INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE IFPRI On Food Stocks, “Peace Clauses” and “Permanent Solutions” after Bali Eugenio Diaz-Bonilla (IFPRI) A Post-Bali Food Security Agenda May 6, 2104 IFPRI

Page 2 Structure of Presentation  Background  Legal Issues  Economic and Operational Issues  Conclusions

IFPRI Page 3 Background  Food security not a new issue… Emerged during UR, after UR, Doha (breakdown in 2008), almost breakdown in Bali  …but changed circumstances Higher prices, volatility? Recurrence of extreme weather events Energy developments affecting the food system Developing countries increases in GDP, agricultural production/exports, support to agriculture. Changes in consumption and marketing channels  Bali Agreement only part of DDA Trade Facilitation; 5 Ministerial Decisions on agriculture and cotton; 4 on development and LDCs.

IFPRI Legal Issues: Background and Proposal  Annex 2 (“Green Box”), paragraph 1: “fundamental requirement” and “basic criteria”  Food security stocks (Annex 2.3) and domestic food subsidies (Annex 2.4) Purchases at “current market prices.” If “administered prices,” compare to FERP ( ) Selling prices can be at subsidized prices  G-33 proposal, based on the 2008 Modalities Rev.4 Not counting in AMS when a developing country purchases products for FSS from LI/RP producers Concerns: violates basic criteria of no price support; excessive stocks may lead to subsidized exports Page 4

IFPRI Legal Issues: “Peace Clause” 1  No time to discuss options; therefore, postpone the issue…  Protects developing with existing programs from complaints under AoA, if they comply with the rest of Annex 2.3 and additional conditions:  a) notify CoA that it is exceeding or at risk of exceeding DS  b) be current on notifications of DS  c) provide timely information on public FSS (template)  d) FSS do not distort trade or adversely affect FS of others  e) potential increase in DS only up to that notified in a)  f) Accept requests for consultations  Temporary (limited period) versus Interim (until a “permanent solution” is found) Page 5

IFPRI Legal Issues: “Peace Clause” 2  WTO Members have to find “permanent solution” (until two Ministerial Conferences, about 4 years)  Only existing FSS protected  Notification and transparency requirements not mere formalities, considering many WTO members are extremely behind schedule  “traditional staple food crops” ….“primary agricultural products that are predominant staples in the traditional diet..”  LDCs exempted from DS disciplines  FSS could be challenged under other WTO texts (e.g. Subsidies and Countervailing Measures)? Page 6

IFPRI Legal Issues: “Permanent Solution” 1  Developing countries can provide domestic food aid (Annex 2, paragraph 4)  The question is procurement… Buy at market prices (Brazil, US) Define “eligible production” in a way that focuses on quantities bought (follow Korean Beef case) Define “fixed external reference price” (FERP) in USD  “in accordance” with Annex 3 and “taking into account” constituent data and methodology in original schedule  With procured quantities and USD FERP, many developing countries stay below the “de minimis” (examples in Montemayor, 2014).

IFPRI Legal Issues: Permanent Solution 2  The question is procurement (cont…) Consider adjustment by inflation  18.4 refers to Committee on Agriculture, not countries  But one submission was in constant 1991 prices  Clarify link between “administered prices” and “market prices” (Diaz-Bonilla, 2013) Rebuttable presumed in compliance of not providing price support if administered prices are in line with domestic prices or import parity prices (including allowed border protection under WTO) Not exports allowed from food security stocks  There are other (not good) ideas …

IFPRI Economic and Operational Issues 1  Integrated Food Security Framework FS: multidimensional ; influenced by many policies and contextual variables; diverse impacts depending on other policies, structural issues and type of households Role for Public Food Security Stocks? Page 9

IFPRI Economic and Operational Issues 2  Tinbergen Rule (1952) and Bhagwati Rule (1971)  Different types of FSS: Emergency, Food Redistribution Stocks, Stabilization Stocks (single price, price bands, extreme values, price support…)  Triple burden malnutrition: a) under-nutrition, b) micronutrients, and c) over consumption Lack of dietary diversity, child stunting/wasting, mothers low BMI. Arimond & Ruel,2006; Headey,2013  Food safety nets: physical delivery, vouchers, cash Difficulty to administer? Costs? Vouchers and cash lead to greater dietary diversity (John Hoddinot et al, 2013)  If food stocks are to provide income support to producers, then better Article 6.2, or Annex 2 paragraph 5 (direct income support to LI/RPs)?

IFPRI Conclusions  WTO: variety of legal options for FS, some do not need additional negotiations  “Food security” products a bad idea? It does not address poverty issues, and dietary diversification  Main problems are economic and operational Analyze different FSS within Integrated Food Security Framework (multidimensional approach)  More complex political economy of trade negotiations and trade issues Example India, many poor and small farmers, but a net food exporter (important in rice, beef, wheat)

IFPRI  THANKS… Page 12