Bridges Trade BioRes • Volume 1 • Number 2 • 6th December 2001

WTO Agriculture Committee Discusses Environment

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WTO Agriculture Committee Discusses Environment

For the last time this year, Members convened in the WTO Committee on Agriculture for an informal negotiating session on 3-4 December to discuss, inter alia, the relationship between environment and domestic farm support. The debate principally focused on whether some degree of trade distortion is legitimate in cases where states support their farmers whose agricultural activities fulfil environmental purposes. In another debate, some Members pointed out that labelling could also be a way to deal with environmental concerns.

WTO Members have been holding ’special’ agriculture sessions since early 2000 as mandated by the Agreement on Agriculture (AoA), which provides for a continuation of the "fundamental reform" programme for the liberalisation of the world’s farming sector through ongoing negotiations (Article 20). While the agriculture negotiations have so far been taking place independently of other talks in the WTO in line with the ‘built-in agenda’, they are now part of the single undertaking launched at the Fourth WTO Ministerial Conference in November (see BRIDGES Weekly, 15 November 2001).

Environment

Non-papers (i.e. unofficial papers) were tabled by Japan and Norway — both of which belong to the group of ‘friends of multifunctionality’ — and from the Cairns Group of food exporting nations comprising Canada, Australia, and several Latin American and South-East Asian countries. The debate principally revolved around the question, whether environmental concerns are adequately addressed by targeted, transparent and non- or minimally trade-distorting measures while making use of already existing AoA tools [e.g. the Green Box]. The use of existing WTO instruments and provisions is being promoted by those calling for a quick liberalisation of the farming sector, such as the US and the Cairns Group. In contrast, the ‘friends of multifunctionality’ like Norway, Japan and Korea believe that agriculture is a unique trading sector vis-a-vis, for instance, trade in industrial goods. They argue that agriculture has a multifunctional character as it not only has an economic function, but also addresses so-called ‘non-trade concerns’ such as environment, food security, rural development and poverty alleviation.

The preamble of the AoA as well as Article 20 itself indeed provide that Members should take non-trade concerns into account. However, significant differences exist among Members on how this should be done. In general, farm subsidies are deemed to be trade-distortive and thus only allowed under certain conditions listed in the AoA. Members can use the Green Box to compensate farmers e.g. for environmental conservation or protection provided through their agricultural work. Payments under the Green Box, however, must be non-, or at most minimally trade-distorting. Thus, direct payments to farmers, for example, should to be decoupled from production so as not to create an incentive for farmers to increase their production — which would have a trade-distorting effect. The Green Box also allows Members to make payments, inter alia, through environmental programmes, but whose criteria need to be clearly defined in order to be targeted and thus minimise trade distortion.

Members, such as Japan and Norway, are concerned that the two options of either decoupling direct payments from production or to provide targeted support via criteria-based programmes might not be sufficient to appropriately address non-trade concerns, arguing that subsidies outside the Green Box are needed in order to help agriculture perform its many roles. While stressing the need to tackle agriculture’s diversity as part of these non-trade concerns, the countries take the view that some production linkage of domestic support payments may be necessary, particularly in areas where agricultural production has a low potential because production is needed for environmental reasons.

Labelling

The EC and Switzerland reiterated that labelling could be an option to address some non-trade concerns without distorting trade, as it would enable consumers to freely choose products which comply with their expectations regarding, for instance, organic agriculture. In addition, labelled products could improve market access by increasing consumer confidence.

While Switzerland and other European countries recognised that this issue should be addressed in the Committee on Technical Barriers to Trade (TBT), they made a link between progress in the agriculture negotiations and the TBT Committee. Cairns Group members, the US and several developing countries objected to this point, arguing that labelling was part not of the agriculture negotiations, but fell under the jurisdiction of the TBT Committee, and in the case of food safety also involved other bodies such as the Committee on Sanitary and Phytosanitary Measures (SPS) or the food labelling Committee of the Codex Alimentarius Commission.

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