WTO farm talks seek fresh thinking without losing everything

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Posted by Peter Ungphakorn
APRIL 21, 2024 | UPDATED APRIL 21, 2024

Negotiators in the World Trade Organization’s farm talks broadly agree that a new approach is needed to revive the talks after they failed completely at the Abu Dhabi Ministerial Conference, but they differ on whether to tackle the entire subject or focus on priority areas.

On the table in the April 16, 2024 meeting was a proposal from Brazil for a decision by the General Council in July. This would effectively turn the scrapped draft from Abu Dhabi into a postponed decision, while removing the no longer available option of agreeing on over-the-limit subsidies in food stockpiling (“PSH”) at the Ministerial Conference.

The WTO’s General Council has the power to take decisions on behalf of its Ministerial Conferences.

In a separate process, WTO members also agreed on a non-binding document on food security, including export restrictions, also a binned agricultural text in Abu Dhabi.

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Fresh thinking and building on past efforts | Reactions | Food security and export restrictions | “PSH”: a misleading name

Fresh thinking and building on past efforts

The agriculture negotiations’ chair, Türkiye Ambassador Alparsian Acarsoy, said the talks faced an “urgent need for fresh thinking on both our perspectives on the negotiations and on the process to break this persisting deadlock”.

But he also warned that “throwing away past efforts and restarting from scratch would not be productive” because “we have a solid basis to build upon”, according to the WTO website and trade sources.

And he said members should not make the common post-Ministerial Conference mistake of “overestimating the time available before the next conference. It is of utmost importance not to fall into this trap again. As stated by one of my predecessors, ‘it is too early until it is too late’.”

Brazil’s proposal is based on the draft decision ministers discussed in the February 26 to March 2 Ministerial Conference in Abu Dhabi (“MC13”), itself a revision of the chair’s original version from February 16.

The decision would set the next Ministerial Conference — “MC14” scheduled for Cameroon in 2026 — as the deadline for agreeing on how the WTO rules on agricultural trade would be reformed.

The technical term is “modalities” (the methods or ways to do something), which includes formulas for lowering tariffs and cutting subsidies, along with a range of variations and flexibilities for some countries’ specific circumstances. The final deal is produced from the modalities. It is more precise if the modalities are tightly defined.

The last time the negotiations produced comprehensive draft modalities was in 2008, when an attempt to conclude the talks failed.

Those draft modalities (document TN/AG/W/4/Rev.4, often called “Rev.4”) were in 120 pages and took almost five years to develop from chair Tim Groser’s basic framework in 2004 to his successor Crawford Falconer’s 2008 document, which is still more or less on the table. The WTO website says the negotiations included “roughly 240 hours of talks between September 2007 and July 2008”.

A two-year deadline to develop and agree on a new version of modalities is a tough ask, particularly since national and international politics are much less favourable for multilateral cooperation now than 15 years ago. Striking the right balance between “fresh thinking” and deciding what to “build upon” is therefore only part of the problem.

Brazil’s proposal, like the drafts for Abu Dhabi, envisages a package containing eight headings:

• Domestic support
• Market access
• A new special safeguard mechanism for developing countries
• Export prohibitions and restrictions
• Export competition (ie, subsidies and other policies that contain hidden subsidies). With export subsidies in agriculture banned in 2015, much of the remaining work is technical, on plugging loopholes
• Cotton — trade measures
• Cotton — development assistance
• Over-the-limit subsidies in food stockpiling (“public stockholding for food security purposes” or “PSH”). For years this has been the biggest controversy in the WTO agriculture talks. It was the cause of the deadlock in Abu Dhabi when India and its allies insisted on a stand-alone decision at the conference but some other countries said it should be part of a package

Reactions

According to sources, several of Brazil’s allies in the Cairns Group — Australia, Canada, Columbia, Costa Rica and Ukraine — welcomed the proposal because it provided a clear structure that could be agreed for the negotiations before the WTO’s summer break in August.

Sharing this view were said to be least-developed countries and the “Cotton-4” — Benin, Burkina Faso, Chad and Mali, who have been pushing for steeper cuts in domestic support for cotton and development assistance for the sector.

