WTO Corner blog

WTO Corner: Agriculture manoeuvers, another EU case against Russia, US China bicker over TRQ

By Chris Horseman and a bit of Iana Dreyer.

Chair to table new text on agriculture

The chair of the agriculture negotiations, Costa Rica’s Gloria Abraham Peralta, will submit new WTO draft text on agricultural reform – the first such document for many years –  in advance of a meeting of the WTO agriculture negotiating group on Thursday (29 July).

The hope is the text will form the basis for a plan of agreed action on a long-overdue overhaul of global rules on agricultural support and protection at the next ministerial meeting – MC12.

Hopes are not high, however. Key WTO countries remain divided over which elements should be included in the text, let alone how these agreements should be shaped. 

Transparency, food aid rules prime candidates for deal

There is broad agreement that the paper should include elements on transparency – improving the quality and regularity of data submissions from national capitals to Geneva on agricultural subsidies – and on measures to exempt food aid from disciplines on export subsidies.

Neither point is particularly controversial. It has long been evident that more reliable and timely data is needed on tariff changes, TRQ utilisation rates and domestic support payments – and there is no argument either against the idea of ensuring that genuine food aid consignments do not find themselves caught up by WTO constraints.

But the chair will need to work out how to balance these elements against other issues on which there is much less consensus.

The quest for ‘doable’ elements for agreement

The agricultural negotiating arena is currently a maelstrom of controversial and conflicting demands from developing and developed countries alike.

During the course of negotiations last week, as many as 14 different papers were submitted by different members, each emphasising different elements of the negotiation, and advocating different approaches.

The European Union’s view, shared by a lot of other developed countries, is that the participants should concentrate on elements of the agreement which are potentially ‘doable’ at MC12.

In Brussels’ view, this would involve reaching agreements on transparency and food aid exemptions, together with a roadmap for continuing negotiations on other issues which are less ‘ripe’ for agreement.

But other WTO members have their own views on what the high-priority issues for MC12 should be.

Can members agree permanent deal on public stockholding?

India, and many of the African Group countries, are determined to find a permanent agreement on the question of public stockholding.

Since 2013, a temporary ‘peace clause’ has been in operation in this area, under which WTO members agree not to mount legal challenges against countries which use state funds to buy up agricultural products for domestic food reserves.

All sides would like to regularise this situation within the WTO’s legal framework.

But while many developing countries would like a permanent exemption from disciplines on domestic support, others point out that this would effectively give a blanket exemption from WTO rules for any developing country which wanted to cite a ‘public stockholder’ motivation behind any national farm subsidy programme.

There are also demands, not least from India’s neighbour Pakistan, that measures be put in place to prevent agricultural commodities purchased in this way from being exported. The arguments in this area are therefore likely to continue.

Reforming the rules on domestic support payments

There is even more dissent over methodologies and priorities when it comes to the wider question of domestic support for agriculture.

The current rules, dating from 1995, are widely held to be no longer fit for purpose.

Only 32 of the WTO’s 164 members countries are permitted to give their farmers so-called Amber Box payments – that is, subsidy payments liable to have a distorting effect on trade.

All other WTO member countries, including all of those which have acceded since 1995, have no Amber Box entitlements, and may only pay any such subsidies up to the level of a ‘de minimis’ threshold,. This is set at 5% of the value of agricultural production for developed countries, and 10% for developing countries.

Many developing countries are now calling for the Amber Box category to be abolished completely so that all members are operating on a level playing field.

But there are also calls for disciplines to be applied to de minimis payments themselves.

Farm subsidy payments in China and India in particular have mushroomed in recent years – simply because a huge expansion in the value of these countries’ agricultural production has led to a concomitant increase in their de minimis thresholds.

A special safeguard mechanism to protect developing country markets?

There are also calls for agricultural market access schedules to be revisited.

Developing countries are pushing hard for a special safeguard mechanism to be introduced. This would allow them to raise tariffs on sensitive agricultural products in cases where prices fell, or import volumes increased, by significant margins.

But the issue remains just as controversial as it was in 2008, when an argument between India and the US, which centred on whether the SSM could push up tariffs in excess of WTO-bound levels, was largely responsible for the collapse of the Doha Round.

Covering all the bases

These are the minefields which Peralta must somehow navigate through when she tables her text later this week.

With fisheries subsidies and the facilitation of trade in healthcare products also set to feature on the agenda for MC12 meeting, there is a clear risk of agriculture being crowded out altogether.

EU launches another dispute against Russia’s import substitution policies

Only seven days after having launched a WTO dispute over Russia’s procurement practices, the EU is launching a new case that involves a range of measures under Moscow’s import substitution programme.

And no, this is not yet the potential case against Moscow’s decision to allow only sparkling wine from Russia be allowed to be named ‘Champagne’.

The request for consultations contests three policy measures in Russia: price preferences for goods and services purchases of state-linked enterprises, the obligation to request prior authorisation for the purchase of certain engineering products from an ‘import substitution government commission’ and minimum quotas for domestic products in government procurement contracts.

US and China bicker over compliance in TRQ case

Today’s Dispute Settlement Body meeting at the WTO was overall rather unspectacular.

One dispute is escalating, related to a dispute China lost two years ago against the United States over the country’s practical implementation of its WTO  tariff rate quotas of wheat, rice and corn – case DS517.

Mid July, the US requested authorisation to apply retaliatory tariffs against China for non-compliance. China responded today by requesting an arbitration panel to determine whether it had complied with the ruling.

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