New agriculture draft suggests nervousness in divided WTO

Never before in 21 years of the WTO agriculture negotiations has a chair’s text been circulated as a secret document

Divided: members’ inability to converge seems to be causing nervousness | Julian Ebert, Unsplash licence

By Peter Ungphakorn
POSTED JULY 30, 2021 | UPDATED SEPTEMBER 18, 2021

This has now been revised throughout, based on the actual text

As the World Trade Organization began its 2021 summer break, Gloria Abraham Peralta, Costa Rica’s ambassador and WTO agriculture negotiations chair, circulated her first draft negotiating text, stressing that delegates will need to move quickly to compromise and make a difference to people’s lives.

The 27-page draft, covering eight topics, is designed to focus negotiators’ attentions on what might be agreed at the November 30–December 3 WTO Ministerial Conference, three months after they return in September. It shows members are as divided as ever with little convergence after months of work.

The text is not a public document, but it has been leaked. It was circulated on July 29, 2021 as a restricted document, the first time a chair has done that since the agriculture negotiations began over two decades ago, in 2000.

The reasons behind the secrecy are unclear. It does suggest the WTO membership and its leaders are nervous about the prospects over the coming months. It may partly reflect the fact that many proposals submitted by members are also “restricted”, but in the past that has never prevented chairs from drawing on the proposals in their own publicly-available drafts.

The downside is that the secrecy could make matters worse because public support is needed if members are to find the political impetus to compromise.

But the WTO has 164 members, meaning documents like this are routinely leaked. This one is now available here.

The content, suggests only one or two final agreements at most can be reached at the ministerial conference. It’s possible that the only decisions ministers will be able to take could be on how future work will be organised and what the objectives will be — the work programmes that have become the standard vehicle for keeping WTO talks going.

(The WTO has subsequently published this news story.)

Former WTO deputy director general Alan Wolff is already pessimistic about the prospects, even though he sees agriculture as central to the WTO agriculture negotiations.

“I do not expect any major consensus to be reached in the lead-up to the Ministerial [Conference] other than, I would hope, an agreed work program for agriculture. Frankly, it is long overdue,” he wrote for the Peterson Institute for International Economics (PIIE).

One of Abraham Peralta’s predecessors, Vangelis Vitalis of New Zealand, says sometimes agreement is possible despite apparently irreconcilable differences.

Drawing on his experience as chair in 2015 and a surprise breakthrough on eliminating export subsidies at the Nairobi ministerial conference in that year, he tweeted (see below) that “persistence and a belief that nothing is impossible is vital, especially in agriculture where the situation is grave.”

The textBack to top
Gloria Abraham Peralta

In her introductory text, Abraham Peralta says her draft is an honest assessment of what might be possible.

A look at the text itself shows it does include some diametrically opposite alternatives, drawn from about 25 new papers circulated recently, and what negotiators have said in meetings.

“The text takes into account the range of views that have been expressed by members and seeks to chart a way forward with this in mind,” the chair says.

That is important because some reports have suggested that proposals in the draft are hers, for example to halve domestic support entitlements by 2030. She was simply reflecting what members have proposed, in this case, the Cairns Group, and she does offer an alternative.

“It is not intended to be a perfect representation of what can and should be achieved, nor to summarize all the views expressed by members: indeed, it is only a tool for you to engage with one another in a constructive exchange, collectively using this text as a reference to work toward [a ministerial conference] agricultural outcome,” she says.

She calls on members to “set out a direction for future progress”, indicating that most if not all decisions agreed at the ministerial conference are unlikely to be final.

Whatever is agreed this year “can and must contribute to rebuilding confidence among governments and other actors in our collective ability to rise to the challenges we face and work together to address them,” she says.

“It is urgent for us to lay out a pathway forward to guide our future work and set out markers for what we wish to achieve together, including at subsequent ministerial conferences.”

Urging negotiators to compromise and adapt expectations, she reminds them: “My role as chair is not to negotiate with you; it is to facilitate negotiations amongst you as this is the only way for an agreement to be reached at [the ministerial conference] and beyond.”

Her repeated references to “beyond” implies this ministerial conference agreeing on a set of work programmes.

The topics covered are:

> See also the chair’s statement to journalists (below) on September 2, 2021
as members prepared to resume negotiations the following week

Domestic supportBack to top

This is supposed to be the priority topic with a number of members hoping for an agreement by the ministerial conference.

