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Discussions on ‘Peace Clause’ data, a proposed food safety-net fund, and 69 notifications

The EU and US provided the regular meeting of the Agriculture Committee, 28–29 June 2001, with some data — related to the so-called Peace Clause — on their domestic support in 1992, in response to a question from Argentina. Also discussed were a proposed $1.4 billion fund to act as a food security safety net for poorer countries, agricultural export credit disciplines, and 69 notifications.


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1. The Peace Clause and 1992 data 

Argentina continued to press the EU to supply data on its direct payment supports in 1992 for specific cereals under programmes that also limited production (known as “blue box” programmes). The EU replied that a breakdown for individual cereals is not available because the payments were made on fixed areas and yields. However, it supplied some per unit figures, which it said show that guaranteed prices have declined and that this has not been fully compensated by direct payments.

The EU also argued that under the Agriculture Agreement and the committee’s working procedures, it was not required to notify the 1992 figures. The issue is more appropriate for the present agriculture negotiations sessions (the “Special Sessions” of the Agriculture Committee), and not this current agenda item in the committee’s regular sessions, the EU said. It was referring to the committee’s work on monitoring how members are implementing their commitments under the Agriculture Agreement, which came into force in 1995.

Argentina said it reserves the right to raise this issue again in the Agriculture Committee, and is considering possible further steps.

The issue arises from the Article 13 due restraint provisions, i.e. the “Peace Clause”, which restricts members’ rights to take action against others members’ subsidies so long as those subsidies remain within committed levels. One provision under Article 13 says the Peace Clause holds (for example under the Subsidies Agreement) so long as agricultural supports do not exceed 1992 levels (i.e. “… provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year”).

This discussion was a follow up of discussions in the March meeting of the regular Agriculture Committee. Among the other speakers at this June meeting were Uruguay, Brazil, Chile, Paraguay, Australia, New Zealand, Canada and the US.


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2. Implementation: Proposed fund for net food-importing developing nations 

This subject is part of the current discussion on the implementation of the present WTO agreements.

In December 2000, the General Council instructed the Agriculture Committee to examine problems food importing developing countries could face as a result of the present Agriculture Agreement. More specifically, the committee was asked to consider how to implement more effectively the Marrakesh Ministerial “Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries”.

At the time it was negotiated, some members felt that one negative effect would be a rise in food prices resulting from the cuts in subsidies under the Agriculture Agreement.

Deputy chairperson Yoichi Suzuki, who chairs the regular committee meetings, has identified three issues that have emerged in the discussions that have followed: a proposed food security fund, food aid, and technical and financial assistance for improving agricultural productivity and infrastructure.

Côte d’Ivoire, Cuba, Dominican Republic, Egypt, Honduras, Jamaica, Kenya, Mauritius, Morocco, Pakistan, Peru, Senegal, Sri Lanka, St. Lucia, Trinidad and Tobago, Tunisia, and Venezuela have proposed a special Food Financing Facility (F3) of about $1.4 billion. This fund would be solely for implementing the Marrakesh decision, and would provide a short-term safety net for importing countries that face short term difficulties in financing normal commercial requirements for purchasing basic foodstuffs. Their proposed fund would be managed jointly by the WTO, World Bank, IMF and donor countries and eligible borrowers.

Members discussed this informally with representatives of the World Bank, IMF and FAO at a roundtable meeting on 18 June.

At this 28–29 June committee meeting, Egypt stressed that the fund would be run commercially (borrowers would pay interest and repay the loans), and that its purpose would not be to delay reforms in the eligible countries. Rather, Egypt said, the fund would increase these countries’ confidence in facing adjustment because they would know that they could fall back on it if food security is threatened. Countries speaking in support included almost all the proposers, and India and Nigeria.

Egypt said that successfully addressing implementation issues, like the decision on least-developed and net food-importing developing countries, could encourage developing countries “engage wholeheartedly” in the agriculture negotiations.

New Zealand, the EU, Canada, the US, Switzerland and Norway said they are willing to continue to discuss the issue, but so far they are not convinced that a new fund is suitable. Finance should continue to be handled in existing Bretton Woods institutions, some said. Some also argued that the WTO, as a rules-based organization, should not become involved in managing funds.

Argentina questioned assertions by Pakistan, Sri Lanka and others that the present reform is the cause of higher food importing bills in the net-food importing and least developed countries, particularly since in general world prices have fallen since 1995–96.

The vice-chairperson will report back to the General Council, and hold further consultations in July.

He will also report on two other “implementation” issues: developing disciplines on agricultural export credits (Article 10.2 of the Agriculture Agreement); and improving transparency and equity in the administration of tariff quotas.


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3. Notifications and review 

Sixty-nine notifications were up for review. One additional notification — on US domestic supports for 1998 — was too new for members to comment in detail, but New Zealand and Australia said they wanted to commend the US for including marketing loans and emergency payments under the “Amber Box” (i.e. domestic supports that influence prices and production and have to be reduced or be kept within specified minimal levels).


The next regular meeting is scheduled for 27 September 2001.
(The next negotiations are on 23–27 July.)