Pre-ministerial draft shows little to harvest in WTO farm talks

21 years of talking with little sign of convergence on remaining topics in agriculture

Little sign of convergence in the draft WTO agriculture text | Johny Goerend, Unsplash

UPDATES
See “WTO farm talks head into 2022 with lots of ‘will’ but not much ‘way’
and May 31, 2022, pre-Ministerial Conference drafts (agriculture decision, food security declaration, and exempting the World Food programme from export restrictions decision)

By Peter Ungphakorn
POSTED DECEMBER 9, 2021 | UPDATED JUNE 8, 2021

A week bef0re the now-postponed World Trade Organization Ministerial Conference was due to start, WTO agriculture negotiators received a revised draft from Gloria Abraham Peralta, Costa Rica’s ambassador and the talks’ chair.

The new assessment and draft text is still in the form of a proposed decision for the ministers. It was circulated on November 23, 2021. The conference was postponed three days later on November 26. It was due to take place on November 30–December 3.

The new text was slimmed down from the 27 pages of the July 29 text, to 16 pages, still covering eight topics. This was not because gaps between members’ positions had narrowed. Rather, some issues had proved so intractable that the chair had simply thrown out large chunks of text.




[Public stockholding] has turned out to be the most difficult issue in the agriculture negotiations

— Gloria Abraham Peralta

The page-count was also reduced by combining eight separate draft decisions into one single text.

One commentator has slammed the draft for being completely empty.

“It has absolutely nothing in it. Basically, it says: We will negotiate on market access. We will negotiate on export competition. We will negotiate on domestic support. And not much else,” wrote Australian trade lawyer Brett Williams on the International Economic Law and Policy Blog.

That is a bit harsh. WTO members and their chair had worked hard in the previous months.

Abraham Peralta says she held five full meetings of the negotiations since the summer break — two each in September and October and one in November. Two were for ambassadors. All five were accompanied by sessions specifically on two subjects (public stockholding for food security and a special safeguard mechanism).

The chair also met delegations individually and in small groups. She met coordinators of all the alliances in the talks so the information reached everyone. In October she convened a larger group of members to go through her draft in the WTO’s medium-sized meeting room D. The pace intensified in November, she said.

She took heart from the level of activity and members actively talking to each other. In her July document she had urged members to use it as a tool to progress. In the new version she wrote:

“I am pleased to be able to report that members have done precisely that, and used it as a reference for their engagement with one another on the outstanding issues, taking also into account their own submissions.

“In the discussions, members have willingly shared proposals that they considered necessary to address their concerns, exploring ways to find possible options to reflect their previous submissions and identifying the most promising paths forward towards consensus.”

But Brett Williams was not far off the mark. Despite the effort, WTO members are nowhere close to agreement on any of the big issues in the agriculture negotiations, which are as old as the present century, such as domestic support, the controversial proposal on public stockholding and market access.

The chair wrote:

“Members have thus not yet been able to agree on detailed and specific outcomes on several negotiating topics. In some instances, positions still diverge.”

The eight topics covered are:

Domestic supportBack to top

This was still supposed to be the priority topic with a number of members hoping for an agreement by the Ministerial Conference.

A lot of talk, a lot of floated ideas about how to tackle “trade-distorting support” (support that affects prices and production), a lot of proposed numerical targets and target dates for achieving them, but no agreement on any.

Where new approaches were introduced — such as the Cairns Group’s proposal to halve total global trade-distorting entitlements by 2030 — members had to start from scratch analysing the concepts and implications.

The chair wrote:

“Despite the broad agreement on the need to address trade-distorting domestic support, the views of members have continued to differ sharply on:

  • how to achieve this objective; a numerical target (eg, 50% reduction)
  • the timeframe (eg, agreed reduction to be made by 2030)
  • the scope, and the potential of different support categories to distort trade (eg, the determination of which categories of support should be included, along with the treatment of these categories)
  • the sequencing of reform steps (eg, whether AMS [outright trade-distorting support] above de minimis [minimal permitted levels] should be addressed first, or whether all categories should instead be addressed in parallel)
  • the level of ambition for [the Ministerial Conference], and what is attainable, especially considering the wide divergence among positions and the limited time until [the conference].”

She concluded:

“I am aware that the suggested draft text will not reflect all members’ views and that the level of ambition may not be what members had in mind. But in my view, this text strikes a careful balance between the competing negotiating priorities and sensitivities of different members and reflects the wide divergence among members’ positions.”

> Chair’s assessment and draft

Market accessBack to top

This draft is considerably shorter than the July version. The two previously detailed sections on enhancing transparency when members change their “applied” tariffs are now reduced to a single paragraph. Also gone is a section on what might be discussed after the Ministerial Conference.

There was never any chance of members agreeing on the main issues in market access: tariffs and tariff quotas (limited quantities of imports allowed at reduced or zero duty).

Here, the legal obligations are only on “bound” ceilings committed in the WTO. But the actual tariff rates that countries “apply” can be lower, and that was the focus of any possible modest outcome on market access at this stage.