But Abraham Peralta acknowledges that a deal this year is “out of reach” as members continue to differ on how to tackle “trade-distorting support” (support that affects prices and production).

“After having listened carefully to members’ views, I have not detected any fundamental change in members’ positions that would make me think otherwise,” she says.

She says she is looking for “a useful intermediary step forward” and urges members to meet halfway.

Her draft would set out principles for negotiations beyond the ministerial conference.

It includes the Cairns Group’s proposal to halve total global trade-distorting entitlements by 2030, but also offers alternatives and other possible features, including:

  • the vaguer “substantial reduction of trade- and production-distorting domestic support entitlements”
  • exemptions for developing countries
  • the possibility of focusing on the types of support used in developed countries but not developing countries such as China and India (technically “AMS above de minimis entitlements”)
  • revising criteria for “Green Box” support, considered not to distort trade and therefore not subject to limits
  • simplifying transparency requirements, which some developing countries consider to be too burdensome (see also “transparency”)

> Chair’s assessment and draft

Market accessBack to top

Some countries such as the US say resolving domestic support alone is not enough and want to balance it with a deal on lowering import duties and expanding tariff quotas. This makes the talks even more difficult and adds to the complexity of negotiating domestic support on its own.

The chair focuses on two issues:

Transparency on changes in “applied” tariffs and how shipments en route are treated when changes are made. (Tariff commitments in the WTO are on legally “bound” ceilings. Lower applied tariffs are easier to change.)

This, she says, has dominated recent meetings on market access.

Here, the draft is in three parts: draft guidelines to make changes to applied tariffs more transparent; an annex on “best practices” to achieve this; and a template (or form) for countries to notify how they are applying their best practices.

“The recent discussions on the proposal […] confirmed that additional work might be required to bridge the remaining gaps in Members’ positions,” she says.

A future work programme. The chair’s draft includes:

1.             Members commit to reduce tariff barriers and substantially increase market access for agricultural goods [within 10 years]. Negotiations shall start [no later than 2022].

2.            With the aim of achieving this goal, Members shall negotiate new disciplines [by MC13]. These negotiations shall take into account all elements within this pillar that will result in improved and less restrictive market access conditions.

3.             The contribution by individual Members in these reductions will need to be proportionate to Members’ level of tariff barriers, market access concessions as well as their patterns of participation and potential impact in the global agriculture markets, taking into account individual Members’ needs.

4.            Flexibilities, when appropriate, may include, inter alia, the development of options for cuts across the different elements of the market access pillar and across other pillars.

5.            The implementation of the future disciplines on market access shall take into account Members’ needs for sequencing with domestic support.

6.            Members will show the utmost restraint in the use of non-tariff barriers in order to preserve market access conditions and not undermine future concessions, upholding the principles and obligations set out in the relevant WTO Agreements, such as the SPS and TBT Agreements.

7.            To ensure transparency for the implementation of market access reform, all efforts must be made to comply with current notification obligations under this pillar.

  • Converting “specific” duties (eg dollars-per-tonne) and more complex tariffs into percentages of the price (the “ad valorem equivalents”). This is needed in order to structure agreed tariff reductions but it is fiendishly complicated. It was originally resolved in 2006 and is now badly out-of-date.
  • non-tariff barriers
  • the link with negotiations on domestic support

> Chair’s assessment and draft

Export competitionBack to top

This is WTO-speak for policies that might contain hidden export subsidies, particularly through government involvement in guaranteeing export credit, food aid and state trading enterprises

Since members agreed to scrap agricultural export subsidies in 2015, the task here is largely about transparency in those other areas of government action.

The purpose is to demonstrate that government actions do not have the effect of subsidising exports. The draft and an annex detail how transparency can be improved.

Again, several developing countries say the obligation to notify is too burdensome. The chair says she has taken this into account, and adds: “In that regard, it has been suggested that the Secretariat could provide relevant trade-related data to ease the burden on members.”

> Chair’s assessment and draft

Export restrictionsBack to top

Since the start, this has been an issue for importing countries such as Japan. It has become more serious because of the COVID-19 pandemic and some countries’ moves to restrict exports.

The chair’s draft draws on two proposals that appear to be fairly straightforward but where consensus has proved elusive in the WTO:

  • exempt the World Food Programme from export restrictions: “My assessment remains that the text emerging from the December 2020 discussions […] continues to be a plausible basis for members to re-engage in the negotiations with a view to reaching an agricultural outcome at [the ministerial conference],” the chair says.

Background: 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.

