WTO Members Push For Increased Transparency On COVID-19 Measures In Farm Trade
At a meeting of the Committee on Agriculture on 28 July, WTO members posed a record number of questions about each other’s farm measures. Australia and other members called for enhanced transparency on COVID-19 measures. In the subsequent information session dedicated to COVID-19, members heard from several international organizations about their research work. India was queried about its subsidies for rice in 2018-19. At the end of the meeting, Ms Maria Escandor (the Philippines) was elected as the new chair of the Committee.
A total of 308 questions were submitted (G/AG/W/205/Rev.1 and Corr.1) by WTO members since the last Committee meeting in 2019. The March 2020 meeting was postponed due to the COVID-19 pandemic. To ensure an effective discussion, the one-day meeting focused on a WTO Secretariat document (RD/AG/78) compiling 146 unanswered questions regarding members' farm policies. Written responses received in advance of the meeting were compiled in a document for members' reference. These responses can also be found in the WTO's Agriculture Information Management System.
US, EU, China respond to questions
The United States addressed members’ concerns over "Phase 1" of the US-China trade deal and over farm stimulus packages, including the package adopted in response to COVID-19. The US noted that, in the US-China Economic and Trade Agreement, China committed to ensure that purchases and imports into China of agricultural and seafood products from the United States would exceed the corresponding 2017 baseline amount by US$ 12.5 billion in 2020 and by US$ 19.5 billion in 2021. “Purchases will be made at market prices based on commercial considerations and market conditions may dictate the timing of purchases within any given year,” the United States reiterated.
The US provided the value of 2017 exports to China based on U.S. Census Data for several main commodities. The US said both parties are not disclosing further disaggregated information “to avoid speculative behaviour in commodity markets”, and that market rules will prevail: “Chinese buyers can choose specific products and vendors, time purchases, and negotiate prices according to current market conditions.” The US also maintained there would be no market distortion or discrimination since “the Agreement neither restricts China from purchasing food, agricultural, and seafood products from other countries nor discriminates against these products”.
Regarding COVID-19 stimulus packages, the United States said updated information can be found in its new submission: US ad hoc report on COVID-19 measures (G/AG/GEN/161). It encompasses key information (designated agency, short description of the programme, weblink and the legal reference for actions) for 11 programmes. These include nine US Department of Agriculture projects, such as the Coronavirus Food Assistance Program and USDA Farmers to Families Food Box, as well as two targeted support plans for small business. The US said this special submission is without prejudice to its normal notifications and will be updated over time. It encouraged all members to make their own ad hoc reports on COVID-19 measures.
China’s responses regarding the US-China trade deal were in line with what was said by the United States. It said that “commercial considerations” is the principle agreed upon by both parties. “Chinese enterprises engaged in imports from the US will follow the principle of market and the WTO rules … the Chinese government does not make any instructions (on the purchases),” it asserted. Regarding its agricultural insurance programmes, China said it is still processing the questions and will provide responses when they are available.
The EU's multiple environmental policies were the subject of discussion. These policies include the new “Farm to Fork” Strategy issued on 17 February 2020 - a set of regulations to reduce the use of chemical pesticides, fertilizers and antibiotics in agri-food production; the European Green Deal - an ambitious plan to transform the EU into a carbon-free economy by 2050; and the EU’s production subsidies resulting from the implementation of sanitary and phytosanitary (SPS) measures.
The EU said the Common Agricultural Policy reform and related Farm to Fork proposals are still being discussed by the EU’s co-legislators, the European Council and the European Parliament. Therefore, details are not yet available, and no formal decision has been taken to introduce a carbon tax at present. The relevant notifications in relation to the pesticide standards fall within the scope of the WTO's SPS Committee and Technical Barriers to Trade Committee, it said. Regarding the questions on its COVID-19 measures, the EU referred members to its ad hoc report (G/AG/GEN/159) and said more information will be added once it becomes available.
India cites “peace clause” of Bali Ministerial Decision for breach of rice support
In its recent domestic support notification (G/AG/N/IND/18), India notified the Committee that it exceeded the "de minimis" support level (10% of its value of production) for rice in the marketing year 2018-2019.
