SUBMISSION FROM LESOTHO ON BEHALF OF THE AFRICAN GROUP
The following communication, dated 20 October 2015, is being circulated at the request of the delegation of Lesotho on behalf of the African Group.
- Since the Uruguay Round, developing countries have waited 20 years for the implementation of the Built-In Agenda of the Agreement on Agriculture to reform agriculture. The Doha mandate to have "substantial reductions in trade distorting domestic support" must be achieved. This would contribute to correcting the imbalances inherited from the Uruguay Round. This is because the continuation of massive domestic support in developed countries is a major distortion of the trading system.
- Most of our farmers in Africa are small subsistence farmers. Subsistence/smallholder agriculture can play an important role in reducing the vulnerability of rural and urban food-insecure households, improving livelihoods, and helping to mitigate high food price inflation. However, they are extremely vulnerable to the subsidised imports that for several decades have had negative impact on their production, for example of cereals, poultry, tomato paste, dairy and cotton.
- Furthermore, our farmers continue to have difficulties accessing export markets in developed countries which are protected by high subsidies as well as high tariffs on the products which are of specific interest to the African countries and restrictive standards and inspection regimes. At the same time, we have also been told to open our markets to imports. All of these, in combination, have meant that many of our small farmers have been edged out of their domestic markets, whilst not having access to other markets. It is well established that that the current global system is distorted and pits small-scale, largely subsistence farmers against farmers of developed countries who during the past century have been heavily assisted to increasingly capture economies of scale.
- The negotiations on agriculture in the DDA is therefore of paramount importance to the African Group. It is widely known that agriculture remains the most trade-distorted sector in the context of WTO rules. Reforming the agricultural rules in order to level the playing field is therefore a critical development outcome in the DDA.
- With respect to substantial reduction of trade-distorting support, product-specific AMS limits currently do not exist. As a result, developed countries with high bound AMS can effectively give unlimited product-specific AMS concentrating supports in specific products. In contrast, developing countries are constrained by the 10% product-specific de minimis. While applied levels of product-specific trade-distorting support have come down, recent notifications show that product-specific AMS on some products for example cotton has increased.
- Regarding the Green Box, such subsidies are provided in such large amounts that they are bound to have a more than minimal effect on production and exports. One study estimates that Green Box subsidies increased agricultural productivity by around 60% in the European Union and 51% in the United States. A substantial reduction in US and EU Green Box subsidies would lead to a rise in export volume and revenues and a fall in their import costs for LDCs. Net Food Importing Developing Countries (NFIDCs) would also gain in terms of exports with no rise in their import costs. Studies suggest that substantial reduction of direct payments in particular decoupled income payments would improve terms of trade, GDP and household consumption as well as poverty indicators of African countries in particular LDCs and NFIDCs.
- In the draft modalities of 2008, TN/AG/W/4/Rev.4 (Rev.4), domestic support disciplines are already very weak. For the most part, the proposed disciplines only require the developed countries to cut their "water" in domestic support. (Some developed countries have argued that real cuts will have to be made, but this is largely not the case if the expanded Blue Box in Rev.4 is also taken into account.) Nevertheless, even these minimal domestic support commitments in Rev.4 are now being rejected.
- The African Group reaffirms the mandates for the agriculture negotiations as provided in the Doha Ministerial Declaration (2001), July Framework (2004), Hong Kong Ministerial Declaration (2005), and the Bali Ministerial Declaration (2013). These agreed upon mandates by Ministers must be respected and fulfilled.
- The outcome of the DDA negotiations in the area of agriculture must achieve the following for Africa:
- Substantial reduction of trade-distorting domestic support in the agricultural sector. In particular, trade-distorting domestic support which historically have been and are still currently provided by developed countries must be substantially reduced, especially reduction of subsidies to products produced by African small farmers. There should also be strict disciplines regarding "box-shifting" towards Green Box supports, to ensure that these supports are truly minimally or non-trade distorting.
- Allow African countries to pursue "agricultural policies that are supportive of their development goals, poverty reduction strategies, food security and livelihood concerns" (para. 2, Annex A, July 2004 Framework).
- The draft modalities of 2008, Rev.4, must remain the basis of negotiations because these modalities represent the overall balance that has been achieved between WTO Members after ten years of negotiations. This hard fought balance cannot simply be set-aside to suit a minority of Members at the expense of the interests of the majority. The "balance" that has been captured in Rev.4 must be maintained. Any minor adjustments should not lead to lowering ambition for some, whilst maintaining or increasing the ambition for others.
- In the context of the DDA, the level of ambition in agriculture determines the level of ambition in the other areas, including NAMA and Services. This practice must continue. Hence, it is important to first have clarity in agriculture before movement can be expected in the other areas. Furthermore, within agriculture, due to the importance of levelling the playing field, outcomes on the domestic support pillar must first be clarified before the market access issues can be decided upon.
