WTO: 2014 NEWS ITEMS

AGRICULTURE: FORMAL MEETING

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NOTE:
THIS NEWS STORY 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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MINUTES:

The discussion was about one of 31 sets of questions and answers, a key part of the agenda of the committee, whose major responsibility is to oversee the present Agriculture Agreement and members’ commitments in agriculture. (The questions can be found in document G/AG/W/119 (pdf).)

The largest number of comments from delegations were on India’s sugar programme. The topics that also aroused interest included Costa Rica’s on-going breach of its domestic support limit resulting from its guaranteed rice prices and its intention to correct this breach in 2015 (the US said it appreciated the fact that Costa Rica had shared information consistently but that breaches of commitments are always a serious concern), Thailand’s rice support programme known as “paddy pledging”, Canada’s reclassification of pizza toppings to prevent traders avoiding import duties, and India’s domestic support for rice and wheat and its food security programme. (See details below)

Meanwhile, members continued their work on implementing the decisions and a declaration from the December 2013 Bali Ministerial Conference, and they discussed information that members shared on their policies, including the latest US Farm Bill, and trends in trade and agricultural trade policies.

And a voluntary solution has been found to the long-running question of how to update the 1995 list of significant exporters — used to define who should provide information on their exports in order to help members monitor whether exports might have hidden subsidies. The solution is voluntary because members have failed to agree on a formal decision.

 

Some details    back to top

One of the key responsibilities of the “regular” Agriculture Committee, which consists of all 159 WTO members (and does not deal with the current agriculture negotiations), is to see how countries are complying with their commitments on subsidies and market access and to discuss issues that arise.

It monitors whether members are keeping the promises they have made in the WTO. Out of the 31 sets of questions in this meeting (document G/AG/W/119), 15 were about information available elsewhere that has not yet been notified, and 16 sets of questions were about some of the 48 notifications on their programmes that members submitted since the last meeting in January (seven questions on tariff rate quotas, eight on special safeguards, 18 on domestic support and 15 on export subsidies).

Questions and answers from all meetings are compiled in the Agriculture Information Management System database, and each question is identified by a code, AG-IMS ID XXXXX, where the Xs represent numbers (for questions in this meeting, use meeting number 73). These are a selection:

 

India’s export subsidies for sugar    back to top

Australia, Colombia, Brazil and the EU asked India about a new policy announced in February involving incentive payments to Indian sugar exporters (the questions are in document G/AG/W/119 and questions and answers will be in the Agriculture Information Management System (AG-IMS) with ID numbers AG-IMS ID 73036, 73055, 73067, and 73068). Along with the facts and figures they sought, some of them asked what the legal basis under the WTO was for the export subsidies. Several pointed out that India has agreed not to subsidize exports.

India said the policy is designed to encourage diversification away from white sugar to raw sugar and that no intervention payments have been paid yet. India said export subsidies will be notified to the WTO.

Australia said the 3,300 rupees per tonne incentive payment is the equivalent of 14–16% of the world price. Since India is the third largest exporter of sugar this threatens to seriously distort trade, Australia said and it asked India to remove export subsidies immediately. It said that the amount envisaged could potentially finance all its own exports half way across the Pacific Ocean.

The Agriculture Agreement allowed developing countries to subsidize marketing costs and internal transportation costs during the agreement’s “implementation period” (under Article 9.4).

Brazil asked how India could justify the subsidies since there has been no consensus to extend these special provisions for developing countries. Previously, in response to similar questions raised in the past, India argued (see the 2012 question-and-answer document G/AG/W/103) that developing countries are still allowed to use the special provision because the 2005 Hong Kong Ministerial Declaration says, “developing country Members will continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture for five years after the end-date for elimination of all forms of export subsidies” — and export subsidies still have not yet been eliminated.

Sharing the concerns were Paraguay, Thailand, El Salvador, Canada, the US, Pakistan and New Zealand.

