WTO agriculture talks 2021: where ambition and cynicism collide

Prospects and developments in the WTO agriculture negotiations in 2021

Priority: but are governments willing to confront lobbies on cutting domestic support?

By Peter Ungphakorn
POSTED FEBRUARY 4, 2021 | UPDATED JULY 23, 2021

A strange atmosphere surrounds the agriculture talks in the World Trade Organization (WTO), which resumed on Friday February 5, 2020 and continued through to July, as members to submitted numerous new proposals on a wide range of issues. Consensus stays blocked, even on subjects that ought to be simple.

First, there’s COVID-19, which demands an urgent look at rules, particularly on export restrictions for food, but has also cast a shadow over the talks as governments focus on the pandemic rather than trade negotiations. The meetings have to be partly or totally online because of the semi-lockdown in Geneva.

The target is now the November 30–December 3, 2021 Ministerial Conference scheduled to be held in Geneva, assuming the COVID-19 pandemic does not prevent it being held in person.

(Skip this updated box to continue reading the background)


THE DISCUSSIONS IN THE WTO
Updated February 8 and July 22, 2021

As expected, negotiators remain divided on all the subjects in the talks in meetings from February to July 2021, according to Geneva trade sources. This is despite many countries arguing that the status quo is “less and less appealing”.

The prospects of an agreement on anything by the November 30–December 3 ministerial conference, look dim. The most likely outcome could be the traditional WTO fallback of a “work programme” to keep things ticking over, unless there is a breakthrough in September to November.

This is not for lack of effort. As members prepared to take the WTO’s traditional summer break (August to mid-September), the chair, Gloria Abraham Peralta, said she would produce a draft negotiating text on July 29. This was designed to take the talks into a new “text-based” phase in the hope that agreement can be reached on at least something.

By then new papers had been circulated on a wide range of topics, with a number of new ideas, which seemed to broaden the discussion rather than narrow it down to points of potential agreement.

By July, with 11 latest papers under discussion, negotiators were looking at domestic support, market access (including transparency on applied tariffs, not just the tariff ceilings legally bound in the WTO), transparency more broadly, export restrictions, waiving export restrictions for purchases by the World Food Programme, policies that may contain hidden export subsidies (called “export competition”), “public stockholding”, a “special safeguard mechanism”, etc. On most of those — perhaps all — members disagreed.

Domestic support was described as the priority and the issue most likely to produce agreement. In an attempt to invigorate the talks, the Cairns Group proposed a new approach, taking a global approach both geographically and in terms of the types of domestic support.

But because it was new, it needed clarifying. Some members disagreed with the approach, expanding the areas of disagreement on this subject alone. By July members were debating which type of domestic support was worse, and therefore which one needed to be tackled first.

China, India and some developing countries argued that “AMS” was worst because it allows rich countries like the US, EU and others large amounts of trade-distorting support — affecting prices and production.

The EU and some members of the Cairns Group said “de minimis” has become the most distorting form of domestic support (see this graphic) and should be the priority. “De minimis” is AMS but within limits based on percentages of the value of production. That means the limits expand as agriculture grows, unlike regular AMS entitlements which are fixed.

Disagreement also erupted on exemptions for developing countries, allowing them to support, for example, subsidies on inputs. Developing countries in the Cairns Group complained that this was also distorting world markets.

During the first half of the year, the focus of work continued in small groups handled by “facilitators” as members sort out technical issues. They were also encouraged to get to know each other’s positions better. It’s “an essential preparatory phase and requires time,” said the chair.

Abraham Peralta said the talks would have to move to higher level and towards convergence if a result is to produce some decisions: “We cannot afford to have another ministerial conference without an outcome on agriculture.”

The two issues debated most in substance are still export restrictions — including exempting the World Food Programme — and domestic support — including the approach to adopt, and purchases for developing countries’ food security stocks. Japan had earlier summed up the task for domestic support in general: whether to deal with supports categorised as Amber Box, de minimis, Blue Box, Green Box and Development Box (allowances for developing countries), or all four. That is still the case.

> Follow the WTO’s news on the agriculture negotiations here


The negotiations’ chair, Costa Rica ambassador Gloria Abraham Peralta, has said she’s “encouraged” by the steady stream of new proposals.

One of the latest is from the Cairns Group of agricultural exporting countries, and some allies, circulated on January 23, 2020 and February 1, 2021. It introduces an innovative approach for domestic support. Coincidentally mirroring the talks on fisheries subsidies, which set a date for meeting a sustainable development goal, the Cairns Group proposes at least halving by 2030 worldwide trade-distorting domestic support — the types that directly affect prices or production.

But to get anywhere near agreement on that or any other subject in the talks, WTO members will have to ditch the mindsets that seem to be preventing agreement on anything.

For example, a large group of countries led by Singapore tried and failed to get the membership — meeting as the WTO General Council on December 16–18, 2020to agree that the World Food Programme’s humanitarian purchases should be exempt from any restrictions on food exports. There was no consensus because India and others said this would affect their own food security, despite the World Food Programme’s “do no harm” policy.

Without a formal WTO decision, 79 members declared they would go ahead unilaterally anyway.

Key priority: members put domestic support top of the list, the new chair reported | WTO
Are the signs really encouraging?Back to top

On the eve of that final General Council meeting of 2020, WTO ambassadors received a report from their Costa Rica counterpart, who chairs the agriculture negotiations, now in their 22nd year.

