Two last-minute agriculture proposals land as WTO conference approaches

By Peter Ungphakorn
POSTED JUNE 3, 2022 (REPLACING THIS ORIGINAL PAGE) | UPDATED JUNE 3, 2022

Less than two weeks before the re-scheduled World Trade Organization (WTO) Ministerial Conference, two new proposals were circulated on May 31, 2022, on the most difficult subject in the agriculture negotiations — including the first from a “non-demandeur”.

The two proposals are from opposite sides on how to deal with domestic support in developing countries’ stockholding programmes for food security.

The debate in a meeting of WTO ambassadors two days later showed how far apart members still are on this with only 10 days to go before their ministers meet in Geneva. Members are now holding round-the-clock meetings to prepare for their June 12–15 Ministerial Conference

The issue is usually abbreviated to just “public stockholding (PSH)”, which is misleading since stockholding itself is not a problem — only when domestic support is involved through purchases into the stocks at prices set by the government (“administered prices”) instead of the market.

Continue reading or jump to:
G33 and allies | Brazil | First reactions | Special safeguard mechanism

The issue is explained here (briefing note), here (on the chair’s 2021 draft) and here (what the chair said in her draft). The 2013 interim decision is here. It is modified by this 2014 decision.

G33 and allies

One of the new documents is a revised proposal for a “permanent solution” from the original authors — the G33 group — together with the African Group and the African-Caribbean-Pacific group (ACP).

They propose an amendment to the Agreement on Agriculture (abbreviated in the texts as AoA), softening the way domestic support is calculated but also stating that these programmes “shall not substantially distort trade or adversely affect the food security of other [WTO members].” (See this on what amending an agreement involves.)

Technically-speaking, the proposal would allow countries with these programmes to use a formula for calculating how much domestic support is created that has been changed in two ways:

• allowing a smaller calculation of how much price support is given by redefining the base reference price
• reducing the quantity of support by redefining “eligible production” to mean only the amount that is bought, instead of the amount that could potentially be bought, usually total production of that product

It would replace the base reference price — currently fixed at prices in 1986–88 — either with more recent prices or adjustments to take account of inflation. This would narrow the gap between the reference prices and the current government-set prices, resulting in a lower figure for trade-distorting domestic support (“aggregate measurement of support”, AMS).

Brazil

The other, from Brazil, is the first ever counter-proposal from a country that is concerned that the drafts from the G33 and allies could allow major producers and exporters to distort markets and affect other countries’ food security.

Brazil does not propose amending the Agriculture Agreement. Instead, it would limit the countries that could use the domestic support in stockholding programmes to those that depend on food imports or are not major traders, and it would impose other tighter disciplines, including new obligations on transparency.

In one sense, Brazil’s proposal is more radical. Stocks acquired at government-set prices would not have to be included in domestic support calculation at all.

But this would only apply to a limited number of eligible countries.

The eligible countries would be:

• Least-developed countries
• Developing countries that are net food importers (as defined in WTO agreements)
• Countries requiring external assistance for food (as defined by the UN Food and Agriculture Organization) at least once in the past two years

To qualify in the last two categories, the country could not be a major player in the product concerned — based on the country’s share of exports (in any case not exceeding 2% of world exports) and how large its stocks of the product are in comparison with its total production. Specifically (square brackets indicating proposed numbers):

• [0.5%] or less of global export share of a product, provided the value of the stocks procured does not exceed [15%] of …
  … or …
• more than [0.5%] but no more than [2%] of global export share of a product, so long as the value of the stocks procured does not exceed [5%] of …

… the country’s average value of production of that product as notified to the WTO for the three most recent years.

Roughly speaking: India would qualify for wheat by 2020 figures because its export share was around 0.5% but not by 2021 figures when the share rose above 3% (ITC Trade Map). It would not qualify for rice at all because its export share is more than 30% (ITC Trade Map for 2020)

First reactions

First reactions were heard in an informal agriculture negotiations session on June 2, 2o22. They showed that agreement is unlikely at the Ministerial Conference.

A new draft from Director-General Ngozi Okonjo-Iweala and the talks’ chair, Gloria Abraham Peralta (Costa Rica’s ambassador), simply proposes a work programme:

“… We undertake to continue our negotiations and make all concerted efforts to agree to a permanent solution to [this] issue by MC13 [the next, ie, 13th, Ministerial Conference].

“These comprehensive negotiations shall consider relevant elements including the review of the external reference price of relevant products,  programme and product coverage, limits on Public Stockholding programmes, transparency and safeguards/anti-circumvention, and legal certainty.

“… Periodic progress reports on the negotiations to achieve a permanent solution will be provided by [negotiations] Chair to the General Council in between the 12th and the 13th sessions of the Ministerial Conference.”

The G33 and its allies repeated their arguments on why a permanent solution is needed, including the problem with the formula for calculating support.

Egypt and India welcomed what they saw as a “change of heart” from Brazil in recognising that a permanent solution is needed, sources say.

Some Cairns Group members (Australia, Canada, New Zealand and developing countries Costa Rica, Mexico, Paraguay and Uruguay) with the EU, UK and US, said the proposal from the G33 and allies arrived too late to tackle the technical details and explore consensus in time for the Ministerial Conference.

Several also opposed the proposal as a whole for allowing unlimited distortions with inadequate transparency and legal consequences.

Because the proposal affected the WTO Agriculture Agreement’s fundamental approach on domestic support, it should be negotiated with broader reductions in the support, some said.

Canada, China and New Zealand called for a factual and well-informed examination of this type of stockholding programme and trade-distorting domestic support in general, according to informed sources.

Special safeguard mechanism

This G33 proposal is also deadlocked. Again, the most likely outcome is a decision at the Ministerial conference to continue working on this.

The issue is explained here, and the chair’s earlier proposal is summarised here and reproduced here.

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Updates:
June 3, 2022 — expanding the technical details of the two proposals, and adding the first reactions sections