WTO: 2008 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
  

> Explanation in “Understanding the WTO”

The assessment came from international organizations and followed a statement from least-developed countries on the problems they face and how they assess the relationship between WTO rules and their food security.

This took place in an annual discussion on the situation facing net-food-importing developing and least-developed countries. The organizations said the solution lies in increasing their own assistance, improving farmers’ productivity, and reforming disciplines on tariffs, subsidies and food aid in the WTO’s Doha Round negotiations.

The meeting also briefly heard members’ questions and answers about how they are implementing the Agriculture Agreement — a core function of the committee. The questions were based partly on information in 41 notifications received from members since the committee last met in September this year.

The “regular” Agriculture Committee meetings deal with routine WTO work, and not the current negotiations, which take place in separate “special sessions”.


Food prices

The discussion on food prices was presented under an annual agenda item, officially the “annual monitoring exercise on the follow-up to the Marrakesh Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries”.

The reports on the latest situation were from the UN Food and Agriculture Organization (FAO), International Monetary Fund (IMF), UN Conference on Trade and Development (UNCTAD) and International Grains Council, which are observers in the Agriculture Committee.

They attributed the higher prices to shortages in supply and higher costs caused by soaring oil prices, which affect both energy and inputs such as fertilizer. The recent decline was attributed partly to farmers responding with higher outputs, better harvests in some areas, lower oil prices, and the global economic slowdown. But they also observed that prices are still high when compared with earlier years.

The least-developed countries (Tanzania speaking) presented a summary (G/AG/GEN/77) of a conference examining how WTO rules affect them. They pointed out that some of them “have already been hard hit by violent public protests that have often resulted in serious casualties”. The conference concluded with a number of recommendations and a call for a “holistic” approach.

The FAO said its food price index is 51% higher than in September 2006, even though it is at its lowest level in nine months.

The result, the FAO said, is that the two groups of developing countries — least-developed and net food importers — face a food import bill of US$22.2bn for 2007/08, more than double (125% higher) the amount of five years ago (US$9.8bn).

This is likely to remain high in general, the FAO said, because of: high cereal prices, a need to import more, a surge in freight costs, declining volumes of food aid, the need to replenish stocks and increase use, and a low level of exports caused by production failing to keep up with consumption.

Added to that, many individual poor countries have their own specific problems, including bad harvests (eg, Zimbabwe, Swaziland, Lesotho and North Korea) and war and civil strife (eg, Somalia, Ethiopia and the Darfur region of Sudan), the FAO reported.

The International Grains Council highlighted the difficulty of dealing with the instability, which includes some export prices plunging to their lowest levels “in years”. The Food Aid Committee (which is associated with the Grains Council) is considering changes to the Food Aid Convention but this cannot be done until the WTO’s Doha Round concludes, because of provisions on food aid in the agriculture negotiations, the council said.

The IMF said the fluctuating food prices “weakened macroeconomic fundamentals in many countries, leaving them more susceptible to financial contagion and the consequent slowdown in global growth.” It warned that inflation remains a danger because the earlier high prices can still have knock-on effects in economies, and that this “would prove directly harmful to the poor segments of the population”.

Countries face difficult choices in making the necessary economic adjustments that result from the policies needed to “maintain macro-economic stability and to protect the poor”, the IMF said. And it described in detail its initiatives in helping the two groups of food-importing countries, including activities involving the WTO such as supporting countries’ participation in global trade, the Doha Round, Aid for Trade and the Enhanced Integrated Framework of assistance for least-developed countries.

“As countries contemplate additional flexibility in their negotiating positions, we encourage developed and developing countries alike to weigh fully the benefits they receive from liberalizing their own trade measures, as well as from enhanced and secure access to the markets of others,” the IMF said.

UNCTAD described the situation as a wake-up call, “which can be turned into an opportunity by developing countries and the international community to revitalize global agriculture production and trade”. Food importers and least-developed countries have to increase their ability to produce and the international community has to put more effort into aid, which has “neglected agriculture and economic development more in general for a long time,” UNCTAD said.

Calling for fair rules that support developing countries, UNCTAD also said the Doha Round “could be a major step to reform the agricultural trading system in that direction”. The immediate impact on global farm production could be small but it will allow imbalances to be rectified, UNCTAD said.


Implementation issues

The committee has been tasked to examine three Doha Development Agenda items under the heading of “implementation” — problems developing countries face in the implementation of the present agreements. These deal with disciplines on export credit and other financing, improving the effectiveness of work under the net-food importing countries decision, and tariff quota administration.

The chairperson has held consultations and as a result the Secretariat will draft a “compendium of relevant documents” as a means of updating information currently available in three documents, G/AG/16 and Add.1 and G/AG/22. She stressed members’ concern that this work should be based on existing rules and commitments and exclude anything that might be agreed in the Doha Round talks — all three subjects are in the agriculture negotiations.


Notifications and review, and related questions

The questions members ask each other under the review of notifications is part of the committee’s responsibility to oversee how countries are complying with their commitments. They can also ask about agricultural measures that have not yet been notified or have not been notified at all.

These are some of the points raised:

  • The EU explained the method it has used when combining its original domestic support and export subsidy commitments with those of its new member states. This issue arises because the EU’s commitments have to be adjusted to take account of its expansion from 12 members to 15, 25 and now 27 members. The EU’s revised commitments on market access and subsidies have not been certified by WTO members. The questions in this meeting were about the calculation methods, which involves issues ranging from exchange rates to the definitions of products. (See also 18 September meeting.) Argentina and Australia, which asked questions, and the US and Brazil said they would look at the details, but were not satisfied that the EU had answered all the questions.

  • The EU replied to an Argentine question on details of Blue Box domestic support by product.

  • The EU has been negotiating modifying its tariffs and tariff quotas. It defended its refusal to accept China as “a party with substantial interest” and therefore with negotiating rights in three poultry products, saying there were no significant imports from China in the reference period. China said the EU was being unreasonable because the EU banned Chinese imports, and called on the Europeans to recognize China’s right “immediately”. (See paragraphs 35–37 of the official report of the previous meeting, G/AG/R/52, available soon.)

  • China and the US repeated their exchanges over a US measure on poultry, which has also been raised in the Sanitary and Phytosanitary Measures (SPS) Committee because it arises from a law involving the US Food and Drug Administration. The US repeated that the government is talking to relevant authorities in Washington to try to remove the impediment. (See paragraphs 38–40 of the official report of the previous meeting, G/AG/R/52, available soon.)

 

Chairperson: Ms Valéria Csukasi (Uruguay)


Next meetings

In 2009, tentatively:

  • 12 March

  • (perhaps) 18 and 19 June

  • 21 and 22 September

  • 19 and 20 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

de minimis: Amber Box supports in small, minimal or negligible permitted amounts (currently limited to 5% of the value of production in developed countries, 10% in developing)

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

overall trade-distorting domestic support (OTDS): In the Doha Round agriculture negotiations: Amber Box + de minimis + Blue Box (see above)

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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