AGRICULTURE

Issues on the table Public stockholding for food security purposes and food aid General services TRQ administration Export competition

Structure of the Agreement on Agriculture Green Box Blue Box Article 6.2 – Development Programmes Amber Box Export subsidies Anti-circumvention Export prohibitions and restrictions Market AccessDomestic SupportExport Competition Tariffs Tariff rate quotas Special safeguards

 Food purchased by governments from farmers at supported/government-set not market prices counts towards “Amber Box”.  Amber Box is limited, subject to reduction commitments.  Developing countries are allowed an amount that is conceptually minimal - up to 10% of VOP – so called “de minimis”

 Amend the Agriculture Agreement so that price support (administered prices) in developing countries to benefit low-income farmers/those that lack resources not count as AMS, but be considered as “ Green Box ”  Expand the list of “general services” under the Green Box to include more programmes that are relevant to developing countries

 Public stockholding for food security is the most suitable policy instrument for them to address food security  Policy tool allows addressing two elements of food security: availability & access to food  Policy space has been eroded by increasing market prices and therefore higher administered prices  Several developing countries are in danger of reaching/exceeding their permitted limits  Methodology for calculation of support makes it difficult to stay within permitted limits  AMS calculation is not based on actual expenditure; instead price support takes external reference prices ( ) and sees how much higher are a government’s current administered prices  Inflation & rising commodity prices have forced up the administered prices, and with them the AMS calculation

 Lack of in-built policy constraints & adequate targeting to limit potential trade distortiveness  Procurement might continue even if stocks enough for stated objective  Procurement might not benefit only low income but also larger producers  potential trade distorting consequences  different situations of different developing Members – one-size- fits all approach unlikely to address specific problems of individual Members  Systemic impact of changing current rules, outside a wider negotiation

 Increasing clear that November 2012 proposal was unlikely to obtain consensus in time left  Without prejudice to November 2012 proposal, but to allow for exploration of other avenues, some ideas by subset of G-33 members  Four variables for clarification/modification  De-minimis level  External Reference Price  eligible production  administered prices

Question One :  Whether Members were willing to consider that the Bali Declaration recognises, subject to the requirement of the Green Box relating to no or minimally trade or production distorting, a wide range of general services policies in developing countries, along the lines suggested by G-33.  All expressed willingness to work  Make clear that chapeau to Green Box applied to these policies  Need better understanding of G-33 policies, with view of fine- tuning list

Question Two :  Taking into account what the Ministerial Conference had said in the past, could Members use Bali and send a convergent political message that recognised the role played by public stockholding and similar policies in some developing countries ?  positive response at general level  Message should bring some value added  Need to ensure balanced message ; acknowledgement of wider dimension of food security across all pillars; encourage further reform; and greater transparency

Question Three :  Whether Members were prepared in the lead up to Bali to agree on any amendment or interpretation of existing WTO AoA disciplines that might provide greater flexibility in the area of public stockholding that was currently the case.  If so, what was this amendment/interpretation? If not, were Members prepared to consider further work on these issues in the post-Bali period and how would it be framed?

 Those that supported a general systemic solution through amendment/interpretation  Those not convinced that amendment/interpretation was possible or desirable by Bali, but open to discussion of possibilities post-Bali  Nuanced position : half way house: temporary remedy + ongoing work post-Bali

Question Four :  Whether Members were willing to consider a mechanism or process whereby any member with specific concerns that their PSH policies aimed at addressing food security objectives were at risk of breaching their WTO commitments could bring those concerns to the attention of members & seek additional flexibility on an interim basis, pending broader agreement to modify the disciplines in general.

 Openness to consider mechanism but…  Time-limited; non-automatic; should create no or minimal trade or production distortions  Flexibility should not be at expense of needed economic reforms  Transparency important- timely notifications  Other view : whatever the temporary solution – must be operational and not substitute for broader solution

 Three options to address G-33 concerns  Option A :  Agree that developing countries use of a three year rolling average to calculate contribution of food stockholding purchases to overall farm subsidy limit  Option B :  Agree on draft decision allowing Members to take into account excessive rates of inflation (higher than 4%) in calculating AMS  Option C:  Agree to a peace clause exempting these programmes from legal challenge

 As Bali approached, clearer that amending the AoA would on this point was too controversial to be agreed on time.  Focus instead shifted to work on an interim solution – due restraint/”peace clause”  Although not originally proposed by the G-33, they were willing to discuss it.

