Canada was questioned by New Zealand regarding its market price support for dairy products. Australia queried the European Union on its general intervention programmes for farm products, while Viet Nam asked the EU to explain how Greece’s new consumption tax on coffee avoided discrimination between imported and domestic coffee. In addition, India’s export subsidies for onions and minimum price support for pulses, oilseeds and other “kharif” products were questioned by the United States.

An additional 16 trade concerns were raised once again at the 9 November meeting.  Many of these concerns focused on policies in India, Canada, Turkey and the United States.

Canada: dairy trade policy

New Zealand asked Canada to explain why it does not include market price support (MPS)⁽¹⁾ provided at the provincial level in its WTO domestic support notification. New Zealand noted that all milk produced in Canada, with the exception of that exported under export subsidy commitments or sold as animal feed, receives the benefit of supported domestic prices. Canada had told the committee in September that it only reports support prices for butter and skimmed milk powder at the federal level.

Canada replied that it reports MPS for the only two products to which an administered price (support price) applies, i.e. butter and skimmed milk powder, and that there were no additional administered prices. The EU, Australia and the United States expressed support for New Zealand’s question; New Zealand said it would be interested in how Canada reports its new milk classes in its future notification once the measures have been implemented.

European Union: intervention programmes

Australia noted the positive direction of the EU’s domestic support reform but sought clarification on the impact of some EU intervention programmes,⁽²⁾  including which products are eligible for intervention programmes, what were the volumes and values of relevant commodities that had been purchased through intervention programmes in recent years, the prices at which the commodities were purchased, and the total value and total volume of production for commodities purchased under intervention programmes.

The EU replied that only three products would be eligible for intervention: common wheat (up to 3 million tons), skimmed milk powder (up to 109,000 tons) and butter (up to 50,000 tons). Other products, such as durum wheat, barley, maize, paddy rice and beef and veal, might be added.  For the 2016 calendar year, limits for butter and skimmed milk powder had increased to 100,000 tons and 350,000 tons respectively. No products had been purchased through intervention in 2013 or 2014, the EU noted.  For 2015 and 2016, 17,254 tons and 347,333 tons of skimmed milk powder had been purchased through these programmes in each year respectively.

European Union — Greek coffee tax

Viet Nam said Greece has imposed a WTO-inconsistent tax on coffee which constitutes an impermissible “other duty or charge” under Articles II:1(b) and (a) of the General Agreement on Tariffs and Trade (GATT) 1994.  The tax, included as part of an austerity bill passed by the Greek government last May, is levied at 2-4 euros per kilogram.  Viet Nam noted that the tax excludes “roasting, grinding or packaging” operations which occur in Greece from the definition of “coffee production”, and that Greece does not grow coffee beans; thus, it could not be considered an internal tax.  Viet Nam asked the EU to explain what measures it and the Greek government would take to ensure the tax is brought in line with WTO requirements.

The EU responded that, contrary to Viet Nam’s claim, the tax in question is a consumption tax, not a customs duty, which is consistent with Article II:2(a) of the GATT 1994. The EU noted that consumption taxes, which are applied to both domestic and imported products, do not qualify as customs duties just because the product in question is mostly imported. The tax will only enter into force in January 2017, but it is clear the tax will apply to all products regardless of their origin. Indonesia, Colombia, Switzerland and Brazil all expressed interest in the issue.

Indonesia said Greece could have considered policies which were less trade restrictive, while Brazil said its exports to Greece will be severely impacted by the tax.

India — export subsidies for onions

The EU said that, according to press reports, Maharashtra State in India has proposed an export subsidy programme for onions.  The EU asked India to confirm this and to provide more information about the programme (duration, total amount of subsidy, subsidy rate per ton, etc.).  It also asked India to explain how the programme conforms to Article 20 of the Nairobi Decision on Export Competition, since exports of onions are subject to state trading through the state agricultural marketing board.  Finally, the EU said it understood India was working on a market price support programme for onions, and asked India to explain the state of preparations for the programme.

India said the information requested by the EU is being collected and will be shared in due course.  The EU, the United States, Canada, Ukraine and New Zealand said they were looking forward to seeing India’s reply.

India — minimum price support for kharif crops

The US said that on 1 June 2016, India had announced the MPS for kharif crops for 2016-17.  Kharif crops, which are cultivated and harvested during the monsoon season in South Asia, include rice, oilseeds, fats and oils, seeds, vegetable oils and fats, and cotton. In the announcement, India’s Cabinet Committee on Economic Affairs (CCEA) increased the MPS for 14 kharif commodities, including for certain varieties of paddy, jowar and cotton. In addition, the CCEA stated that the Cabinet decided to give bonuses to incentivize cultivation of pulses and oilseeds due to India’s increasing reliance on imports. The US asked India to confirm whether one of the main objectives of increasing the MPS for pulses and oilseeds is to limit imports of the goods.  In addition, the US enquired whether India set procurement targets for pulses and oilseeds in 2016, whether it expects to procure any pulses and oilseeds, and what its procurement targets are for the other 14 commodities.

India replied that the primary objective of increasing the minimum price support for pulses and oilseeds was to cover the increasing gap between the demand for, and domestic supply of, these crops.  Furthermore, increased production of leguminous pulses also has environmental benefits, as these crops consume less water and reduce soil degradation. MPS are intended to provide minimum prices to farmers so that they do not have to resort to distress sales. For most of the commodities covered by MPS, the market price is above the fixed MPS, so the government is not required to make any procurement or set any targets.

The US expressed concerns that India was not notifying MPS for these commodities when the CCEA statement indicated that the May announcement was intended to motivate producers to grow the covered crops. The EU said it had the same concerns, while Canada said it had an interest in the issue given that it was a large exporter of pulses and oilseeds.

 

Implementation of ministerial decisions

Members considered the review of the international food aid provisions of the Nairobi Export Competition Decision.  Speaking on behalf of the net food-importing developing countries, Egypt underlined the importance of the Nairobi Decision, which sets out disciplines on preventing or minimizing commercial displacement by international food aid. Morocco expressed support for Egypt’s intervention. Noting it was the biggest food aid donor, the United States reaffirmed its commitment to provide food assistance in compliance with the Nairobi Decision but noted that food aid was currently falling below international demand.

New Zealand responded to questions earlier posed by Chile regarding the relationship between two entities, Kiwifruit New Zealand and ZESPRI Limited. Chile asked New Zealand how it would ensure compliance with paragraph 21 of the Nairobi Decision requiring members to ensure that the use of export monopoly powers by agricultural exporting state trading enterprises are exercised in a manner that minimizes trade distortions and does not result in displacing or impeding the exports of another member. New Zealand said that all regulatory structures regarding these entities are in line with its WTO obligations.

 

Next meeting

The next regular meeting of the Committee on Agriculture is tentatively scheduled for March 2017.

 

Notes:

1. Market price support generally refers to the practice of governments guaranteeing the purchase of farm goods at a guaranteed price. Such support is considered trade-distorting “amber box” support and subject to spending limits. Back to text
2. In the EU, the intervention price is the price at which national intervention agencies are obliged to purchase any amount of a commodity offered to them regardless of the level of market prices. Back to text