One member said the meeting was “the most productive of the year” and asked counterparts to start doing “serious homework”. Many members stressed their strong commitment to achieving an outcome by the 12th Ministerial Conference (MC12) in Kazakhstan. There was an increasingly strong call to bridge gaps and seek “common ground”.
Highlighting the challenges faced by the multilateral trading system, the chair said that achieving an outcome on agriculture “demonstrating members’ capacity to make progress in a sector of key importance for millions of farmers around the world is more necessary than ever”.
Lively discussions took place throughout the meeting. The main focus was on domestic support, while members also took up the six other topics, namely market access, export competition, export prohibitions and restrictions, cotton, public stockholding (PSH) and the special safeguard mechanism (SSM).
Encouraged by the growing momentum in the committee, the chair said his intention was to circulate a paper in late January 2020 to guide members as they work towards an outcome in agriculture. He stressed that it would be up to members to determine what it would look like.
Five new submissions
A paper from Australia and New Zealand (JOB/AG/171) pointed to an ever-growing increase in agriculture subsidy entitlements since 2001 — indicating growth in total trade-distorting domestic support entitlements for all WTO members. Measured by Aggregate Measurement of Support (AMS) including de minimis allowances (as stipulated in Article 6.3 and Article 6.4 of the Agreement on Agriculture), trade-distorting support entitlements have more than doubled, from USD 322 billion in 2001 to approximately USD 740 million in 2016.
A paper from Canada provided a snapshot of individual contributions to this increasing trend, notably by major economies. The paper indicates that even without the AMS entitlement (other than de minimis), China and India ranked No 1 and No 3 as the highest subsidy providers in 2016, partly due to the large size of their agricultural production.
The two papers triggered a strong call from some members to stop differentiating between developing and developed countries and to ask all members to contribute to reducing trade-distorting subsidies. One developing member defended its position by referring to its low de minimis entitlement and numerous smallholder farmers.
A submission by Russia proposed a “formula for reduction of Trade Distorting Support”, also targeting the reduction of AMS, including de minimis entitlements, under Article 6.3 and Article 6.4 of the Agreement on Agriculture (“Amber Box”) support. The formula uses coefficients to adjust the reduction to the actual performance of the member's agricultural sector. In addition, the submission includes a provision for a compensatory instrument to address the specific needs of each member.
Members welcomed Russia's submission as the first formula-based submission tabled since the last Ministerial Conference in 2017. They said they will need more time to study the technical paper.
Egypt, on behalf of the African Group of WTO members (JOB/AG/173), presented suggestions for tackling different categories of subsidies, with the main goal being the reduction of AMS above de minimis. It restated its longstanding position on special and differential treatment for developing countries, cotton, transparency-related issues, PSH and SSM.
Many members took the floor. Most welcomed Egypt's proposal and said it is going in the right direction. Some countered that the proposal is not very helpful as it only asks a limited number of members to make contributions. They also asked not to cap Green Box subsidies. Some members asked Egypt to clarify the proposed language on Blue Box subsidies.
Egypt said the AMS above de minimis has had a more severe impact on market uncertainty compared to de minimis entitlements. Therefore, its elimination is necessary to enable all members to start on an equal footing before talking about proportional contributions. It said agriculture reform is not only an import/export issue but also a food security issue. It said the African Group is open to further discussion on all the issues and is also willing to revisit the proposed language with regards to Blue Box support.
Finally, a submission was circulated by Costa Rica on 25 November, asking members to contribute to subsidy reductions in proportion to their contribution to the problem. It also suggested a “sustainable negotiation framework”, which should address the trade-distorting potential of each member by covering all trade-distorting subsidies.
Members were divided on the “proportionality” issue (i.e those that have more potential to distort global markets would contribute more to the reform process). Some agreed that all members should contribute to reducing trade-distorting subsidies. Some developing members, however, insisted that addressing the AMS entitlement in the form of final bound total AMS, a historical imbalance from the Uruguay Round negotiations, would be of paramount importance. Thus, other issues have to wait before it gets solved.
Many members reiterated their appreciation for all the new submissions. Costa Rica's submission was praised as an example of raising creative and innovative approaches. Some members welcomed Costa Rica's work in conceptualizing ideas such as “proportionality”. They also backed the idea that proportionality must be progressive so that the reductions can narrow gaps and lay the foundation for future reforms.
Many members agreed that decoupling the value of production from future entitlements is very important because trade-distorting programmes resulting in an increase in production will also lead to an increase of the de minimis entitlements, causing a vicious cycle.
One developing member echoed the United States' call for the need to identify the challenges that farmers are facing and asked members to “listen more carefully” and understand better the comprehensive reasons why subsidies are provided to farmers in developing countries. It asked members to understand that farmers in developing countries are facing “additional challenges” on top of those highlighted by the United States for American farmers. It said it will come back with more analysis and it plans to table a new submission on this matter in due course.
One member again asked other members to stay focused on Amber Box subsidies. Given the limited time before MC12 and the complexity of other issues, it would be “unrealistic” to tackle too many issues as that could complicate efforts to achieve agreement on some important issues, it said.
The chair said that to frame the possible outcome text on agriculture, he will work with all members to identify the components of “doable” elements on domestic support from the current submissions.