  • strengthen transparency in order to reduce market volatility — a proposal from Japan, Israel, South Korea, Liechtenstein, Switzerland and Taiwan. Again, the chair tries to accommodate several developing countries’ complaints about the burden of notifying.

> Chair’s assessment and draft

CottonBack to top

The chair’s draft deals mainly with transparency and trade-distorting domestic support. The cotton-4 (Benin, Burkina Faso, Chad, Mali) want domestic support cuts on cotton to be steeper than on agriculture as a whole. They have promised to submit a new proposal soon.

The draft focuses on continued monitoring of the situation in trade. The draft says members should continue to discuss cutting domestic support for cotton. In practice this will be vague until a clearer picture emerges about cuts for all of agriculture.

A section on development assistance for cotton — the second component of the cotton initiative — is left open.

More details on cotton are here.

> Chair’s assessment and draft

Special safeguard mechanism (SSM)Back to top

The chair says members have failed so far to discuss technicalities seriously and urges them to do so. Her draft focuses on five of these:

  • evaluating import surges and price falls. They would be used to justify implementing the safeguards, which are tariff increases.
  • the “triggers” — the import surges or price falls that would trigger the safeguard tariffs — and how these are cross-checked. Since prices and volumes fluctuate anyway under normal trade conditions, one of the challenges is to design the safeguard so that it only captures abnormal situations.
  • remedies — how high the safeguard tariffs can rise
  • the scope, coverage and treatment of preferential trade — whether price or volume fluctuations under free trade agreements can be used to justify raising tariffs outside those agreements
  • transparency and other issues

Accounts from recent meetings indicate that this remains so controversial that agreement is unlikely if it is a stand-alone deal rather than a confidence-building measure to accompany tariff cuts.

The draft ministerial decision would simply commit members to “continue to pursue negotiations” on this.

> Chair’s assessment and draft

‘Public stockholding’Back to top

The text shows that the chair struggles to find any possible consensus:

Given the widely divergent views of members, I have found it very challenging to propose a way forward on this issue.”

Instead, she offers two options.

One is a detailed decision to replace the temporary agreement, drawing on a variety of texts, complete with templates (or forms) for notifying programmes under the decision and relevant data.

The other is a 3-paragraph draft decision to continue talking, extend the present temporary agreement (perhaps not needed since it continues until replaced) and for the General Council to review progress.

The latest situation is further complicated by new proposals from the African Group and G33 group of developing countries. The two groups have overlapping membership. Both their proposals are secret, but sources say some members observed that the proposals contradict each other.

At first India, the main champion of the G33 proposal, declined to join the rest of the group in sponsoring the July 28, 2021 new proposal, apparently because of the draft anti-circumvention provision on preventing exports of supported produce. India eventually signed up in a September 16, 2021 revision.

This is another issue that is unlikely to see agreement at the ministerial conference. At best, members could agree on the chair’s second option.

> Chair’s assessment and draft

TransparencyBack to top

This is an important topic but ironically the details are untransparent. The chair says her draft is based on a proposal from Canada, the EU, Japan and US — which is itself restricted.

The proposal apparently aims to improve transparency by strengthening what countries are required to notify to the WTO.

The chair’s draft would simply commit members to improve transparency and monitoring. The Secretariat would provide information regularly on technical assistance to help developing countries meet their obligations to notify. And members could agree to set up a work programme on how to improve transparency.

The draft acknowledges the value of information technology tools such as databases for searching notified information.

Transparency is a central principle of the WTO. The agreements cannot be implemented unless members share information on what they are doing under the agreements. Nor can members monitor each other to see whether they are implementing the agreed rules correctly.

But a theme running through many of the eight topics in the draft is also concern expressed by many developing countries about the increasing burden on them to notify. The same debate can be heard more generally on transparency across the board in WTO work.

Finding a way to deal with both sides’ concerns may prove crucial to members’ ability to reach agreement if not at this ministerial conference, then beyond it.

> Chair’s assessment and draft


This article is based on a Twitter thread.

Replying to it, a former chair of the Agriculture negotiations Vangelis Vitalis of New Zealand (2015–17) tweeted:

“V helpful thread, as ever. @wto members always divided on #agriculture The months leading to Nairobi MC10, for instance, were v bitter & divisive. Even in Ag chair’s consultations certain members (developed & developing) often walked out in anger or frustration. Often both.

