WTO (Negotiations, Regular Work, Leadership)

Domestic support on developed countries’ agriculture: Impacts on SSEA export opportunities

The fifth forum meeting of the project “Business & Trade Connexion” took place at CUTS International Geneva office, during an informal lunch on Tuesday 4th February 2020. Delegates from South and Southeast Asia discussed the issue of Domestic support on developed countries’ agriculture, and its impacts on their exporters.

The meeting started with Rashid S Kaukab, Executive Director, CUTS International, Geneva, welcoming all the forum participants and especially some of the delegates who had recently joined their respective Permanent Mission in Geneva. He took the opportunity to present briefly the project’s main activities and objectives of this project to the new comers.

He further explained that the main aim of this lunch meeting was to share the results of project country partners’ consultations with their exporters of agricultural products, as well as relevant ministries’ representatives, on the impacts of domestic subsidies allocated by developed countries (i.e. EU, US and Japan) and how those domestic support could distort trade at their level. The objective was to understand how the current domestic subsidies allocated to farmers in those three developed countries could potentially impact the business & exports of S&SEA agro-producers, as well as the policies and strategies to put in place by governments to counter-act the challenges He also introduced the technical note prepared by CUTS which synthetize the Country Update notes (CUNs) and is entitled “Domestic support on developed countries’ agriculture: Impacts on S&SEA exports’ opportunities”, of which he promised that the final electronic version will be shared with the meeting report.

Laiba Amir, Intern, CUTS International Geneva, gave a summary of the findings in the Country Update Notes. She explained that domestic support measures are allocated into two categories: green box measures, which are considered as minimal or non-trade distorting measures; and amber box measure, which are the contrary. Amber box measures are subject to a reduction in commitments in terms of aggregate monetary value. The effects of the domestic support measures by developed countries, may include loss of market access, loss of competitiveness, as well as lower profitability caused by a deflation in prices in S&SEA countries. She mentioned that a majority of the top export products of the project’s countries do not receive any form of specific domestic support in S&SEA countries. There exist some general support measures in place, such as subsidies on fertilizers in Sri Lanka, research and development facilities in Cambodia, tax refund programs for the purchase of raw material in Nepal. Based on the specific needs expressed in each country, recommendations were made for policy action and support to be provided to the concerned producers and exporters in the region.

After the statements by CUTS, it was time to open the floor to the participating delegates. Delegates recognized that the information provided are of good quality, and will be useful for future work and discussions in the WTO, as domestic support especially in agriculture is a hot topic at the moment.

More substantially, the delegates underlined that domestic support is on their top priority going to the next WTO ministerial conference. A statement and a proposed framework for negotiations on domestic support were adopted by the Cairns group (19 members including some S&SEA countries) in Davos at the end of January 2020. Delegates all seem concerned by the topic and its need to be negotiated at the WTO so that any trade-distorting measures and trade imbalances can be corrected.

Delegates pointed out that as least developed and developing countries, they are not in the same position to support their domestic agriculture to the same extent as developed countries. Even though the current WTO rules are giving policy space to LDCs to do so, they don’t have the capacities to (fully) utilize it. Hence, their interest mainly lies in disciplining such subsidies by developed countries.

Lastly, participating delegates discussed the potential topic to be covered in the forthcoming forum meeting. They agreed on two potential topics: (i) WTO institutional reform, particularly related to transparency issues and their implications for S&SEA countries, (e.g. technical, human, financial and institutional capacity constraints regarding the periodic preparation, submission and discussion of various notifications); and (ii) general aspirations and possible priority areas of the private sector (particularly MSMEs) for MC12. For the next forum meeting, it was decided to focus on the second topic. The next lunch meeting is scheduled to take place in the second half of March 2020.