WTO: 2010 NEWS ITEMS

AGRICULTURE

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NOTE:
THIS NEWS ITEM IS DESIGNED TO HELP THE PUBLIC UNDERSTAND DEVELOPMENTS IN THE WTO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE THE CONTENTS ARE ACCURATE, IT DOES NOT PREJUDICE MEMBER GOVERNMENTS’ POSITIONS. THE OFFICIAL RECORD IS IN THE MEETING’S MINUTES

  

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Explanation in “Understanding the WTO”

These “regular” Agriculture Committee meetings deal with routine WTO work, and not the current negotiations, which take place in separate “special sessions”. The committee comprises all WTO members. One of the committee’s core functions is to receive notifications from WTO members on how they are applying their commitments in agriculture, and to discuss these when issues arise.

Two agriculture coalitions — the Cairns Group and the G-20 — supported by the US and EU said the violations risk undermining the credibility of the multilateral trading system, could hurt other countries, and run counter to the objective that all WTO members have agreed on continuing agricultural trade reform through the Doha Round negotiations.

But they also acknowledged that the countries concerned had notified their levels of support even though the figures revealed the breaches. They said this allowed the breaches to be discussed and the committee — which consists of all WTO members — to play its role in monitoring and surveilling how governments are complying with their commitments under the WTO’s Agriculture Agreement.

Some of the breaches were attributed to high world prices and tighter supply, partly blamed on export restrictions.

Ukraine, which has notified its restrictions on grain exports, was asked why it needed the measure, whether it had taken the impact on importing countries into account, and whether it plans to renew the restrictions in the new year.

The committee also looked more broadly at food security, as it usually does in its November meeting. The World Food Programme reported that although the food crisis is easing it is far from over.

Some details

The questions members ask each other in the review of notifications, and their replies, come under the committee’s key responsibility of overseeing how countries are complying with their commitments on subsidies and market access. Members can also ask about agricultural measures that have not yet been notified or have not been notified at all.

The questions and answers can be found here when they have been processed and derestricted after a few weeks:

Breaches of subsidy commitments

Members said they were now aware of four cases of countries exceeding their subsidy commitments. Two new cases discussed in this meeting were about Israel’s and Norway’s domestic support (AMS), both in 2008.

The committee had already discussed Costa Rica’s AMS domestic support in the previous meeting in September, when Poland had also reported that its export subsidies exceeded the limit in 2002 — since then Poland has joined the EU and now comes under the EU’s limits.

AMS is the type of domestic support that distorts trade the most, by raising prices in the country and stimulating production. It’s sometimes called “Amber Box” support.

The reasons for the breaches varied and all members concerned said they were acting to bring their supports within their legally bound limits, although recent high world prices were partly blamed in some cases.

Israel, one of the cases (notification document G/AG/N/ISR/45), also blamed export restrictions introduced by Ukraine and others for worsening tight supply and further raising prices. It said the breach was partly technical: exchange rate fluctuations affect the calculations since Israel’s commitments are in US dollars and not the Israeli shekel. If the 2006 exchange rate had been used, the 2008 figure would not have exceeded the limit, Israel added that the reference prices (1986-88), which are also an agreed component of the calculation, are out of date.

It said its notification for 2009 would fully comply with its commitments. The 2008 breach reflects “unusual global circumstances and not a change in domestic production policy”, nor “any real increase of support to the farmers themselves”.

The questions to Israel came from Australia, Canada, EU, US and Uruguay.

Norway said its 2008 breach (notification document G/AG/N/NOR/59) was caused by altering the calculation of its Amber Box support to include rye, oilseeds and goat milk, a result of its October 2008 trade policy review. By then, it was too late to change support already given or committed, Norway said.

However, the alteration did not cause breaches in other years and a number of reforms have been introduced to bring the support within Norway’s commitments from 2009 onwards, it said.

The questions to Norway came from Australia, Canada, EU, US and Uruguay.

