Envoys cry foul as US seeks to protect its farm export credits

Original Publication Date: 
2 November, 2015

D. Ravi Kanth  

The US has demanded ‘safe harbor’ protection for its controversial farm export credit programme from the disciplines underpinning the World Trade Organization’s agreement on subsidies and countervailing measures despite denying such a flexibility to India and other developing countries for public stockholding programmes for food security last year.

In October, Washington’s trade envoy Ambassador Michael Punke sought the ‘safe harbor’ protection for export credits for its farm products from legal challenges arising from the disciplines in WTO’s agreement on Subsidies and Countervailing Measures (SCM).

Significantly, in the bilateral deal between the Narendra Modi government and the Barack Obama administration signed in November 2014 on public stockholding programmes for food security purposes, Washington had vehemently opposed New Delhi’s demand for exempting the public stockholding programmes for food security purposes from legal challenges arising from the SCM disciplines.

The deal on public stockholding programmes says, in paragraph four, that “any developing Member seeking coverage of [public stockholding] programs shall ensure that stocks procured under such programs do not distort trade or adversely affect the food security of other Members”.

Effectively, WTO members can challenge the public stockholding programmes if they create an “adverse effect” on other nations in the international markets under the SCM disciplines.

But, when it comes to export credits for farm products, the US wants an exemption from the SCM disciplines because of the underlying distorting impact of these credits, said a Western en-voy, who asked not to be quoted.

“The US’ position on safe harbor provision amounts to hypocrisy and double standards,” said a South American trade envoy.

The export credits provided to the highly subsidized US farmers currently have a repayment period of two years. Punke also demanded substantial changes for continuing with another controversial programme called the international food aid.

Both export credits and food aid along with the elimination of export subsidies and disciplines for state-trading enterprises form part of the so-called Nairobi deliverables for the WTO’s 10th ministerial conference star-ting in Nairobi on 15 December.

At a meeting of the Doha agriculture negotiating body on Friday, Norway, along with several developing countries, described the US demand for ‘safe harbor’ protection for its export credits as a retrograde measure in the wrong direction, according to people present at the meeting.

Except the US, a large majority of countries, including European Union members, have consistently demanded that the deliverables in the export competition pillar of the Doha agriculture negotiations must be squarely based on what are called the Hong Kong Ministerial Declaration of 2005 and the revised draft modalities of 2008 or the Rev.4.

According to these mandates, industrialized countries such as the US, Canada, Norway, Switzerland, Japan, Australia and New Zealand as well as the EU can only provide export credits to their farmers with a minimum repayment period of 180 days.

Further, the food aid disciplines have to be sufficiently reformed to avoid monetization as per these mandates.

Both these conditions, particularly on export credits and food aid, are not acceptable to the US as it would tantamount to changing its farm bill, which was passed last year. It provides subsidies for the next five years on a scale that would contravene WTO’s subsidy disciplines, especially those crafted in the Doha negotiations over the past 14 years, according to US analysts.

Even in the other two pillars of the Doha package dealing with disciplining the domestic subsidies and reducing market access barriers for agriculture, the US has raised stumbling blocks to ensure that there are no outcomes, said an African envoy, who asked not to be quoted.

Many developing countries, including India, have all along demanded credible outcomes in the domestic support and market access pillars based on the 2004 July framework agreement, the 2005 Hong Kong Ministerial Declaration, and the Rev.4.

At the Friday meeting, India cautioned “cherry-picking” by members while reiterating its demand for “credible” and “balanced” outcomes in all three pillars of the agriculture package at the Nairobi meeting. China said members should not push any issues off the table, according to those present at the meeting.

Several members also demanded written proposals from the so-called proponents who are trying to limit the package of deliverables at the Nairobi meeting to export competition.

WTO director general Roberto Azevedo has been silent on de-mands from many nations who want a written proposal from the US, according to envoys.+