 Nature of the solution (political/legally binding)  Its character (automatic/non- automatic/hybrid)  Its coverage  Transparency & Reporting  Safeguards to minimize distorting effects  Other terms & conditions  Duration & review  Post-Bali work

LEGAL IN NATURE The Ministerial Decision is LEGAL IN NATURE, not political. The G-33 were clear that they were looking for a mechanism that was legally bindingeffectivecertain legally binding, effective, and certain legalistic approach. The discussions pointed to a more legalistic approach. final conditionssafeguards terms agreed The final legal weight would depend on the final conditions, safeguards, and terms agreed. In Bali legal effects In Bali, Ministers agreed to a Mechanism with legal effects.

Pre-Bali, Pre-Bali, there seemed to be convergence that the Mechanism would be subject to: CONDITIONS CONDITIONS on Notification and Transparency, Anti- Circumvention/Safeguard, and Consultations Once those conditions were fulfilled, the implementation of the Mechanism would be AUTOMATIC. In Baliprovided certain conditions are met In Bali, Ministers agreed that provided certain conditions are met, REFRAIN WTO’sDispute Settlement Mechanism Members are to REFRAIN from challenging through the WTO’s Dispute Settlement Mechanism AMS obligations Compliance of a developing country Member with its AMS obligations or de minimis obligations Meeting the Conditions = Automatic Application of the Mechanism

Coverage of Mechanism In Bali, In Bali, Ministers agreed that developing country Members benefiting should have: Notified the COA exceeding or is at risk of exceeding AMS / de minimis Notified the COA that it is exceeding or is at risk of exceeding either or both AMS / de minimis obligations traditional staple crops In relation to support provided for traditional staple crops In pursuance of public stockholding programmes for food security purposes EXISTING EXISTING as of the date of the decision What are Traditional Staple Food Crops? primary agricultural products predominant staples traditional diet These are primary agricultural products that are predominant staples in the traditional diet of a developing Member NO NUMERICAL LIMITS There are NO NUMERICAL LIMITS in the decision does not preclude The Mechanism applies to existing programmes but the decision does not preclude developing countries from introducing from introducing programmes of public stockholding for food security purposes, in accordance with Agreement on Agriculture. in accordance with the relevant provisions of the Agreement on Agriculture.

shall not be used in an increase Member’s Bound Total AMS de minimis limits other than those under paragraph 3.a. This decision shall not be used in a manner that results in an increase of the support subject to the Member’s Bound Total AMS or the de minimis limits provided under programmes other than those under paragraph 3.a.

In Bali, agreed must satisfy the notification requirements In Bali, Ministers agreed that a developing country benefitting from the Mechanism must satisfy the notification requirements What must a Developing Member notify? it is exceeding at risk of exceeding AMS limits de minimis level Notify the Committee on Agriculture that it is exceeding or is at risk of exceeding either or both AMS limits or de minimis level domestic support notification requirements Have fulfilled and continue to fulfil its domestic support notification requirements What information must be provided? annual basis completing the template in the annex Have provided and continue to provide on an annual basis, additional information, by completing the template in the annex Additional relevant statistical information described in the Statistical Appendix updatingcorrecting Any information updating or correcting any information earlier submitted

In Bali In Bali, Members agreed that seeking coverage Any developing Member seeking coverage ENSURE Shall ENSURE Stocks procured Stocks procured under such programmes not distort Do not distort Trade adversely affect Or adversely affect the food security other Of other Members The SCM applies The SCM applies. These programmes are shielded only against challenges on AoA.

In Bali, Members agreed to put in place an interim mechanism and to negotiate an agreement for a permanent solution. When will the Mechanism apply? INTERIM In the INTERIM, until a permanent solution is found ALL Developing Countries Permanent Solution will be applicable to ALL Developing Countries

Which body is responsible for monitoring the information submitted? Agriculture Committee on Agriculture

Developing Country Member benefitting A Developing Country Member benefitting for the Decision REQUEST Shall upon REQUEST Hold consultations Hold consultations with other Members operation On the operation of its Public Stockholding Program notified

Work Programme Members agree to establish a Work Programme Committee on Agriculture To be undertaken in the Committee on Agriculture making recommendations permanent solution With the aim of making recommendations for a permanent solution existing future submissions Taking into account Members’ existing and future submissions aim of concluding 11 th Ministerial Conference With the aim of concluding it no later than the 11 th Ministerial Conference shall report evaluation of the operation progress of the The General Council shall report to MC10 on evaluation of the operation of the Decision and the progress of the Work Programme

wanted to make the market price support in FN 5 Green Bali deal: the market price support remains Amber but will not be challenged 30 Annex 2

 Decision recognizes the contribution of general services programmes to rural development, food security and poverty alleviation, particularly to developing countries  Subject to Annex 2 of the AOA (Green Box- Chapeau), types of programmes in the decision could be considered as falling within the scope of the non-exhaustive list of general services programmes in Annex 2, paragraph 2  The programmes relate to land reform and rural livelihood in order to promote rural development & poverty alleviation.