She carefully stuck to the facts as she briefly ran through the main subjects being negotiated.

EXPORT RESTRICTIONS

Under WTO rules, countries can restrict exports of agricultural products but only temporarily and only to prevent “critical shortages of foodstuffs”.

They have to comply with GATT Article 11, including paragraph.2(a), and with Article 12 of the Agriculture Agreement.

These require the restricting country: to take into account the impact on importing countries’ food security; to notify the WTO as soon as possible, and as far in advance as possible; to be prepared to discuss the restriction with importing countries and to supply them with detailed information when asked for it.

The rules are more lenient for least-developed countries.

She said curbing domestic support was “the key priority for virtually all members”, but “divisions remain”. For export subsidies (now that members have agreed to scrap them) and export restrictions, in different ways the important issues are transparency and notification.

Negotiators have lowered their sights on market access, she said, with recent discussions focusing “mainly on a transparency outcome — such as goods en route — considered by many as important for ‘trust-building’.”

Then her factual guard slipped. “I would say that after the sudden halt in the negotiation process this Spring [2020], work has now fully resumed and the intensity of work is very encouraging.”

Her predecessor’s departing message in June 2020 had been even more optimistic, that “a shared overall objective towards capping and reducing [trade-distorting domestic support] with numerical goals could possibly be agreed.”

This is still a tough ask. The US on one side with China and India on the other have for years been uncompromising on trade-distorting support for agriculture.

The US complains about ever-increasing support in the other two because their entitlements are no longer as small as the “de minimis” title suggests — they are a percentage of agricultural production and therefore grow as agriculture grows.

India and China say that with small scale and peasant farming, their support per farmer is much less than the US’s.

The Cairns Group proposal (which does not include group member South Africa) might find some middle ground because it sets a global target (halving trade-distorting support entitlements by 2030) and says the way to meet that is:

“… contributions by individual Members in these reductions will need to be proportionate to the size of those Members’ current entitlements and their potential impact on global markets, taking into account the individual development needs of Members, to ensure the global target is reached by 2030.”

(See technical note.)

The group estimates that entitlements under the most distorting category (known as “Amber Box”, and including “de minimis”) alone will reach $2 trillion by 2030 if left unchecked.

It first floated the idea in early 2019. The formal paper was circulated and discussed in January 2020, but received little public attention at the time. It was discussed again in a negotiating session in December 2020. A revision was circulated this month (February 2021) adding El Salvador to the sponsors.

Whether the US, China, India and others can accept that remains to be seen. Each of them can be intransigent because of domestic politics, and they each have other axes to grind.

The US has always demanded more market access for its exports, and powerful farm lobbies make it difficult for Congress to agree to cut support, which is historically large. The has increased, approaching the limit, as the Trump administration has compensated farmers for the collateral damage of the tariff war with China.

In addition to preferring support disciplines to be per farmer, China has a range of priority issues such as “investment facilitation”.

India and its allies continue to press for a permanent decision on public stockholding for food security. They argue that temporarily excluding these programmes from dispute settlement when purchases lead to breaches of domestic support commitments is not enough.

Eleven facilitators lead informal discussions on seven key topics, emphasising small-group and bilateral meetings. The facilitators are:

India has used the public stocks issue to hold up agreement before, notably when the Trade Facilitation Agreement had to be delayed for months in 2014. When it blocked the proposal on World Food Programme purchases in the December 2020 General council, India also cited a preference for its proposal on public stocks.

It remains to be seen whether anything — even the new Biden administration in the US — can change these long-held positions.

In the last negotiations meeting of 2020 (on December 7), Brazil challenged members to “think outside the box” and ditch some long-standing positions, particularly on exemptions for developing countries, according to a Geneva trade official familiar with the talks. (See technical note.)

Abraham Peralta has already overseen technical work chaired by a group of “facilitators”. She said some newer approaches could also be discussed technically. Technical work is considered essential, to clarify issues, and also for negotiators to understand each other’s concerns better.

Half a year later, the omens are still not good.


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Blog posts

Proposals circulated in 2021

  • “JOB/AG” documents: search result.
    July 22, 2021: total = 26; unrestricted = 12; restricted = 14
  • “RD/AG” “room documents”: search result.
    July 22, 2021: total = 1; restricted = 1
  • “TN/AG” formal trade negotiations documents search result (all on cotton):
    July 22, 2021: total = 8; unrestricted = 8

Updates:
• July 22–23, 2021 — updating the box on developments in the WTO, revising the text to reflect passing time, adding July 29 as the date the chair will circulate a text
• June 27, 2021 — adding link to technical note on countries ranked by farm support
• February 8, 2021 — adding box with a summary of the meeting
• February 5, 2021 — adding box on rules on export restrictions; some edits for clarity

Image credits:
• Rice farmer | Sasint Tipchai via Pixabay CC0
• Ambassador Gloria Abraham Peralta chairing her first meeting of the agriculture negotiations | WTO

Author: Peter Ungphakorn

I used to work at the WTO Secretariat (1996–2015), and am now an occasional freelance journalist, focusing mainly on international trade rules, agreements and institutions. (Previously, analysis for AgraEurope.) Trade β Blog is for trialling ideas on trade and any other subject, hence “β”. You can respond by using the contact form on the blog or tweeting @CoppetainPU