public stockholding

Agriculture Reform and Liberalization — What is Likely for the WTO’s 12th Ministerial this June?

Agriculture is a critical subject for many WTO Members. Liberalization in agriculture at the GATT and now the WTO has lagged far behind that on industrial goods, a fact readily seen when comparing tariff levels on agricultural goods vs. industrial goods, with agricultural tariffs typically twice or more as high as the bound industrial rates with much higher individual tariffs and with products subject to tariff rate quotas. See, e.g., https://www.wto.org/english/tratop_e/tariffs_e/tariff_data_e.htm

The critical importance of agriculture for human survival for many makes agricultural trade different from trade in manufactured goods. The history of starvation flowing from natural and manmade events make nations reluctant to become too dependent on imported agricultural products. Moreover, most of agriculture is subject to significant variability based on weather conditions and changes. While industrial goods production can be subject to natural events, production tends to be far less dependent on the vagaries of nature.

When the Uruguay Round agreements included initial liberalization in agriculture, there was also agreement to restart talks by 2000 on the next round of liberalization. There were many aspects in the agriculture negotiations during the Doha Development Agenda aimed at achieving increased liberalization, and there have been some achievements in improving liberalization in agriculture over the first twenty-five years of the WTO. Agreement by developed countries to eliminate export subsidies is one important example.

However, the very ambitious agenda during the Doha Round on agriculture has largely not been resolved, and so a range of issues continue to be pursued by various Members or groups of Members within the Special Session of the Agriculture Committee. Which of these items will potentially lead to progress at the upcoming 12th Ministerial Conference in Kazakhstan this June is an important part of the ongoing activities in Geneva.

Unfortunately, despite what has been true throughout most of the twenty- five years of the WTO where most documents presented for consideration in negotiations have been made available to the public, the Agriculture Committee Special Session has seen huge numbers of documents, even from the Chair of the Special Session treated as JOB or RD (room) documents with the result that the documents are typically not released to the public. Thus, a document recently released by the Chair entitled “Elements and processes for a possible outcome in agriculture at MC12” (JOB/AG/180) is not public. However, the WTO write-up of the meeting provides an overview of topics explored and identifies topics likely to be manageable by the 12th Ministerial. See “Eyeing MC12 for an outcome, agriculture negotiators focus on doable elements and processes”, WTO news, 24 February 2020, https://www.wto.org/english/news_e/news20_e/agri_24feb20_e.htm.

The topics discussed include most of the topics covered under the Doha Development Agenda including domestic support levels, market access, cotton, export competition, export restrictions, public stockholding and special safeguard mechanism.

Press accounts indicate that, inter alia, transparency improvements have a chance of obtaining agreement by MC 12. In that connection, the United States submitted a paper which was discussed this week that addressed “Notification of Select Domestic Support Variables in the WTO”. The U.S. paper reviewed issues Members had repeatedly raised relevant to the level of domestic support. The U.S. demonstrated that what was supplied in notifications were often viewed as insufficient or were unclear. Thus, the U.S. documented a number of areas where greater transparency would improve the process for all Members being able to understand compliance by trading partners. JOB/AG/181 (19 February 2020)(this job document was released publicly).

Paragraphs 1.3 -1.5 of the U.S. submission provides a summary of where a review of past activities within the Committee on Agriculture (“CoA”) show a need for further transparency and that the U.S. paper is intended to help Members have a technical discussion on transparency in notifications:

“1.3. The United States has identified several areas within the domestic support pillar where CoA discussions are driven by inquiries seeking to gain further transparency in relation to notifications. These areas include: (1) market price support (MPS) (specifically eligible production, adjustments
to the fixed external reference price, and product basis); (2) negative support levels; (3) classification and non-notification; (4) currency and inflation, and (5) value of production (VoP) data. This list is not exhaustive.

“1.4. For each area, this paper attempts to summarize what information has been provided through notifications and what has had to be discerned from questions posed in the CoA. This summary is based primarily on a review of notifications submitted by Members covering the 2005 to 2018 notification years, as well as responses to CoA questions dating back to 1995. Additional Members and years were drawn upon in a limited number of circum- stances to provide a fuller illustrative discussion.

“1.5. This paper is intended to support Members’ ability to engage in a technical discussion regarding transparency in notifications.”

The U.S. paper does an excellent job of laying out important impediments to Members’ understanding core elements of the domestic support information supplied by Members in their notifications. The paper is available below.

JobsAG181

As reviewed in earlier posts, increased transparency is an important part of the WTO reform agenda that the U.S. is seeking more broadly. Within agriculture, the failure to have full and timely transparent notifications (including in some instances by the U.S.) handicaps the ability to make substantive progress in other areas. For example, in cotton, the U.S. has long raised the concern that major cotton subsidizers haven’t reported full information on the size of subsidies provided making resolution of the cotton issues unacceptable where major contributors to the problem are not participating.

Other issues being discussed within the Committee on Agriculture’s Special Session are long standing and arguably can’t be quickly resolved without trade offs in other areas. Public stockholding is one such area, although the peace clause introduced at the 10th Ministerial Conference provides interim protection for countries’ support programs in this area. Transparency, limits on what can be done and where product can be sold are all relevant topics within the area of public stockholding. But for agriculture exporting countries, there has been a strong desire for expanded market access which has not happened since the start of the WTO. Public stockholding issues pose a reduction of market access. While the Chair has teed up a suggested solution on public stockholding, it is hard to see any final resolution without expanded liberalization/market access being addressed as well.

Conclusion

While agriculture is important to nearly all WTO Members, the strong divisions between Members and the long term lack of full transparency of programs, subsidies and other issues makes any significant movement over the next few months unlikely. Hence, agriculture will likely have a minor role in the 12th Ministerial Conference in Kazakhstan in early June.