“Yet an outcome in Nairobi was secured Admittedly after clock was stopped & after several all nighters (& more walkouts incl by Ministers from the ‘small group’ process). Lesson is persistence & a belief that nothing is impossible is vital, esp in Ag where situation is grave

“Situation in global Ag & cotton v serious More large members (not just OECD ones btw) expanding subsidies =serious trade distortions & negative development impacts. And is it time to talk about environmentally harmful effects of these activities? Triple win”

(Vitalis is currently Deputy Secretary Trade and Economic, at New Zealand’s Foreign Affairs and Trade Ministry. The tweets are here, here and here.)


Gloria Abraham Peralta’s statement to the pressBack to top

As delegates prepared to resume negotiations on September 7, 2021

CHAIR’S INTRODUCTORY STATEMENT
Meeting with journalists — 2 September 2021

At MC12, trade ministers will have an important opportunity to deliver concrete outcomes on food and agriculture that will make real changes to people’s lives – as well as charting a way forward for the future.

Doing so would ensure WTO Members build on the achievements of the Uruguay Round, which concluded over 25 years ago, and help advance the agricultural negotiations in accordance with article 20 of the Agreement on Agriculture.

Despite concrete achievements such as the December 2015 Nairobi Decision to eliminate export subsidies, much more still needs to be done to improve the functioning of markets for food and agriculture.

In particular, these markets remain highly distorted and protected, with the most vulnerable producers and consumers in developing country Members paying the highest price.

The impact of the COVID-19 pandemic has heightened the urgency of governments taking concrete steps forward in order to provide a fair and sustainable basis for trade in food and farm goods both now and in the future.

With the COVID-19 pandemic, conflicts, and economic downturns already setting back efforts to end hunger and malnutrition, the climate crisis is also set to exacerbate the challenges facing policymakers as extreme weather events become more frequent and intense, and as temperature and precipitation patterns change.

MC12 is an important opportunity for Members to move ahead on shared objectives – alongside the COP26 climate change talks that take place just beforehand, and the UN Food Systems Summit in September.

By agreeing on concrete outcomes and a path forward, WTO members can contribute to establishing a more open, fair, predictable, and resilient international trading system.

This would contribute to enhancing food security by improving the availability and accessibility of more diverse and nutritious food, by reducing extreme price volatility, and by improving market stability.

An outcome on trade in food and farm goods at the ministerial conference will not provide a comprehensive solution to all the issues at stake – but all members have emphasized that an outcome is critical for re-establishing the WTO’s credibility, rebuilding trust, laying out a path forward, and galvanising political engagement.

An outcome on trade in food and farm goods can and must constitute a meaningful step forward paving the way for our future work and setting out markers for future outcomes post MC12.

The draft text I circulated at the end of July constitutes a tool to help Members engage with one another in more focused text-based negotiations with a view to achieving an outcome on food and agriculture at the conference.

The draft text reflects and builds on the collective work undertaken so far, including the valuable work of the Facilitators on their respective negotiating topics, as well as numerous submissions, comments and reflections by Members in different negotiation sessions.

The draft text is not an “ideal” solution. It lays out possible options for compromises and landing zones.

This text acknowledges remaining well-known areas of divergence between Members and reflects the complexity and the sensitivity of the issues at stake – including in particular in the topics of domestic support and public stockholding for food security purposes.

I am fully aware of all these concerns and sensitivities. I do not underestimate them, as they are directly related to critical challenges such as food security, poverty alleviation or economic development.

But it is precisely because the issues at stake are so fundamental that the status quo is not an option – and why all Members have emphasized the importance of a significant step forward at MC12. To achieve this goal, it is also clear that all Members will have to make concessions and move from their initial positions to reach consensus on meaningful, realistic, balanced and concrete outcomes that will move us in the right direction to address these challenges.

Time is short but I have confidence in Members’ willingness and ability to engage with one another and demonstrate the necessary flexibility to achieve a meaningful outcome at MC12.

My role is to facilitate this process and I will do all I can to this end. My sincere hope is that the draft text will help in this regard.

More on the agriculture negotiations


Updates:
September 18, 2021 — adding India hesitating to co-sponsor the new G33 proposal on public stockholding
September 2, 2021 — adding the chair’s statement to the press
August 6, 2021 — revised throughout, based on leaked text
August 3, 2021 — adding the link to the text
July 31, 2021— adding Vangelis Vitalis’s tweets and background on the World Food Programme proposal

Image credits:
Agricultural divide | Julian Ebert, Unsplash licence
Gloria Abraham Peralta | 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