Costa Rica (notification documents G/AG/N/CRI/24/Rev.1 and <…/CRI/30) had already explained the reason for exceeding its limits in the September meeting. India and the US asked for further clarification. They urged Costa Rica to stick to its commitments. India pointed out that Costa Rica is a member of the Cairns Group, which is seeking steep cuts in subsidies and tariffs.

Costa Rica said a high-level commission had been asked to propose reforms in the rice sector so as to bring the support within the commitment level. In the meantime, a decision has already been taken to reduce rice support prices by 18% which would also reduce production and the two factors together should lead to a lessening of support amount in 2011, Costa Rica said.

The US said it considers the improvement to be too slow to bring the level within the limit soon. Also expressing concern with Costa Rica’s support levels were: Thailand, Canada, the EU and Pakistan.

The Cairns Group and G-20 (Australia and Brazil speaking; groups in agriculture are here) said they are deeply concerned about the breaches because of the impact these could have on world markets, on the credibility of the WTO’s multilateral trading system, and because countries promised to continue reforms in the Uruguay Round (Art.20 of the Agriculture Agreement) and in the Doha Round.

They acknowledged that the countries concerned had complied with their obligations to provide the information, allowing the breaches to be discussed, and urged them to comply.

Supporting the two groups were some of their members — Chile, Colombia, the Philippines, Argentina, China and Pakistan — and the EU and US.

Export restrictions

Ukraine is only the second country to notify export restrictions since 2004 (Kyrgyz Rep notified in 2008). Document G/AG/N/UKR/5 of 28 October 2010 describes export quotas on various grains, which Ukraine is implementing until the end of the year.

Ukraine sad the quotas are temporary, designed to prevent shortages resulting from poor harvests and drought. It said its detailed replies to the questions would be submitted in writing.

Questions came from the EU, Israel, Japan and the US, with additional concerns from Switzerland. They sought details on the production and marketing situation, how the quotas work, how Ukraine has complied with the requirement to consider the impact on other countries, how the restriction ties in with a reported export deal with Russia, whether some countries are exempt from the quotas, and whether recent reports that the quotas will be extended beyond the end of the year are true.

The US said that its own figures suggest Ukraine is producing considerably more grain in 2010 than it can consumer and asked whether lower domestic prices caused by the export quotas would discourage domestic production and cause more shortages in the future.

Under WTO rules, countries can restrict exports of agricultural products but only temporarily and they have to comply with GATT Article XI (ie, 11), in this case paragraph 2(a), and with Article 12 of the Agriculture Agreement.. These require the country restricting exports to take into account the impact on importing countries’ food security, to notify the WTO as soon as possible, and as far in advance as possible, to be prepared to discuss the restriction with importing countries and to supply them with detailed information when asked for it.

Other issues

Most of the other questions and answers dealt with details of various programmes or measures. The US provided lengthy replies to questions about its latest notification on domestic support for 2008, the first year of the new Farm Act, which included several new or revised programmes.

Brazil and the EU cited a recent dispute ruling to disagree with the US that “counter-cyclical payments” received by cotton producers should be considered “non-product-specific”.

New Zealand, supported by Australia and the EU, continued to question Canada’s insistence that its dairy policies do not restrict trade.

Australia continued to question countries that are behind schedule in submitting notifications. This time the countries concerned were China, Egypt, India, Rep. Korea and Turkey. They said they would notify as soon as possible.

Food security

The World Food Programme (WFP) reminded the committee of two ponts:

  • “The world needs sustained commitment to food security through both development and humanitarian action.”
  • Global economic recovery through growth will be essential but will not be enough to eliminate hunger within “an acceptable period of time”.

“The number of people experiencing hunger has declined from 1.2 billion in 2009 to 925 million in 2010,” the WFP reported. “After increasing from 2006 to 2009, due to high food prices and the global economic crisis, the decrease is encouraging. But hunger remains a critical issue for countries around the world.

“Volatile food prices, storms, floods, earthquakes and conflicts have plunged tens of millions into vulnerability just in the last eight months. With the devastating earthquake in Haiti, life threatening drought in Sahel and epic level flooding in Pakistan, the Philippines, and China, we saw the washing away and disruption of livelihoods and access to food of more than 50 million people in these countries alone,” WFP said.

