Three major developing countries – Indonesia, South Africa and Peru – apparently chose to disassociate from a paper circulated by the Cairns Group of farm exporting countries under the leadership of Australia, charging that attempts are being made to include subsidies provided to developing countries in the development box, our correspondent writes.
Under Article 6.2 of the Agreement on Agriculture, which was concluded as part of the Uruguay Round negotiations during 1986-94, subsidies availed by developing countries for the development of their agriculture are currently exempt from any reduction commitments.
For more than seven years, attempts have been made to review Article 6.2 due to its alleged effect on overall commitments.
Australia on behalf of the Cairns Group has apparently been trying hard to bring the issue to center stage, said a developing country trade envoy who asked not to be identified.
The Cairns Group is silent on the so-called green box subsidies provided by the United States and the European Union. Green box subsidies running into more than $ 200 billion also are proving to be trade-distorting, said people familiar with the green box payments.
The Cairns Group circulated its paper on June 16 focusing on “product-specific concentrations of domestic support in 2019.”
The paper “covers entitlements and support provided under Articles 6.3 (Final Bound Total Aggregate Measurement of Support or FBTAMS) or Amber Box, 6.4 (de minimis) and 6.5 (Blue Box) of the Agreement on Agriculture (AoA). It does not cover Article 6.2 support as this support is usually non-product-specific. The purpose of this paper is to help inform and support agriculture trade reform discussions in the WTO Committee on Agriculture in Special Session.”
The Cairns Group paper says there is “no level playing field in agriculture.” It says “For the Members covered in this paper for the year 2019, product- and non-product-specific Amber Box 2 entitlements amounted to USD 786.3 billion. These entitlements were highly concentrated, with five WTO Members accounting for approximately 71.6 percent. Approximately USD 168.9 billion
(21.5 percent) of Amber Box entitlements were FBTAMS, with the majority of FBTAMS entitlements (88.4 percent of this value) held by four WTO Members.”
Approximately 14.3 percent of amber box entitlements ($112.4 billion) were utilized, leaving significant water in both Article 6.3 and Article 6.4 entitlements (see para 5.3).
According to the report, there are four main sources of product-specific support:
1. Around 72.4 percent (or $89.8 billion) of total Amber and Blue Box support ($124.1 billion) was product-specific.
2. Of this product-specific support, there were four main sources: 40.2 percent was provided as CTAMS3 above de minimis by WTO Members that were not FBTAMS holders, 30.2 percent was provided through FBTAMS entitlements, 17.2 percent through de minimis and 12.4 percent through the Blue Box.
3. All WTO Members are required to notify annually the total amount of domestic support provided to their agricultural sector, known as the current total aggregate measurement of support (CTAMS). Members do not have to include in their CTAMS calculations support below a certain de minimis threshold (Article 6.4). Members with FBTAMS entitlements are entitled to exceed their de minimis entitlement to the extent of their FBTAMS cap under Article 6.3. All WTO Members, regardless of whether they have an FBTAMS entitlement or not, must notify support in excess of their de minimis limits in their CTAMS calculations. Developing country Members are not required to include in their CTAMS calculation support provided under Article 6.2. Support that meets the criteria of Article 6.5 (“Blue Box”) or the criteria of Annex 2 (the “Green Box”) is not included in the CTAMS calculations for any WTO Member. Product-specific support is concentrated on only a few commodities and is dominated by a few Members – and is distorting markets.
4. Commodities receiving the highest levels of product-specific support were rice ($26.5 billion, 29.6 percent of total Amber and Blue Box product-specific support); wheat ($13.3 billion, 14.8 percent); dairy ($10.3 billion, 11.5 percent); bovine ($8.5 billion, 9.4 percent) and corn/maize ($8.3 billion,
9.4 percent). These five commodities received 53.7 percent of total Amber Box support and 55.1 percent of total Blue Box support of Members covered in this analysis.
5. Product-specific support provided to key commodities such as rice, cotton, wheat, corn/maize and bovine was heavily concentrated among just a few WTO Members, with two or three of these Members accounting for between 80 percent and 90 percent of product-specific support, depending on the commodity.
6. Members providing significant product-specific support for these commodities were often significant global producers and/or exporters of this commodity. For example, the WTO Member providing the most product-specific support to rice accounted for nearly 40 percent of global rice production, and the second-largest provider accounted for nearly 30 percent of global exports. The WTO Member providing the most product-specific support to cotton accounted for around 50 percent of global cotton production, and the second-largest provider accounted for nearly 40 percent of global exports.
7. When the value of support for a commodity was measured as a proportion of the value of world production of that commodity, support was concentrated on rice (9.2 percent), cotton (7.3 percent), wheat (7.1 percent), bovine (5.0 percent) and dairy (2.9 percent) (see para 6.2).
There is a high degree of variation in key considerations such as:
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