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India's support for cotton and sugar producers

The United States and Australia presented WTO members with "counter-notifications" outlining what they said were high levels of support payments for cotton and sugar producers which India failed to notify to the WTO. These notifications follow an earlier counter-notification from the US on India's wheat and rice support in May 2018, the first-ever counter-notification to be submitted to the committee.

On cotton, the United States referred to its communication from 9 November (G/AG/W/188). Using what it said were publicly available sources, the US said India was substantially under-reporting the value of its market price support (MPS) for cotton, or government purchases of cotton at guaranteed prices; for example, in its 2015/2016 notification to the WTO India reported 1.2 billion rupees in MPS for cotton whereas the US estimated India's support at over 504 billion rupees.  This level of support would imply that India was in excess of its WTO spending limits on cotton support, which is fixed at 10% of the total value of overall production.

The US noted that, since 2007, India is the world's second-largest cotton producer. The US also underlined specific concerns with the methodologies being used by India to report its support, including reporting support levels in dollars rather than rupees, reporting only volumes actually purchased as eligible production for the purpose of determining support levels, and failing to report total value of production.

Australia referred to its 16 November communication on India's MPS for sugarcane (G/AG/W/189). Australia said that, as the world's second-largest sugar producer and fourth-largest exporter, the dynamics in India's sugar market have significant implications for both prices and trade in the global market. Each year the government of India sets floor prices for sugar mills to pay farmers for sugarcane, with farmers also eligible for paid premiums for increased production efficiency and additional payments for sugar mills under specific state-level support. 

Using the latest publicly available information and a "conservative" calculation, Australia said it appears that India has provided support for sugarcane over a six-year period vastly in excess of its WTO spending limits, which is fixed at 10% of the total value of production. India has not included sugarcane or its derived products in any of its domestic support notifications since 1995-96; thus there is no evidence provided to the WTO from India to compare with the findings of this paper, Australia said.

India reiterated its commitment to transparency and the fact that it was up to date on its notifications. Support for both cotton and sugar was provided to prevent producers from resorting to distress sales. India considered that the US and Australian counter-notification were based on flawed assumptions and analysis which led to wrong conclusions. In regard to cotton, procurement by government agencies only accounts for a very small part of total production (less than 2%) while for sugar, India is a marginal player in the international market and accounts for less than 1% of global sugar exports; in any event, MPS does not qualify as reportable support as there is no procurement of sugar by the government. India said it has been using a consistent reporting approach since 1995 and that the methodology it uses is compatible with WTO rules. 

More than a dozen members took the floor to comment on the counter-notifications. Most said they shared the concerns of the United States and Australia regarding India's support programmes for cotton and sugar and the impact it may be having on international markets. Several members asked India to better clarify how its policies work.

Regular review of agriculture policies

The committee continued to review policies related to the three pillars of agriculture trade: market access, domestic support and export competition. Nine new questions were posed to various members regarding various developments under the three pillars.

China responded to questions from the United States regarding a June 2018 announcement by the People’s Bank of China that it would ease access to credit for small and green economy businesses, including agriculture. Canada posed questions regarding the 31 October decision by EU ambassadors to adopt a “safety-net” regulation that will allow the EU to unilaterally implement reduced agricultural products import quotas in response to Brexit. The European Union replied to a question from Ukraine about support provided to EU farmers in response to a drought earlier this year which hit cereal and other producers hard.

India responded to questions from the United States regarding reported “soft loans” being given by India to support state cooperative dairy federations as well as India's decision to increase its import duty on whey milk powder.  Japan responded to a question from the US regarding fiscal year 2018 direct payments earmarked for a programme where farmers are eligible to receive payment for rice planted for overseas markets.

Pakistan was asked by the European Union about its recent decision to increase import tariffs for several products, including dairy products such as whey, cheese powder products and curd while Sri Lanka was asked by New Zealand about the exemption of domestic producers from a value added tax on imported milk powder.

A further 16 items were addressed in relation to issues that were already raised in previous committee meetings. The full list of questions can be found in G/AG/W/190. The questions and replies can also be found in the WTO's Agriculture Information Management System (AG-IMS).

Review of the Bali Ministerial Decision on TRQ Administration

Members continued their review of the 2013 Bali Ministerial Decision on TRQ Administration, including a thematic discussion on TRQ administration and underfill involving the participation of industry representatives. One member noted that the Bali Decision sets out deadlines for action and that it wanted useful discussions on issues such as establishing the re-allocation mechanism for underfilled TRQs as mandated under the Decision.

Several members intervened on the matter, in particular with regards to exceptions granted to developing countries under the Decision; a number of developed members said it was important that all members be subject to the underfill mechanism while one developing member said that special and differential treatment provisions in the Bali Decision should not be diluted. The importance of members providing better and more notifications to the WTO on their TRQ fill rates and improving transparency of their TRQ administration was also stressed by members.

Implementation of the Nairobi Ministerial Declaration on the elimination of export subsidies

Several members provided updates on their efforts to incorporate the 2015 Nairobi Ministerial Decision on the elimination of export subsidies into their WTO schedule of commitments, thus making the commitments binding under WTO rules.

South Africa said it expected its revised schedule would be ready by the end of the year while Iceland said it hoped to submit revised draft schedules for members' approval within weeks. Mexico said the draft schedule was still undergoing domestic review and would hopefully be ready as soon as possible and Brazil indicated that the draft revised schedule was expected to be sent to parliament by the end of the year.

The 2015 Nairobi decision required developed members to immediately eliminate their remaining scheduled export subsidy entitlements and for developing members to eliminate their export subsidy entitlements by the end of 2018, with some transitional exceptions granted.

Enhancing transparency and the committee's review process.

The chair of the agriculture committee, Debora Cumes of Guatemala, noted that the committee has discussed ideas relating to improving the timeliness and completeness of notifications and that Norway introduced a paper on this at the last meeting in September (G/AG/W/185). In that paper Norway said some of the deadlines for submitting notifications are "unrealistic" and that the deadline for submitting notifications on total Aggregate Measurement of Support (AMS) should be extended from 90 days from the end of the calendar/fiscal year in question to 10-12 months.

Norway reiterated its call for extending the reporting deadline for AMS, noting that those with AMS commitments are reporting well beyond the 90-day deadline, with the submissions ranging between 8 and 55 months after the calendar/fiscal year for the most recent notifications. Several members took the floor to comment, underlining the importance of transparency but expressing different views on the Norwegian initiative.

Overdue notifications

Ms Cumes noted that G/AG/GEN/86/Rev.33, circulated on 16 November, reflects the current status of compliance with notification obligations of WTO members. The chair highlighted the good efforts by a few members to update their notifications since June, notably Indonesia, China, Sri Lanka, Australia and Turkey. Nevertheless, a significant proportion of domestic support (35%) and export subsidies (32%) notifications remain outstanding for the period 1995 to 2016; she said providing the notifications helps ensure the committee works effectively.

Next meeting

The next meeting of the Committee on Agriculture is scheduled for 26-27 February 2019.

More information on the work of the Committee on Agriculture is available here.

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