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UPDATE: The draft prepared for the February 26–29, 2024 Ministerial Conference was circulated on February 16. It still pushed the deadlines back to the next conference, but with options throughout: members “shall” agree by then or they “agree to work towards” the target.
The deadlock remained over whether price support in food security stockpiling (PSH) should be a stand-alone decision at this conference or resolved with all the other topics by the next one.
See the full update below
Posted by Peter Ungphakorn
FEBRUARY 5, 2024 | UPDATED FEBRUARY 18, 2024
World Trade Organization agriculture negotiators are spending the first two weeks of February scrutinising a draft text for the WTO’s upcoming Ministerial Conference.
In a meeting on January 30, 2024 they accepted the draft as the document to work on for the February 26–29 conference in Abu Dhabi — the WTO’s 13th Ministerial Conference, called “MC13” by insiders.
It was prepared by the talks’ chair, Ambassador Alparslan Acarsoy of Türkiye.
The 5-page draft is detailed, but for most issues it postpones any resolution until the Ministerial Conference after Abu Dhabi — “MC14” — normally within two years.
However, one issue still threatens to sink the whole effort. This is about finding a long-term solution for the present short term fix for over-the-limit subsidies used to buy into food security stocks (explained here).
Members disagree on whether this should be a single-issue decision or part of a package covering the whole of domestic support. (More below.)
A WTO website news story summarises its content in detail.
CONTINUE READING or JUMP TO
● Biggest sticking point
● The debate more broadly
● Six other topics
Domestic support for the farm sector | Access to agricultural markets | The proposed new “special safeguard mechanism” (SSM) | Export restrictions on food | Export subsidies and “export competition” | Cotton
● Update (draft sent to the Ministerial Conference)
“PSH”: A MISLEADING NAME
Subsidising purchases into food security stocks is nicknamed “public stockholding for food security in developing countries” or just “public stockholding” (PSH) for short.
The name is misleading because WTO rules do not prevent stockholding. They only discipline subsidised procurement. Even that is allowed, so long as the developing country stays within its subsidy limit, usually 10% of the value of production, which can be a large amount.
This could be described as something like “over-the-limit subsidies used to procure food security stocks”.
The practice is not widespread. A 2022 paper by a Canada-led group found tentatively that since 2013 “only five members notified expenditures […] for stocks acquired at [a supported] price at least once” and only nine since 2001.
Only one country — India — has exceeded its domestic support limit when using subsidies to buy into stocks, and for only one product: rice. For 2021–22, the fourth successive year of the breach, India’s subsidy was calculated at $7.55bn, exceeding its $5.0bn limit by 52%. (The following year the excess subsidy fell back to 20%.)
An “interim” 2013 WTO ministerial decision modified by another decision in 2014 — called a “peace clause” — has protected India from facing a legal challenge despite breaching its WTO commitment.
One problem is that the peace clause is only available to countries with “existing” programmes in December 2013. The few covered include China, India, Indonesia, Pakistan, Philippines and Taiwan, according to a November 2023 WTO Secretariat summary.
The present deadlock is over an unresolved permanent solution originally intended to replace the interim one in 2017. Details are here.
(Updated April 22, 2024)
Biggest sticking point
The biggest sticking point is still the use of price support for procuring food security stocks in developing countries when the support is large enough to exceed entitlements (usually 10% of the value of production). This is misleadingly shortened to “public stockholding” (PSH, see info box above).
This is so controversial among WTO members that it could prevent anything meaningful on agriculture being agreed in Abu Dhabi, as it did at the previous Ministerial Conference in Geneva in 2022.
The objective is to replace a temporary fix with a permanent deal (explained here). The disagreement is whether this can be done on its own, or as part of a wider package on domestic support. Some countries say the deal should include market access as well.
One group of developing countries are insisting on a stand-alone agreement based on their proposal from May 2022 (JOB/AG/229, not released publicly). They are the G33, African and African-Caribbean-Pacific groups.
