AGRICULTURE

1. AGRICULTURE

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

3. Structure of the Agreement on Agriculture Market Access Domestic Support Export Competition

4. From draft Modalities to Bali Package

5. Public Stockholding for Food Security Purposes&General Services

6. Context • 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”

7. The G-33 ProposalNovember 2012 • 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

8. Arguments by G33 • 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 (1986-88) 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

9. Arguments of others • 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

10. ProposalMay 2013 • 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

11. Chair’s four questionsFurther facilitating the search for Convergence 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

12. Chair’s four questionsFurther facilitating the search for Convergence 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

13. Chair’s four questionsFurther facilitating the search for Convergence 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?

14. Three broad groups • 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

15. Chair’s four questionsFurther facilitating the search for Convergence 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 flexibilityon an interim basis, pending broader agreement to modify the disciplines in general.

16. Views on Interim mechanism/process • 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

17. September 2013: Non-Paper • 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

18. Interim “due restraint” solution • 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.

19. Due Restraint ProvisionInterim solution • 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

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

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

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

23. Anti-Circumvention 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 minimislimits provided under programmes other than those under paragraph 3.a.

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

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

26. Duration of the Mechanism In the INTERIM, until a permanent solution is found 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? Permanent Solution will be applicable to ALL Developing Countries

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

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

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

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

31. General Services Decision • 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.

32. Implementation of Decision • 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

33. Tariff Rate Quota Administration

34. Tariff Rate Quotas • 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:

35. The Arguments • 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.

36. Many TRQs have low fill rates • Average annual fill rates (2002-2011) range from 59% to 66% in this period • Absolute annual fill rates (2002-2011) range from 27% to 100% • % of scheduled tariff quotas without notified imports also varies (from 33% to 77%)

37. Proposal by G-20 • Two distinct elements: • Transparency provisions • An under fill mechanism • 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.

38. The Decision

39. Transparency Elements • 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

40. Annex A Under Fill Mechanism • 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

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

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

43. The importing Member shall take either specific actions requested or such other actions it considers will effectively improve the fill rate of the tariff quota If the actions lead to a fill rate above 65 per cent or interested Members are otherwise satisfied If the fill rate remains below 65 per cent A Member may continue to REQUEST additional modifications to the administration of the tariff quotas This will be marked as RESOLVED in the Secretariat Registry and will be no longer subject to monitoring

44. Choose a tariff quota administration method Developing Country Members MAY choose OR Automatic, unconditional licence on demand system within the tariff quota A first-come, first-served only basis An alternative tariff quota administration method OR Maintain the current method in place It will be NOTED on the Secretariat’s tracking register and the concern marked CLOSED 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 After which time, if the fill rate has increased by TWO-THIRDS of the annual increments The choice should be NOTIFIED to the Committee on Agriculture The method selected shall be maintained for a MINIMUM of TWO YEARS

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

46. Implementation of Understanding • 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

47. EXPORTCOMPETITION

48. Context • 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 2013. 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

49. G-20 Proposal • 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.

50. Other elements of proposal • 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 .