G-33 insist on SSM, reject developed-country demands to drop it

Original Publication Date: 
24 April, 2015

TWN Info Service on WTO and Trade Issues (Apr15/07)
24 April 2015
Third World Network  

Published in SUNS #8005 dated 20 April 2015

Geneva, 17 Apr (D. Ravi Kanth) -- Members of the G-33 farm coalition, seeking better terms for low-income and subsistence farmers in the developing countries, have severely criticised attempts to deny the special safeguard mechanism (SSM) for curbing the unforeseen surges in imports of agricultural products from heavily subsidised beneficiaries of the Agreement on Agriculture (AoA) under the Marrakesh Treaty negotiated during the Uruguay Round.

The G-33 coalition, led by Indonesia, rejected demands from the developed countries such as Australia, Canada, the European Union, Japan, Norway, and the United States among others, that the proposed SSM must be dropped because of the ongoing plans to "re-calibrate" the market access outcome in the Doha agriculture negotiations.

The "re-calibration" approach is a concerted effort to kill the tiered formula approach with specific flexibilities for the developing and least-developed countries, in an attempt to conclude the Doha trade negotiations by the end of thisyear, several trade envoys told SUNS.

Norway circulated last Wednesday (15 April) a non-paper on market access, which is a replica of what was earlier proposed by Paraguay but rejected by a majority of developing and poorest countries.

Norway proposed that developed countries shall reduce their tariffs by 54% on average from their current bound levels with a minimum cut of 15% per tariff line.

The developing countries, according to the Norwegian proposal, will reduce tariffs by 36% on average with a minimum cut of 10% per tariff line. The proposal has stated that developing countries shall be allowed to exempt 5% of their tariff lines with nil duty cut.

The recently-acceded members (RAMs) can reduce their tariffs by 25% on an average basis with a minimum cut of 10% per tariff line, according to the Norwegian proposal. The RAMs are allowed to exempt 10% of their tariff lines from any reduction commitment, Norway maintained.

The developed countries, however, indicated their willingness to discuss a modified Special Safeguard (SSG) which they had successfully built into the Uruguay Round agriculture agreement.

Even Australia and Brazil, the two leading proponents for farm trade liberalization, are willing to consider a modified SSG while remaining opposed to the SSM, said several trade envoys.

At a meeting on Wednesday (April 15) of over two dozen trade envoys convened by the chair of the Doha agriculture negotiations, Ambassador John Adank of New Zealand, Indonesia, on behalf of the G-33, made a detailed presentation as to why the developing countries would need the SSM more than ever now to combat the new challenges.

The G-33 includes Indonesia, China, India, Kenya, the Philippines, Bolivia, Venezuela, Cuba, Barbados, and 35 other developing and least-developed countries, among others.

Indonesia's trade envoy Ambassador Iman Pambagyo said "[the] SSM is proposed against the backdrop of two main limitations of the existing Special Safeguard or SSG."

The first limitation, according to Ambassador Pambagyo, is that "only a few developing countries have access to the SSG, and developed countries have the largest percentage of tariff lines of entitlements and invocations."

And the second limitation is that, for the few developing countries that currently avail of the SSG, "the mechanism is hardly accessible and is ineffective in addressing import surges or price depressions due to its complicated and outdated design and assumptions."

Moreover, the subsidized exports from the developed countries would hardly breach price triggers that are based on fixed reference prices of 1986-88. Further,calculating domestic consumption data on tariff line basis for triggering the volume SSG has been a formidable if not impossible task for developing countries. Also, the lack of quality customs infrastructure would make it difficult for implementing an effective SSG regime, the G-33 insisted.

"In short, we need an improved, not a worse one, that is attuned to the needs and conditions of developing countries," the G-33 maintained.

Therefore, the developing countries will need "a more simple, operable, and effective safeguard mechanism" to better manage against "world prices and supply which are becoming increasingly volatile due to increased climate change-induced disturbances and persistently high subsidization, and to respond to import surges and price declines that threatens small, subsistence farmers who overwhelmingly reside in the rural areas."