The committee also saw presentations from the EU on its latest policies on food aid and development assistance. And it heard a presentation from the WTO Secretariat on its updated paper (G/AG/W/42/Rev.13) prepared for members to follow up on the Marrakesh Decision on net food importing developing and least-developed countries (paragraph 6).

After the committee meeting, delegations and members of the Secretariat attended a briefing session (coming soon) by David Nabarro, the UN Secretary General’s special representative for food security and nutrition.

Members’ agricultural exports p>

The Secretariat presented a new paper on countries’ shares in agricultural exports of 22 products, G/AG/W/76. Although the paper is partly designed for technical consultations on identifying “significant exporters”, which has implications for notification requirements on exports, it provides a comprehensive picture of the development of shares in world exports.

The statistics cover: the Uruguay Round base period (1986-1990) for export subsidy reductions; 1995; and 2000 to the most recent year for which data are available — 2007 for all products except for sugar (2008) and fruit and vegetables (2009).

The Secretariat said that broadly, the main findings it reported to the committee in November 2009 remain unchanged, particularly for total world exports of all agricultural products, rice, oilseeds, butter and butter oil, skim milk powder, cheese, other milk products, bovine meat, pig meat, poultry meat.

World exports of wheat and wheat flour increased by 30% in volume terms since the base period. Similarly, world exports of coarse grains increased by 39% in volume terms over the same period.

In 2008, sugar exports remained slightly below their 2006 and 2007 levels in volume terms, with no new exporters above the 5% threshold for defining “significant exporters”.

World exports of fruit increased more than 6-fold in value terms since the base period, and some members gained importance: for example, China and Mexico are shown as exceeding the 5% threshold; and Costa Rica, Honduras and the Philippines are at around and below 2%.

Likewise, vegetable exports grew nearly 7-fold in value terms since the base period, with China gaining a more significant share.

The Secretariat also noted:

  • a 3-fold increase of world vegetable oils exports in volume terms; the top exporters in the last year for which data were available (ie, 2007) being Malaysia, Indonesia, Argentina and Brazil
  • world oilcake exports have doubled in volume terms; Argentina, Brazil, USA and India being the top exporters in 2007
  • only a marginal (5%) increase in world sheep meat exports in volume terms; no change in the ranking of top exporters with New Zealand and Australia holding nearly 90% of world sheep meat exports in 2007
  • world live animals exports nearly doubled in value terms; top exporters in 2007 being Canada, EU, Australia, US and Mexico
  • a more than 2-fold increase in world egg exports in volume terms; top exporters in 2007 being China, US, EU, Malaysia, India and Turkey
  • wine exports tripled in volume terms; with EU, Chile, Australia, South Africa, US and Argentina holding over 5% of exports each in 2007
  • world tobacco exports doubled in volume terms; with Brazil, EU, US, India and China holding above 5% of exports each in 2007
  • a 74% increase in world cotton exports in volume terms; with US, India and Uzbekistan being the top exporters in 2007


   

Next meetings

(Could be changed)

2011

  • 31 March

  • June (possibly)

  • September

  • November

 JARGON BUSTER   

• Amber Box: domestic support for agriculture that is considered to distort trade and therefore subject to reduction commitments. Technically calculated as “Aggregate Measurement of Support” (AMS).

• Blue Box: Amber Box types of support, but with constraints on production or other conditions designed to reduce the distortion. Currently not limited.

Green Box: Domestic support for agriculture that is allowed without limits because it does not distort trade, or at most causes minimal distortion.

• notification: a transparency obligation requiring member governments to report trade measures to the relevant WTO body if the measures might have an effect on other members.

special safeguard (SSG): Temporary increase in import duty to deal with import surges or price falls, under provisions that are special to the Agriculture Agreement.

• tariff quota: when quantities inside a quota are charged lower import duty rates, than those outside (which can be high).

> More jargon: glossary

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