 The monitoring activity of the Committee will depend on whether Members decide to use the Decision.  Conversion on the WP has already started at the January CoA meeting

 Tariff Rate Quota  import duties are lower on quantities within the quotas and higher for quantities outside  Current Rules on TRQ Administration  Art XIII GATT  Import-licensing Agreement  A number of methods employed for administration:

 Exporting countries : methods used for administration can become an additional trade barrier.  Evidence - when parts or all of the quotas are not used (“under-filled”).  Importing Countries : the under fill is caused by supply and demand in the market.

Many TRQs have low fill rates  Average annual fill rates ( ) range from 59% to 66% in this period  Absolute annual fill rates ( ) range from 27% to 100%  % of scheduled tariff quotas without notified imports also varies (from 33% to 77%)

 Two distinct elements:  Transparency provisions  An under fill mechanism paragraphs 115–125 and Annex E of the 2008 draft “modalities”paragraphs 115–125 and Annex E of the 2008 draft “modalities”  The text was not new: it was taken from paragraphs 115–125 and Annex E of the 2008 draft “modalities” for the agriculture negotiations as a whole, and the version circulated in October 2012 was essentially identical. paragraphs 115–125 and Annex E of the 2008 draft “modalities”

 Refers to existing disciplines of the Import Licensing Agreement  Highlights how ILA provisions are relevant to TRQ Administration including on:  Timing of publication of information related to tariff quota opening  Processing of tariff quota applications  Obligation to notify to Agriculture Committee of tariff quota fill rates

 Identifies situations where Members do not notify TRQ fill rates or fill rate is below 65%  Monitoring in the Committee on Agriculture with detailed consultative procedure  Final stage –requirement to allocate TRQs using prescribed methods, with S&D for developing countries

First Monitoring Year Where an importing Member does not notify the fill rate OR below 65 per cent Where the fill rate is below 65 per cent If any of the two conditions are present Initiate Underfill Mechanism Initiate Underfill Mechanism Third and Subsequent Monitoring Year Provide unencumbered access via one of the tariff quota administration methods Provide unencumbered access via one of the tariff quota administration methods Where the fill rate has remained below 65 per cent For three consecutive yearsOR No notification has been submitted for that period AND The fill rate has not increased For each of the Preceding Three Years By annual increments of At least 8 percentage points when the fill rate is more than 40 per cent At least 12 percentage points when the fill rate equals or is less than 40 per cent AND The data-based discussions regarding market circumstances have not led to the conclusion among all interested parties these are in fact the reason for underfill AND An interested Member makes a statement in the Committee on Agriculture, that it wishes to initiate the final stage of the underfill mechanism Where these conditions are present Where the fill rate remains below 65 per cent for two consecutive years OR no notification has been submitted for that period A Member may request that the importing Member take SPECIFIC ACTION A Member may request that the importing Member take SPECIFIC ACTION

raise a specific concern tariff quota commitment Committee on Agriculture A Member may raise a specific concern regarding a tariff quota commitment in the Committee on Agriculture tracking register Place this concern on a tracking register maintained by the Secretariat RAISE A SPECIFIC CONCERN discuss the administration of the tariff quota The importing Member shall discuss the administration of the tariff quota with all interested Members. concerns With the aim of understanding the concerns raised market circumstances manner Improving the Membership’s understanding of the market circumstances and of the manner in which the tariff quota is administered contribute to underfill And whether elements of the administration contribute to underfill This shall take place on the basis of provision of objective and relevant data fully consider all documentation Interested Members shall fully consider all documentation submitted by the importing Member summary of any documentation submitted The interested Member shall provide to the Committee on Agriculture a summary of any documentation submitted to interested Members advise whether the matter has been resolved The Member involved shall advise the Committee on Agriculture whether the matter has been resolved PROVIDE A SUMMARY OF ANY DOCUMENTATION SUBMITTED DISCUSS THE TRQ ADMINISTRATION WITH OTHER MEMBERS remains unresolved If the matter remains unresolved clear statement reasons Members shall provide a clear statement of the reasons why the matter requires further consideration based on discussions and documentations provided The clear statement is based on the discussions and documentations provided Such documentation and information may also be provided and considered in the same manner during the second and third stages of the underfill mechanism, as a means of addressing and resolving Members’ concerns PROVIDE STATEMENT FOR FURTHER CONSIDERATION