Some members had hoped at least for a deal, or something approaching a deal on transparency when countries change their applied tariffs and how shipments en route are treated when changes are made.

This has been pushed into future work in the Market Access Committee (and not the Agriculture Committee or the agriculture negotiations), which covers all goods, not just agricultural products.

Other proposed tasks are bundled into a work programme for after the Ministerial Conference, because members felt they were linked and should not be considered in isolation.

One of the other tasks is 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 and to bring countries’ tariff rates closer together (to “harmonise” them), but it is fiendishly complicated. It was originally resolved in 2006 and the solution is now badly out-of-date.

The chair wrote:

“My revised simplified text on a market access work programme seeks to respond to the comments and concerns I have heard in my post-July consultations. Broadly, the draft work programme in the revised text entails negotiations covering all elements of the market access pillar and acknowledges the need for technical discussions to inform these negotiations. Specific principles such as a ‘harmonizing’ tariff reduction approach, which formed part of the July draft text, have not been retained in this revised version.”

> 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 details how transparency can be improved.

Several developing countries say the obligation to notify is too burdensome.

This is is what the chair wrote this time:

“Most of the discussions addressed the question of transparency, including a post-[Ministerial Conference] work programme and the possibility of encouraging members to provide export data with the support of the Secretariat if deemed necessary.”

> 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 latest draft separates 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. The chair wrote:

“A vast majority of members view this as a ‘very low hanging fruit’ for [the Ministerial Conference].”

One member (understood to be India) has persistently questioned why the the exemption is needed and asked for examples of when the World Food Programme’s purchases have been hampered. The chair concluded therefore:

“the draft text acknowledges that it may be difficult to attain a multilateral outcome on this issue. In such a scenario, it is suggested that Members take note of the adoption of the Joint Statement WT/L/1109 or of any subsequent joint initiative that may be developed in the coming days in this regard.”

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 (in document WT/L/1109) 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.

The chair says her draft draws on discussions since July. It contains four elements:

  • continuing negotiations after the ministerial conference
  • a work programme on transparency in the Agriculture Committee
  • technical assistance from the Secretariat to help countries struggling to notify and compile trade data — a response to some complaints that increasing transparency is a burden for developing countries
  • possible agreement on how to improve existing requirements to provide information as a “best endeavour” rather than a legal obligation.

> Chair’s assessment and draft

CottonBack to top

The chair’s draft continues to deal 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.

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 paragraph on development assistance for cotton — the second component of the cotton initiative — simply notes on-going work.

More details on cotton are here.

> Chair’s assessment and draft

Special safeguard mechanism (SSM)Back to top

The chair wrote that “deep divergence” between members means any agreement on this is “increasingly unlikely” — many would say it was never on the cards.

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 new draft is almost identical to the July version. It would simply commit members to “continue to pursue negotiations” on this.

> Chair’s assessment and draft

‘Public stockholding’Back to top

Abraham Peralta frankly declares this to be the most difficult issue in the agriculture negotiations:

“Given the persistent wide gaps in members’ views, this question has turned out to be the most difficult issue in the agriculture negotiations. It has become increasingly evident that it would be difficult for an agreement on a permanent solution to be reached at [the Ministerial Conference]. I have therefore tried to determine what could be done in the interim.”

The present agreement shields countries from legal challenge in WTO dispute settlement if their programmes cause them to exceed the limits they agreed on trade-distorting domestic support for agriculture. Countries proposing a permanent solution a looking for a way to legalise the support properly, and complain that present transparency conditions are too much of a burden.

The chair noted that proponents see a permanent solution to be a priority for food security and rural livelihoods. Opponents are concerned about potential trade distortions and countries using the policy to be able to provide unlimited domestic subsidies to agriculture through price support. (See this background explanation.)

She also noted that some proponents criticised her for even suggesting agreement could not be reached at the Ministerial Conference. So one side insisted that the proposal be put to the ministers while the other side objected.

She therefore proposed a future work programme, leaving open the possibility that ministers could decide to look at the proposal themselves.

> Chair’s assessment and draft

TransparencyBack to top

This is a longer text than the July version, but with a similar approach. Members would discuss improving various aspects transparency, the information technology tools that are available, and assistance from the Secretariat for countries struggling with notification obligations.

They would “update and streamline as necessary through an evidence-based process the transparency provisions” in WTO procedures on agriculture.

The chair wrote:

“The draft text aims at reflecting the efforts made by both proponents and non-proponents to develop some possible compromise texts. The recognition of the capacity constraints of some developing Members is also an important element of this section.

“The work programme also includes a possible timeframe for the adoption of a revised G/AG/2 document on notification requirements and formats, which in my view should be considered in the context of the timeframes on the other topics and overall balance of the agricultural package.”

Transparency is a central principle of the WTO. The agreements cannot be implemented properly 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


More on the agriculture negotiations


Updates:
June 8, 2022 — Linking to the new drafts for the rescheduled Ministerial Conference

Image credits:
Aerial shot of farmland | Johny Goerend, 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

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