US stand-off did not necessarily mean that progress would immediately be achieved on the wider agenda of trade talks at the WTO, and in particular on the long-running Doha Round that was launched in 2001.

In Bali, ministers had instructed negotiators to establish a work programme within one year – in other words, by December 2014 – to address the remaining Doha issues. Azevêdo recently told trade officials that he thought the deadline would now be missed.

“This is not going to suddenly unlock the negotiations,” one delegate warned.

“The US is still defending its Farm Bill; the EU is defending a low-ambition approach, which they call ‘simplification’; and China doesn’t want to give any more - which is a key demand of the US.”

Another source agreed that “a detailed work programme is next to impossible” within the original deadline.

“It’s sort of back to where we were in January,” one negotiator acknowledged.

ICTSD reporting.

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