Indian media report that the country’s officials have threatened to boycott all other agricultural subjects if this is not agreed in Abu Dhabi.
The majority of the Cairns Group, the US and the EU would include it in a more comprehensive package. The Cairns Group’s proposal on domestic support would include a solution for this controversial issue, but one that would limit the scope for larger subsidisers such as India.
Acarsoy’s draft does not fully reflect the difference. He simply offers two options: for ministers to agree on a stand-alone solution immediately (the India-G33 position), or for members to continue negotiating and aim for agreement by the next Ministerial Conference (keeping open the option of this issue being part of a broader package):
29. [Pursuant to the Nairobi Ministerial Decision (WT/MIN(15)/44-WT/L/979), Members adopt a permanent solution as set out in Annex … to this Decision.]
OR
29. [Pursuant to the Nairobi Ministerial Decision (WT/MIN(15)/44-WT/L/979), Members undertake to pursue and intensify negotiations on PSH in dedicated sessions of the CoA-SS {ie, the agriculture negotiations} and make all concerted efforts to agree and adopt a permanent solution on the issue of public stockholding for food security purposes by MC14. The permanent solution shall be available to all developing country Members. …]
Hyperlinks added
CoA-SS = Special Session of the Committee on Agriculture = agriculture negotiations
In the January 30 meeting, India is said to have warned against “falling into the trap of pushing everything to [the next ministerial conference]”, according to a trade source.
India repeated proponents’ insistence that their proposal is ready and should be used as the basis for negotiations on the subject.
“We will continue [working on it] and will not allow this negotiation to be blocked,” India is quoted saying. India also cited as a precedent how the deadlock was broken at the 2013 Bali Ministerial Conference.
India is said to have argued that because members’ opinions diverge, ambitions should be lowered for setting a timetable for agreement in other agricultural issues such as market access, export restrictions and improving transparency.
This provoked a reaction from the United States, which has recently become more outspoken in the agriculture negotiations.
“The fundamental logjam now is some members prioritizing one issue over others,” the US said, according to the source.
“Some members say the market access issue is not ripe. You’ve got to be kidding me.
“Members cannot fully prioritize one issue while giving one sentence to other issues, saying we will talk about it later — maybe by the time of our grandchildren?”
The US reportedly said it was willing to discuss draft texts constructively, provided the ambition was balanced across all agricultural trade topics.
The debate more broadly
The EU’s position was similar to the US’s, including making market access part of the package.
The EU and a coalition of more defensive countries including Switzerland, Norway and Japan, argued that new domestic support disciplines should only apply to programmes affecting prices and output. In effect they opposed bringing “Green Box” support (having no or minimal effect on markets) into the disciplines.
China’s position was similar to India’s in making two deadlocked issues a priority for this month’s Ministerial Conference: price support in accumulating food stocks, and a proposed new means of raising tariffs temporarily to deal with import surges or price falls (the special safeguard mechanism, see below).
Members are said to have differed on a number of other issues.
Speakers in the meeting are said to have included: Argentina, Australia, Bolivia, Brazil, Cameroon, Canada, Chad, Chile, China, Colombia, Costa Rica, Djibouti, Ecuador, Egypt, the EU, Fiji, Guatemala, India, Indonesia, Jamaica, Japan, South Korea, New Zealand, Norway, Pakistan, Paraguay, Philippines, Russia, Samoa, Senegal, Singapore, South Africa, Sri Lanka, Switzerland, Thailand, Türkiye, Ukraine, the UK, the US and Uruguay.
Six other topics
Chair Acarsoy’s draft identifies seven agricultural trade topics currently being negotiated. Detailed summaries are in the WTO website news story. The other six are:
Domestic support for the farm sector
The chair’s draft envisages members agreeing on the formulas and other criteria for cutting these subsidies at the next (14th) Ministerial Conference (MC14). The technical term is “modalities” — how the new disciplines would be applied.
Several members have said this is a priority. But a number of difficult issues have to be settled, including whether the types of support that are currently allowed without any limits because they are considered to be less harmful (the “Green Box”) should also be brought under the new disciplines.
