WTO: 2007 NEWS ITEMS

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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These are some details of the discussions in this “regular” meeting of the Agriculture Committee:

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Notifications and review, and related questions 

The review of notifications is part of the committee’s responsibility to oversee how countries are complying with their commitments. The relevant notifications can be found from links to searches for documents:
  

US domestic support

Around one hour of the three-hour meeting was spent on the US replying to about 50 written questions from Australia, Canada, the EU, Japan and New Zealand on the 107-page US notification for 2002-2005 (document G/AG/N/USA/60) circulated on 9 October. Two themes were common to the questions:

  • how the US justifies categorizing its direct payments as “decoupled income supports” in the Green Box, the unofficial name for supports that do not distort trade (or distort minimally) as defined by Article 6 and Annex 2 of the Agriculture Agreement. Questioners referred to a WTO dispute on cotton where the direct payments were found not to fully meet the criteria for decoupled income supports (dispute DS267). There are no limits on Green Box spending.

  • how the US justifies describing its “counter-cyclical payments” (supports that rise when prices fall and vice versa) as “non-product specific”, particularly after the ruling in the same dispute, which concluded that the challenged domestic support measures granted some support specifically to upland cotton.

A number of other questions sought clarification on details of the US programmes. The US provided the explanations and defended the classification of some of its support programmes in the notifications. It argued that direct payments do meet the criteria of the Green Box. And it said the counter-cyclical payments are not specific to products because they are based on historical acreages and yields, and do not require specific crops to be grown.

Some questions were also asked about the US’s latest measures in the Green Box reported in two additional papers circulated on the same day on. (The US notifications on these “new or modified domestic support measures exempt from reduction” are documents G/AG/N/USA/58, and G/AG/N/USA/59).
  

Other issues

Among the other topics raised were (details will be available when the minutes are issued):

  • CANADIAN CHEESE: New Zealand followed up earlier questions on its proposed new “compositional standards” for cheese by asking for more information on the decision-making process. Canada said it is still considering all the comments it has received.

  • EU DOMESTIC SUPPORT PAID BY MEMBER STATES’ GOVERNMENTS — Australia followed up earlier questions by asking the EU to confirm an observation contained in the WTO World Trade Report 2006. This said that the numbers the EU notified may be different from the actual spending by the EU and its member states. The EU said this is principally because of a particular method specified in the Agriculture Agreement for calculating support in programmes that are based on prices.

  • INDIA’S SUGAR EXPORT SUBSIDIES: Australia and Thailand sought information and clarification, which India said it would supply shortly.

  • JAPAN’S STATE TRADING FOR RICE: The US had 10 questions on how this works, what proportion of imports goes to various end uses, prices, etc. Japan supplied the information, replying in several cases that the situation can vary from year to year and according to market conditions.

  • CHINESE TAIPEI’S MONETIZATION OF A RICE DONATION: Australia asked about 500 tonnes of rice recently given to Nauru and argued that the donation was sold on the market at a price that undercut commercial sales. Chinese Taipei said the food aid was purely for humanitarian purposes, given in good faith, entirely as grant (ie, not a loan) and covered transportation costs. Disciplines on food aid are being discussed in the present negotiations and Chinese Taipei will comply fully with the outcome, it said.

  • TUNISIA’S TARIFF QUOTAS (i.e. low duties on quantities within the quotas, higher duties on quantities outside): The US followed up earlier questions by asking about value added tax on imports and whether this discriminates between imports and domestic products. Tunisia explained that it does not.

  • JAPAN’S DOMESTIC SUPPORT: Canada sought clarification on an agricultural insurance scheme.

  • NEW ZEALAND’S DOMESTIC SUPPORT: Canada wanted an explanation of an “adverse climatic events” measure.

  • TUNISIA’S DOMESTIC SUPPORT: Canada questioned whether Tunisia was right to adjust its Amber Box (AMS) domestic support figures to take account of inflation and exchange rate fluctuations for 2005-2006 when inflation was only 2.1%-4.5%.

  

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Monitoring the situation for net food importers 

Importing countries could face record costs in obtaining food, the UN Food and Agriculture Organization (FAO) reported to the committee. Another observer in the committee, the UN Conference on Trade and Development (UNCTAD), said the longer term solutions for food security include cutting subsidies in rich countries so that farmers in poorer countries get better prices, development assistance to improve agricultural infrastructure and productivity, and aid for trade.

“The global value of imported foodstuffs in 2007 is expected to reach US$745bn or 21% more than the previous year and the highest level on record ,” the FAO said. “Developing countries as a whole could face an increase of over 25%.”

This “worrisome” development is caused by soaring agricultural commodity prices — food cost 37% more in September than a year previously — and transportation costs, as well as bad weather and wars and civil strife in some producing countries. The present situation is particularly unusual because the high prices are seen almost across-the-board in nearly all major food and feed commodities, except sugar, the FAO told the committee. At the same time, food aid is declining.

“There is now a widespread and commonly shared concern about food price inflation,” the FAO said, “and food riots have been witnessed in several countries.”

UNCTAD observed that food importing countries do not necessarily lack food security. Many net-food-importing developing countries are food-secure, whereas many countries specializing in agricultural production — ie, with a higher share of national income coming from farming — are food-insecure, many of them least-developed countries, UNCTAD said.

The challenge is for net-food-importing developing countries to break out of a vicious circle in which they spend a large share of foreign exchange revenues on food, which is short term consumption. Instead, they should be using the foreign exchange to invest, UNCTAD said.

The reports were submitted under an annual review of the Marrakesh “Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries”.
  

CHAIRPERSON: Ms Valéria Csukasi (Uruguay)

  

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Next 

  • Tuesday 18, Wednesday 19 March 2008

  • (Possibly) Tuesday 24, Wednesday 25 June 2008

  • Wednesday 17, Thursday 18 September

  • Wednesday 26, Thursday 27 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)

decoupled income support: support for farmers that is not linked to (is decoupled from) prices or production

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

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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