SSM has always remained an integral part of the agriculture negotiations under the Doha Development Agenda (DDA), the group said.

"There should be no questions on the mandate to advance [the SSM] proposal as it was captured in Para 42 of the Doha Work Programme and Para 7 of the Hong Kong Ministerial Declaration," the G-33 maintained.

Indonesia criticised the ongoing  attempts to "water down" the SSM with the inclusion of new, complicated and burdensome conditionalities. "A significant number of these conditionalities do not even exist for the SSG," the G-33 said.

The chair sought to know from the trade envoys as to "who should have access to agriculture safeguards in the future." Ambassador Adank asked whether "access to safeguards be linked to commitments to reduce tariffs," and whether "safeguards be linked to commitments to reduce tariffs and be available to all tariff lines or to a limited number of lines."

In response to Adank's questions, the G-33 argued that "all developing countries should have access to agriculture safeguard, and in particular the SSM," as it is a "critical deliverable" that is not linked with any Doha tariff reduction disciplines or commitments.

Indonesia said that the provisions of the SSM "breaching the pre-Doha bound rates under Rev.4 and W7 documents have clearly embraced this principle and the July Framework and Hong Kong Mandate have not established a link between the SSM and the tariff reductions."

The SSM shall have no a priori product limitations as to its availability but the products will be specified in the final schedule, Indonesia argued. "However, there is no intention to apply SSM for every product in every import surge or price depression," Indonesia assured members.

On the question of triggers as to when the SSM would be invoked, the G-33 said developing countries would need "price-based trigger" as customs authorities can simply refer to price information which is always available on a real-time basis. "Price mechanism would address low-priced, and/or subsidized exports which could otherwise dampen domestic prices and appetite of farmers to plant," the developing country coalition argued.

More importantly, the price and volume triggers must be based on most recent or current market realities based on 3-year rolling average. Indonesia said that developing countries would use "volume triggers" when imports cross 110%-135% higher on an average basis in the previous three years.

Several countries - India, Turkey, the Philippines, Barbados on behalf of the ACP (Africa, Caribbean and Pacific) group, Kenya, Lesotho, and Taipei on behalf of recently acceded members - said the SSM has to be an integral part of the market access pillar of the post-Bali work program to be finalized by end-July.

Australia and Canada, among others, severely questioned the need for SSM,saying it would not only undermine market access but increase tariffs to the Uruguay Round levels.

Australia said the SSM would make it difficult to implement market access commitments while Canada maintained that a "re-calibrated" approach in market access would not require SSM. Australia and Canada were willing to discuss a modified SSG but not SSM, said a developing country trade envoy who was present at the meeting.

In a separate meeting on trade-distorting domestic support on Thursday, April 16, China severely criticised the United States for trying to escape from accepting the commitment to reduce the trade-distorting domestic support by raising extraneous demands on others to make a contribution.

China said it would not do anything for the sake of the US which has to reduce its domestic support as per the Doha mandate, according to a participant familiar with the meeting.

China said its de minimis support is less than what is allowed for developing countries which is currently at 10%. Further, China argued that it is not required to make any commitment on aggregate measurement of support.

China asserted that it has a legitimate right not to cap its de minimis payments, suggesting that the nature of trade-distorting subsidies provided by industrialised countries are different from the subsidies offered by poor countries.

The US while conceding it is a major contributor in domestic support, argued what it called other major subsidisers, including China and India, must undertake appropriate commitments to conclude the Doha trade negotiations, according to participants familiar with the discussion.

The US emphasised that members must focus on the concept of overall trade distorting domestic support as well as differentiate the domestic support based on input subsidies and market price support which are more trade distorting than other partially de-coupled support.

India said de minimis support is vital for its farmers, and protested at attempts to create new demands and categories.

Canada said reduction commitments in overall trade distorting domestic support and aggregate measurement of support are important in the "re-calibrated" approach.

Brazil said it wants to take part in any final solution on domestic support commitments that are hammered out during discussions between key members,said participants present at the meeting. +