Two new submissions
The United States' communication on “Tariff Implementation Issues — Issues with tariff rate quotas (TRQs)” (JOB/AG/169) states that TRQs are prevalent in all major agricultural product groups. It says that although these were designed as a tool for market access, high in-quota duties and cumbersome quota administration systems can easily turn TRQs into tools of protection.
The US submission is the fourth thematic submission by the United States on market access following those on “Bound versus Applied Tariffs”, “Complex Tariffs” and “Tariff Peaks”. The other two areas identified by the United States in their initial submission on market access circulated in July 2018 (JOB/AG/141) are agricultural safeguards (SSG) and regional/preferential trade agreements, on which similar submissions by the United States are expected.
A submission by Australia and Canada (JOB/AG/168) focuses on “Transparency in tariff rate changes, and the treatment of shipments en route”. The proponents contributed to the ongoing discussions in the negotiations on the transparency of applied tariffs and focused specifically on how members notify changes in applied tariffs. The paper also looks at how members treat consignments en route when tariff rates are changed.
Members welcomed the US submission as a valuable contribution to the transparency of market access. Some shared the US view that TRQs are probably not the best avenue to achieve market access gains and the objective should rather be to collectively move towards lower single tariff regimes in agriculture. A point was made about the important role of TRQs in supporting market access in agriculture. It was also noted by some members that negotiations on a single topic, such as TRQs, might not succeed without the required balance in other areas of the negotiations.
A large number of members expressed interest in taking up the transparency of applied tariffs and the treatment of shipments en routewhen tariffs are changed. Some also noted that they rarely led to an increase in applied tariffs either because those tariffs were very close to the WTO tariff ceilings or some procedural requirements to effect changes in applied tariffs would discourage members from doing so.
Some members said that domestic changes in applied tariffs, if introduced, are typically to lower them, a scenario which is of benefit to the shipments en route. On being requested to clarify their proposal, the proponents said that they are open to the idea of taking up the issue simultaneously in the Committee on Market Access to deal with such tariff changes in respect of industrial goods.
Some members with sensitivities in the area of market access continued to express doubts about the feasibility of a substantive outcome in market access in the absence of parallel progress in market access more broadly. In the chair's view, more analysis is needed before moving to specific options. There are some elements linked to transparency which could be worked on, he added.
Canada presented its joint discussion paper with Norway and Switzerland (JOB/AG/170) on export competition, flagging the unfinished business in this area, identifying information gaps and suggesting possible options to enhance transparency on export financing and agricultural exporting state trading enterprises.
Several members supported the proposal. They asked for all members to be fully engaged in the annual export competition questionnaire and to improve the accuracy of the data submitted. The chair acknowledged the usefulness of the suggestions contained in the discussion paper but noted that there is still work to do in this pillar.
Export prohibitions and restrictions
Several members demonstrated readiness to pursue an outcome on exempting export restrictions on food purchases for humanitarian purposes by the World Food Programme of the United Nations. The chair noted that most members seem ready to move forward on this issue and that it does not seem to require further in-depth technical work. One of the proponents calling for more transparency and predictability in this area confirmed it is still working on a paper on the state of play regarding the use of export restrictions.
The chair provided an overview of the cotton negotiations and emphasized the successful launch of World Cotton Day on 7 October 2019, referring notably to the joint statement adopted by key cotton-producing members on the cotton trade negotiations. The new submission from the Cotton-4 (Benin, Burkina Faso, Chad and Mali), circulated on 15 July 2019 and revised on 16 September (TN/AG/GEN/49/Rev.1 — TN/AG/SCC/GEN/20/Rev.1), is also “instrumental” for helping the WTO realize its mandate on cotton, he said.
Benin, on behalf of the Cotton-4, joined the chair in calling for more intensive negotiations on cotton in meetings of the “Quad Plus” — a negotiation forum on cotton where the chair, the Cotton-4 and other major cotton players meet.
Several members expressed strong support for making progress on cotton, some highlighting the importance for members to contribute to subsidy reductions in proportion to the level of their cotton trade-distorting domestic support.
Public stockholding (PSH)
Egypt, on behalf of the African Group, presented the public stockholding provisions included in its new submission (JOB/AG/173). The Group asked for a permanent solution that would exempt PSH programmes from the AMS calculation. It stressed that the paper also addresses concerns expressed by other members. It proposed, among other things, that products benefitting from PSH programmes should not be exported and that stocks should not cause market distortions.
Several developing members expressed support for the paper and the initiative. “It is not only a responsibility of proponents, but a responsibility of the entire membership,” they said. One member asked that there be no onerous transparency obligations for developing members, particularly for least-developed members and small, vulnerable economies.
Special safeguard mechanism (SSM
Egypt, on behalf of the African Group, presented its new submission (JOB/AG/173) which also includes some elements on the SSM. It emphasized the need to agree on a special safeguard mechanism which developing members could easily apply to address both import surges and price reductions. The African Group's submission gained support from some other developing members. However, engagement on this issue was virtually entirely limited to the proponents.
The chair said a lot of work needs to be done and what the final outcomes look like “will be determined by members”. He asked all members to get ready for hard negotiations and to be prepared to “bear a little pain for a lot of gains”. Using the analogy of the marathon, the chair said “the next phase (of the negotiations) is a mile … I see us out of the gates and feel we began the first lap.” He urged members to speed up the pace of submitting proposals so that new inputs can be included in a proposed text.
The next two meetings are scheduled for 30-31 January and 24-25 February 2020.