Access to agricultural markets
Market access is mainly about tariffs in general, plus quotas allowing limited quantities to be imported duty-free or at reduced tariff rates, along with other features. This has proved the most difficult of the main topics in agriculture.
The draft again proposes that formulas for cutting tariffs, methods of enlarging quotas and other details (the “modalities”) should be agreed by the next Ministerial Conference.
The proposed new “special safeguard mechanism” (SSM)
For the India/G33 group, this issue is paired with the proposal for price support in acquiring food stocks. They also want a decision in Abu Dhabi at the end of the month.
The Cairns Group in particular argues that it should only be a confidence-building part of a package of tariff reductions and other improvements in market access.
Acarsoy’s draft does not envisage a decision this month, but does include the option of one at the next Ministerial Conference.
(The issue was one reason why the attempt to conclude the Doha Round negotiations failed in July 2008. It is explained here.)
Export restrictions on food
Restricting exports affects food security in countries that rely on imports. The chair’s text focuses on improving transparency and predictability, with some other details, including further discussion in improving how existing WTO rules (Article 12 of the Agriculture Agreement and Article 11 of the General Agreement on Tariffs and Trade) are implemented.
Export subsidies and “export competition”
WTO members have already agreed to ban export subsidies in agriculture, but some remain concerned about other measures that have the effect of subsidising exports. All of these are described as “export competition” issues.
The chair said there had been little discussion on export competition in the negotiations over the past year, and that more work had been done in the regular Agriculture Committee. His draft envisages further negotiations to avoid countries circumventing the export subsidy ban through export finance and guarantees, state trading companies and food aid.
Cotton
Cotton is given a special place in the WTO agriculture negotiations because it is important for many African countries. It has two strands in the WTO.
One is negotiations to cut trade-distorting domestic support by more than for the rest of agriculture. In practice this has been put on hold until members have agreed on what to do with agriculture as a whole.
The other is a more active strand: providing aid for the affected African countries.
Acarsoy’s draft proposes keeping both strands alive both in the negotiations and in the aid activities.
FULL UPDATE: The draft prepared for the February 26–29, 2024 Ministerial Conference was circulated on February 16. It still pushed the deadlines back to the next conference, but with options throughout: members “shall” agree by then or they “agree to work towards” the target.
The deadlock remained over whether price support in food security stockpiling (PSH) should be a stand-alone decision at this conference or resolved with all the other topics by the next one.
Two days earlier, chair Alparslan Acarsoy had told ambassadors in the WTO General Council that:
“Despite our best efforts, many brackets remain, and additional language is being inserted. The text is now referred to as the ‘rainbow text’ because of the multiple colours used to introduce the various suggestions. As it currently stands, I cannot say if we will be able to submit it to the Ministers.”
Here is the “rainbow text”.
Acarsoy told the ambassadors there were three main unresolved issues:
“First and foremost, PSH [price support in food security stockpiling] with two options on the table:
i. The adoption of a permanent solution at MC13 [this Ministerial Conference] or
ii. The continuation of negotiations to agree on a permanent solution by MC14 [the next one].
“Second, the balance across the board between the different topics:
i. First, in terms of timeline and expected outcomes by MC14.
ii. Second, in terms of degree of specificity of each topic, notably the elements to be addressed in the negotiations;
“Third, the possible scope of an outcome for the most vulnerable Members — NFIDCs [net-food-importing developing countries] and LDCs [least-developed countries] — in two areas:
i) an exemption from export restrictions by exporting Members for their food imports and
ii) an extension of the Bali peace clause* to these countries.”
* The Bali peace clause is the temporary agreement not to lodge a legal challenge when some developing countries exceed their domestic support entitlements as a result of price support in food security stockpiling. So far only India has invoked it.
Updates:
February 18, 2024 — adding the update box at the top on the draft sent to ministers
Image credits:
Main picture | Jahoo Clouseau, Pexels licence
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