The Cairns Group (except those allied with India in the G33) has already proposed that over-the-limit subsidies in food stockpiling (“PSH”) be included in broader disciplines on domestic support. Some Cairns Group members agree with the US that the package should be comprehensive and include market access as well as other issues.

Sources say the EU was more doubtful about trying to tackle everything at the same time. It did not reject Brazil’s proposal but advocated making domestic support and “PSH” a priority issue whose conclusion was long overdue.

India and its allies repeated their insistence that “PSH” should be resolved according to their own proposal (still a secret document but leaked, although a version was submitted to ministers in Abu Dhabi) without linking it to domestic support as a whole.

India was supported by Sri Lanka and coordinators of groups behind the proposal: Indonesia (G33), Jamaica (African-Caribbean-Pacific group), Chad (African Group).

China, New Zealand, Fiji, and Samoa, advocated basing the negotiations on the chair’s original pre-Abu Dhabi draft, sources said.

The US was cautious, appearing reluctant to revive the Abu Dhabi draft. It said it was “carefully considering next steps” and was exploring new ideas on what to do bilaterally and in small groups.

The US said all members had to compromise and avoid “my way or the highway”, according to sources.

Food security and export restrictions

The next day, April 17, members agreed on non-binding measures to help boost food security in vulnerable countries including on export restrictions.

The measures are included in a final report of the Working Party on the Emergency Response to Food Insecurity. It was adopted in the regular Agriculture Committee, which is separate from the agriculture negotiations. It fulfils instructions that members gave themselves at the 2022 Ministerial Conference in Geneva.

Although it was on the agenda for the Abu Dhabi conference, the proposed decision suffered the same fate as the rest of agriculture because of deadlock over one word, according the chair’s introduction to the report.

Agreement was achieved by changing that one word — “reservations” became “preoccupation” — in a paragraph on the possible harm that exporting countries’ export restrictions can cause to countries that depend on food imports.:

“Another Member expressed its preoccupation about the imposition of other types of restrictions and economic measures on agricultural products, inputs, logistics, and finance, so as to allow the flow of food supplies at minimum cost.”

The Agriculture Committee had full authority to adopt the report without needing a Ministerial Conference. Its findings and recommendations cover:

• Access to international food markets
• Financing of food imports
• Agricultural and production resilience of least-developed countries and net food-importing developing countries
• Horizontal issues — including collaboration among the WTO and other international organisations

Full details are here.

“PSH”: A MISLEADING NAME
Subsidising purchases into food security stocks is nicknamed “public stockholding for food security in developing countries” or just “public stockholding” (PSH) for short.

The name is misleading because WTO rules do not prevent stockholding. They only discipline subsidised procurement. Even that is allowed, so long as the developing country stays within its subsidy limit, usually 10% of the value of production, which can be a large amount.

This could be described as something like “over-the-limit subsidies used to procure food security stocks”.

The practice is not widespread. A 2022 paper by a Canada-led group found tentatively that since 2013 “only five members notified expenditures […] for stocks acquired at [a supported] price at least once” and only nine since 2001.

Only one country — India — has exceeded its domestic support limit when using subsidies to buy into stocks, and for only one product: rice. For 2021–22, the fourth successive year of the breach, India’s subsidy was calculated at $7.55bn, exceeding its $5.0bn limit by 52%. (The following year the subsidy and excess fell back to 20%.)

An “interim” 2013 WTO ministerial decision modified by another decision in 2014 — called a “peace clause” — has protected India from facing a legal challenge despite breaching its WTO commitment.

One problem is that the peace clause is only available to countries with “existing” programmes in December 2013. The few covered include China, India, Indonesia, Pakistan, Philippines and Taiwan, according to a November 2023 WTO Secretariat summary.

The present deadlock is over an unresolved permanent solution originally intended to replace the interim one in 2017. Details are here.

(Updated April 22, 2024)

Updates: none so far

Image credits:
Main picture | Matthew Smith, Unsplash licence