Invoking the peace clause set out in the 2013 Bali Ministerial Decision on Public Stockholding for Food Security Purposes (WT/MIN (13)/38) and the subsequent General Council Decision (WT/L/939), India clarified that the breach of de minimis limits for rice is covered by the peace clause, and it has submitted full information in line with the specific notification requirements of the decisions. This first-ever invocation of the “peace clause” ignited extensive reactions from members, with 25 questions registered on India's additional notification obligations, reporting methodologies and the trade impact of the support. Further information on the “peace clause” is available below.
In its responses, India reiterated its compliance with WTO rules, particularly paragraph 3 and footnotes 5 and 6 of Annex 2 of the Agreement on Agriculture as well as paragraph 3 of the Bali Ministerial Decision. It maintained that marketing year 2018-2019 was the only year it exceeded its de minimis support for rice. This is why it did not notify the public stockholding programme for rice prior to that period.
Although India’s public stockholding programmes covered rice, wheat, coarse grains and pulses, only support for rice exceeds the de minimis limits, India said. Hence, the statistical annex only includes rice. Other support for rice will be notified in due course, it added. India also affirmed that the 850,000 tonnes of rice stocks subsequently sold on the domestic market were not allowed for export, preventing any risk of distorting global markets. India said it will submit detailed responses in the AG-IMS system in due course and that it is open to bilateral consultations with members having further questions.
Some members said they will study India’s written answers carefully. One member stated that it was not fully convinced that India respected all the requirements of the Bali decision and that all information on the products covered by the public stockholding programme should be provided in order to ascertain that only rice support exceeded the limits. It also took issue with the fact that India has not provided information on support for rice in previous regular notifications, despite the ever-increasing support for rice in recent years. More evidence is needed on how India ensures the rice stocks are not dumped into global markets as India claimed, it insisted. India asked the member to put its questions in writing and said it is willing to conduct bilateral discussions.
Regular review of agriculture policies
The Committee reviewed many other policies related to the three pillars of agriculture trade: market access, domestic support and export competition. The questions and replies can be found in the WTO's Agriculture Information Management System (AG-IMS).
With respect to monitoring outstanding responses to questions in the Committee review process, the chair, Ms Christiane Daleiden Distefano (Luxembourg), noted that the WTO Secretariat produced a document for the meeting summarizing outstanding responses from 2013 to 2019 (G/AG/W/204). This indicated 82 pending responses for questions raised in 2013-18 and 45 for questions raised in 2019. The chair urged members to respect the rules and pursue efforts to reduce outstanding responses. “Collectively, we can enhance transparency through the Committee’s monitoring functions,” she said.
The chair noted that Secretariat document G/AG/GEN/86/Rev.38 provides an updated account of compliance with the notification obligations of WTO members. Thanking members for the good efforts to fulfil their obligations, the chair pointed out that a significant proportion of domestic support (34%) and export subsidies (32%) notifications remains outstanding for the period 1995 to 2018. Recalling that notifications are an important means of informing the entire membership, she urged members to keep updating their notifications, with a view to enhancing transparency in agriculture trade.
Call for increased transparency on farm measures related to COVID-19
Some members informed the Committee about their recent ad hoc reports on COVID-19 related agricultural measures issued in the G/AG/GEN/ series.
Australia introduced a room document co-sponsored by Brazil, Canada, New Zealand and Paraguay. Floating a set of questions as food for thought, Australia invited members to brainstorm on how the Committee can ramp up monitoring on members' COVID-19 agriculture measures. It suggested an approach combining efforts by members and the WTO Secretariat and encouraged members to submit additional notifications. It also noted the option, in the meantime, of improving capacity-building for members in need. “Through normal notifications, we may wait for years (to see those COVID-19 measures). Greater support measures should make the procedure easier,” it said. Australia also indicated that it has led by example and submitted its own ad hoc report of COVID-19 measures.