The i ii importing Member shall take either s ss specific actions requested or such o oo other actions it considers will e ee effectively improve the fill rate of the tariff quota If the actions lead to a fill rate a aa above 65 per cent or interested M MM Members are otherwise satisfied If the fill rate remains b bb below 65 per cent This will be marked as RESOLVED in the Secretariat Registry and w ww will be no longer subject to monitoring A Member may continue to REQUEST additional modifications to the administration of the tariff quotas

Choose a tariff quota administration method A first-come, first-served only basis OR Automatic, unconditional licence on demand system within the tariff quota In taking a decision on which of these two options to implement, the importing Member will consult with interested exporting Members The method selected shall be maintained for a minimum of TWO YEARS Provided that timely notifications for the TWO YEARS have been submitted, it will be NOTED on the Secretariat’s Tracking Register and the concern marked CLOSED Developing Country Members MAY choose An alternative tariff quota administration method OR Maintain the current method in place The choice should be NOTIFIED to the Committee on Agriculture The method selected shall be maintained for a MINIMUM of TWO YEARS After which time, if the fill rate has increased by TWO- THIRDS of the annual increments It will be NOTED on the Secretariat’s tracking register and the concern marked CLOSED

Decision at 12 th Ministerial Conference Extend/Modify Members voluntarily comply Annex B: Some Members reserve their rights not to apply All Members comply Absence of decision S&D provision lapses

 The Committee on Agriculture is expected to review and monitor the implementation of the Understanding  The monitoring to be conducted in the context of the Under Fill Mechanism will depend on Members' submissions

 Hong Kong Ministerial Decision  Para 6: “We agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of This will be achieved in a progressive and parallel manner, to be specified in the modalities, so that a substantial part is realized by the end of the first half of the implementation period”.  2008 Rev 4 text- Export Competition Pillar stabilized?  Small package for Bali - Linkages 

 Step forward in Bali: legal commitments to reduce subsidies, in keeping with HKD deadline  Incremental approach for the progressive elimination of all forms of export subsidies  Down payment :  developed countries halve their ceilings on the money they spend on export subsidies by the end of 2013  envisaged setting a new limit on the quantities of subsidized exports, at the average actually exported with subsidies for 2003–2005.

 Developing countries to continue to benefit from Article 9.4 provisions for 5 years after the end-date for elimination  Prohibition of export subsidies on cotton  phasing in the repayment period for export credits.

 Committed to elimination, but conditions to modify the legally commitments by Bali, in their view not met  That could only be done as part of an overall agricultural package within the Doha Round.  Actual use decreased, therefore the proposed freezing of subsidies at current levels would penalize those that had undertaken reforms  Another Group: proposal would have real impacts on their use, and not cut only “water”  Proposal not balanced in terms of developing country commitments.

 Stopped short of making legal commitments.  But it contains some of the strongest statements of intent that have ever been made on the subject.

 First, clear message recalling that export subsidies in all forms are a highly trade distorting form of support;  Second, acknowledgement that export competition remains a key priority  Third, a reaffirmation of the final objective on export competition “the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect”  Fourth, revised draft modalities (Rev 4, from December 2008) remains important basis for ambitious final outcome

 First, recognition of the decrease in recent years in use of export subsidies that are subject to reduction commitments;  Second, acknowledgement that the reforms undertaken by some had contributed to this positive trend;  Third, this is not a substitute for the final objective  Fourth, emphasize importance of consolidating progress; importance of further engagement to achieve the final objective

 Encouragement to maintain & advance domestic reform processes. Encourage those who have not undertaken reforms to do so  Shall “ exercise utmost restraint ” with regard to recourse to all forms of export subsidies  To the end above will ensure that  Progress towards parallel elimination is maintained  Levels of export subsidies remain significantly below Members’ commitments  A similar level of discipline is maintained on use of export measures with equivalent effect.

 Fulfilling the objective of parallel elimination as in the HKD remains a priority  Agree to continue to work actively for further concrete progress in this area, as early as feasible

 Commitment to enhance transparency and monitoring of policy developments  Agreement to hold dedicated discussions in the CoA on an annual basis to examine developments in the field of export competition  Basis of examination process – timely notifications & information compiled by Secretariat on basis of questionnaire in Annex of Declaration

 Agree to a review of the situation in export competition within 2 years (10 th Ministerial Conference)

 Declaration calls for dedicated discussions based on notifications & a questionnaire to be circulated by the Secretariat  Annex : elements for enhanced transparency which will form basis of Secretariat’s questionnaire  CoA agreed to hold the annual discussion at its June meeting. Similar timing could be appropriate for 2015  Secretariat to circulate questionnaire with view to circulating a summary of the results in advance of the June meeting.