Bridges Weekly Trade News Digest • Volume 5 • Number 42 • 12th December 2001

Agriculture: Members Discuss Environment, Food Aid And Preferences


As announced in last week’s edition of BRIDGES Weekly, Members met in the WTO Committee on Agriculture (CoA) last week for the year’s final ‘agriculture week’. Inter alia, Members addressed farm support for agriculture that serves environmental purposes; food aid; and preferential market access for agricultural goods from developing countries.

Background: 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

The debate at the CoA on environment focused principally on whether some degree of trade distortion is legitimate in cases where states support farmers whose agricultural activities fulfil environmental purposes. Non-papers (i.e. unofficial papers) were tabled by Japan and Norway and from the Cairns Group of food exporting countries.

Norway argued that, for non-trade concerns such as biodiversity and land conservation to be addressed appropriately, a minimum degree of domestic production needed to be secured. This, however, presupposed that farming was sustainable and profitable, which in some cases required significant government support also in the form of production- related measures. To avoid high control and administration costs, Norway proposed to find a solution striking a balance between envisaging least trade distortion and its non-trade concerns — eventually in a mechanism outside the Green Box. [The Green Box, under which environmental concerns in agriculture at the WTO are generally addressed, requires that support payments be either de-coupled from production or specifically tailored and targeted so as to create no, or at most minimal, trade distortion.]

For its part, the Cairns Group reiterated its position that agricultural trade liberalisation was the best guarantee for positive environmental development. Cairns Group Members pointed out in particular that trade and production distorting subsidies in developed countries can lead to lower agricultural profits — and thus poverty — in developing countries, which is, according to the Group, a major cause of environmental degradation. In addition, the Cairns Group called for a review of AoA Annex II paragraph 12 [environmental programmes], as under the terms of this paragraph some trade- distorting support may be justified as meeting environmental goals.

Food aid

With non-papers from a group of seven developing countries, EC, Japan, Mercosur, Namibia and Norway, Members discussed how to target food aid without jeopardising both the domestic production in recipient countries as well as exports from competing suppliers. In addition, the debate included the problem of possible circumvention of export subsidy commitments via food aid programmes.

Most countries argued that aid should be provided in grant form only, with Japan and the US warning that this could lead to inflexibility.

Many developing countries called for making donor countries’ commitments binding and predictable; to increase food aid volumes in times of high world market prices; to provide aid on a demand-driven basis; to provide technical and financial assistance to help countries to improve agricultural productivity and related infrastructure instead of becoming dependant on food aid; and to make food aid more transparent through notifications to the CoA. Some developed countries, including Norway, also endorsed several of these points.

Trade preferences

Non-papers were tabled from the African Group, EC, Namibia, Paraguay and Switzerland.

Most developed and developing countries agreed that preferential market access schemes are crucial for poorer countries, but they acknowledged that progressive agricultural trade liberalisation through general tariff reductions would lead to an erosion of trade preferences, so that countries benefiting from preferential treatment may need help in adjusting their economies.

Some small island developing countries (SIDCs) argued that they might need long-term preferential treatment due to their significant lack of competitiveness, and that because of their negligible share in world farm trade, other countries would not be harmed by preferences remaining in place.

Some Members, such as Australia, questioned the effectiveness of preferences, arguing they would prevent diversification in the preferentially treated countries and would hinder other countries from supplying those products falling under the preferential scheme. As such, Australia commented, market liberalisation accompanied by subsidy elimination was a far better recipe.

Animal welfare & 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 that comply with their expectations in areas such as animal welfare and organic farming. In addition, labelled products could improve market access by increasing consumer confidence, they said.

Switzerland further agreed with the point made by the EU in its non- paper submitted in the September special session, that the Green Box should be re-examined in order to enable states to compensate their farmers for additional costs that occur due to higher national animal welfare standards.

The next negotiating session will be held from 4-8 February 2002 with a 4-6 December special informal session covering the subjects of development box, single commodity producers, special and differential treatment, small island developing countries and "other issues".

The formal special session on 7 February will conclude the current phase two of the ongoing negotiations in line with AoA Article 20. As indicated by trade sources, Members will also determine the future of the built-in agenda (Article 20) taking into account the new agriculture negotiation mandate provided by the Ministerial Decision recently adopted at the Forth WTO Ministerial Conference held in Doha from 9-14 November.

"Trade Policy: EU, MERCOSUR Group Issue Call For WTO Rules on Use of Food Aid," WTO REPORTER, 5 December 2001. ICTSD Internal Files.