Co-sponsors indicated they have provided, or intended to submit, ad hoc reports of COVID-19 measures. They stressed the need to track these measures in quickly changing times. One member said this should be a truly member-driven process. The Secretariat plays an important role but informing the WTO of their trade measures falls under the purview of the members, it said. Some members pointed out that domestic support in agriculture provided in response to the pandemic is an area in need of updated information. A point was made that big economies have bigger responsibilities in this regard.
Many members took the floor and commended the proponents on the initiative. One developed member asked all the co-sponsors to “walk the talk” and submit ad hoc reports of their COVID-19 measures, while urging all big and emerging economies to follow suit. It also suggested listing on the meeting agenda all members that have submitted ad hoc reports. One developed member agreed that regular notifications are not enough, and suggested members submit ad hoc reports as it had done.
Meanwhile, differences remain on approaches to achieve the common goal of transparency. One developing member pitched a “pragmatic approach” on the ad hoc reports: due to the emergency nature of many measures, the WTO should allow members to notify in any format that suits them best. One member asked to take into consideration members’ different capacities and believed there is no need to duplicate the monitoring work currently done by the Secretariat. One member argued that the priority of the Committee work should be on the removal of import and export restrictions and freeing up the global supply chain.
Some members cautioned that the exercise of ad hoc reporting should not become a policing mechanism, arguing that members - especially developing country members - needed the necessary policy space to respond appropriately to the impact of the pandemic. Another member also warned that they should not be penalized for actively and voluntarily participating in this transparency exercise.
Australia thanked all the speakers and concluded that flexibility, consistency and coherence will be the guiding principle for improving transparency on COVID-19 measures.
COVID-19 information session
Under the theme of “Transparency for food security”, experts from the United Nations Food and Agriculture Organization, the International Grains Council, the International Food Policy Research Institute and the International Trade Centre presented their observations and lessons learned in their respective monitoring and research efforts related to the pandemic.
Experts generally agreed that, distinct from the 2008-09 financial crisis, there are ample supplies of the main food crops in markets at present. However, the trade-restrictive measures imposed in response to the COVID-19 crisis, despite being smaller in number than in 2008-09, have led to severe disruptions in global supply chains and exposed many weaknesses and vulnerabilities, sending shock waves in transportation, labour markets and informal sectors.
Experts joined the call for more transparency on COVID-19 measures and highlighted the importance of real-time data and policy tracking. The AMIS Market Monitor (which monitors market information for rice, wheat, maize and soybean) showcased its usefulness during the crisis, with more tools being developed in different organizations to monitor changes in agri-food markets. Cooperation between international organizations and governments has also intensified to help put in place sensible policies. Furthermore, experts pointed out the need for collective actions and well-informed decisions to ensure food security for the poor and the livelihood of small producers and traders. All speakers’ presentations are here.
Members welcomed the information-sharing session. One member reiterated the importance of open trade as an integral part of the solution to revive economic growth and aid vulnerable communities. Looking forward, in view of the WTO's 12th Ministerial Conference, it is “more convinced” that transparency in export restrictions should be a key targeted outcome for the ministerial conference, and the exemption of the World Food Program’s humanitarian food purchases from export restrictions should be the top priority.
The Committee on Agriculture will have COVID-19 as a standing agenda item, as requested by members, with a view to gaining a better understanding of the situation and keeping abreast of the changing agriculture trade environment.
The next Agriculture Committee meeting is scheduled for 22-23 September, to be facilitated by the new chair, Ms Maria Escandor from the Philippines. The 2020 annual dedicated discussion on export competition and the review of the list of net food-importing developing countries will take place at the September meeting, the chair said.
Background information on the “peace clause”
In Bali, ministers agreed on an interim “peace clause” allowing developing countries to provide subsidies under public stockholding programmes without the programmes being challenged in WTO dispute settlement. Provided these countries meet the conditions specified in the Bali Decision, the peace clause applies even if the country exceeds its agreed limits for trade-distorting domestic support. A General Council decision in 2014 and the 2015 Nairobi Ministerial Conference further confirmed that members would make every effort to agree and adopt a permanent solution on this issue by 2017 and that the interim solution would remain in force until a permanent solution is agreed.