 

Other questions and answers    back to top

Thailand’s paddy-pledging programme (AG-IMS ID 73004 and 730041): Thailand said it is finally about to submit information on its domestic support for 2008, and that the present paddy pledging programme has ended — it cannot be renewed while the government remains a “caretaker” because of political problems, Thailand said.

Those problems have also prevented officials from preparing answers to the questions about the programme in more recent years, Thailand said.

Under the programme, farmers can borrow from the government using unmilled rice (paddy) as collateral valued at target prices, which farmers can forfeit if market prices do not meet the targets.

 

India’s domestic programmes (AG-IMS ID 73003, 73039, 73053, and 73066): Members continued to question India about details of its support programmes for rice and wheat and its stockholding programme for food security. Some asked when India is going to circulate more up-to-date information on its domestic support — the most recent notification is for the 2003/04 year. India said the notifications are being prepared.

 

Overdue notifications: Overall, 1,799 notifications were overdue by the end of 2012, the chairperson observed, the largest numbers being in domestic support and export subsidies. He was introducing the latest updated of the Secretariat paper on notifications, G/AG/GEN/86/REV.17, 22 pages) which also says that a total of 3,400 notifications had been received by 6 March 2014, since the WTO came into being in 1995.

 

Implementing the Bali farm package    back to top

Work has already begun on the Bali Ministerial Conference declaration on export subsidies and measures having similar effects (known collectively as “export competition”). The Secretariat has circulated a questionnaire for members to supply information on this, and the chairperson said three delegations have already replied. The information is being prepared for the next Agriculture Committee meeting in June.

The declaration (explained here) is the strongest political statement since the 2005 Hong Kong Ministerial Conference on export subsidies and related policies. It deals with what some members have described as the agricultural trade policies having the worst distorting effect on world markets.

Members have agreed to “exercise utmost restraint” in using any form of export subsidy, to “ensure to the maximum extent possible” that progress will be made in eliminating all forms of export subsidies (an objective agreed in 2005), that actual subsidies will stay well below the permitted levels, and that similar disciplines will apply to export policies that may have the same effect as subsidies. The subsidies are currently at lower levels than previously, notably because of high commodity prices.

The chairperson also reported on discussions in the informal meetings on this and on “tariff quota administration”, a Bali decision designed to reduce the chances that the methods governments use to share out these quotas are also trade barriers.

He said some members urged delegations to start to use the decision quickly, pointing out that the tariff quota administration decision is to be reviewed in four years’ time, and that seeking a change in the administration method can take three years. Tariff quotas are where quantities inside a quota are charged lower import duties than quantities outside the quota. (Explanations can be found here.)

Members also discussed unofficial papers from the Cairns Group on these two “Bali package” subjects.

 

The problematic significant exporters’ list    back to top

Meanwhile, members have agreed on a voluntary solution to the long-running question of how to update the 1995 list of significant exporters — used to define who should provide information on their exports in order to help members monitor whether exports might have hidden subsidies.

They have failed to agree formally proposed solutions currently on the table, including the updated list itself, how to add new products and how to separate information notified in broad categories of products such as “coarse grains”, into component parts such as rye, barley, oats, maize (corn), sorghum and some other products.

But no delegation objected to the chairperson’s suggestion that countries could voluntarily announce that they consider themselves no longer to be on the list for the product or products concerned — meaning that they will not notify their exports of those products — since they no longer meet the 5% threshold trade share to qualify as significant exporters. Similarly, countries that do meet the threshold can voluntarily notify their exports as significant exporters.

Chairperson Bayer first put the idea of a voluntary solution to an informal meeting earlier in the week and repeated it in a report to the formal meeting. A number of delegations expressed regret at the membership’s inability to agree on a formal solution, he reported.

 

Next meetings   back to top

(Could be changed)

  • 6 June 2014
  • 13 November 2014
 Jargon buster 

Place the cursor over a term to see its definition:

• Amber box

• Blue box

• de minimis

• Green box

• notification

• overall trade-distorting domestic support (OTDS)

• tariff quota

> More jargon: glossary

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