- The African group is seeking a fair and equitable outcome across the three pillars of Agriculture that could reduce and satisfactorily address the longstanding asymmetries and imbalances in the Agreement on Agriculture.
SECTION A: Agriculture Elements in the DDA
- The following elements must be delivered in the current agriculture negotiations of the Doha Development Agenda:
A. Domestic Support
- Fulfilling the mandates for the agriculture negotiations should comprise all the elements contained under the domestic support pillar in Rev.4, including:
- On OTDS, developed countries should reduce and bind their OTDS, a monetary amount. This Final Bound OTDS should not exceed the Rev.4 Final Bound OTDS expressed in terms of value of agricultural production as of 2007. Developing countries' OTDS commitments shall be in accordance to Rev.4, paras. 6-12.
- On AMS, those with bound AMS should reduce their AMS in accordance with Rev.4; product-specific AMS must be limited and bound.
- There must also be reductions in de minimis and especially product-specific de minimis of developed countries, in accordance with Rev.4.
- There should be Blue Box limits and product-specific Blue Box limits.
- The modifications of Annex 2 of the Agreement on Agriculture with regard to direct payments as contained in Annex B of Rev.4 should be improved upon as these do not address the trade distortions which "box-shifting" has concealed. There is therefore the need to introduce stricter disciplines to ensure that Green Box measures in particular decoupled income support have no, or at most minimal, trade-distorting effects or effects on production, in accordance with the Doha Mandate and paragraph 16 of Annex A of the July 2004 Framework.
B. Market Access
- Progress in the negotiations in market access is directly linked to the progress in the negotiations in domestic support.
- The market access elements important for African Group include:
- Special Products are of critical importance for developing countries in order to improve rural livelihoods and food security. Special Products as per Hong Kong Ministerial Declaration (2005).
- An operational, flexible, easy-to-use Special Safeguard Mechanism (SSM) must be established with remedies that are effective. The SSM must not contain conditionalities that are not in the Special Agriculture Safeguard Provision (SSG), and not be linked with the outcome of market access negotiations.
- The following elements are to be concluded as an integral part of a balanced outcome on market access: tariff simplification including binding of in-quota tariffs in ad valorem form, longstanding preferences and preference erosion, tariff escalation, tariff peaks, commodities as well as reduction of in-quota tariffs on products of export interest for African countries.
C. Export Competition
- An outcome in export competition is an integral part of an outcome in the agriculture negotiations. This pillar cannot be harvested as a standalone. Elements of importance to the African Group are:
- Elimination of export subsidies of developed countries and preservation of flexibilities for developing countries as provided in Rev.4.
- Export credit modalities as provided in Rev.4, including preservation of flexibilities for developing countries as well as NFIDCs and LDCs.
- International Food Aid and Disciplines. The provision of food aid should be in fully grant form and not directly or indirectly tied to commercial exports of agricultural products or of other goods and services.
- Monetization, re-export and provision of in-kind food aid should be in accordance with the criteria in Rev.4.
- Cotton is a central development issue and must be resolved ambitiously, expeditiously and specifically:
- On market access, developing countries in a position to do so and developed countries shall provide DFQF for cotton and cotton derived products produced and exported from LDCs by 1 January 2016. Developing countries not in a position to do so will consider increasing cotton imports from LDCs.
- Most importantly, on trade-distorting domestic support, developed countries shall eliminate all Amber Box support for cotton by 2018. The elimination of Blue Box supports will also follow.
- Immediate elimination of export subsidies and application of export competition disciplines to cotton.
- NFIDCs have a need for special measures that contribute to an enabling environment for boosting agricultural production. In the context of the current agricultural negotiations, the following should apply to NFIDCs:
- In accordance with para. 7 of Rev.4, NFIDCs shall not be required to undertake reduction commitments in their Base OTDS. NFIDCs shall be treated in accordance with Rev.4, paras. 7, 10, 17 and 32.
- NFIDCs and LDCs shall have more flexible treatment on the current de minimis entitlement in order to support their food security and rural livelihood concerns.
SECTION B: Other Agriculture Elements
Public Stockholding for Food Security Purposes
- The necessary elements should be introduced in the Green Box to reflect the particular circumstances of developing countries. This would to some extent address the current imbalances in the Agreement on Agriculture (TN/AG/GEN/15). Support measures in relation to Public Stockholding for Food Security Purposes provided by developing countries NFIDCs and LDCs for low-income or resource poor farmers are to be accounted for under the Green Box (TN/AG/W/4/Rev.4; TN/AG/GEN/15; JOB/AG/27).
- All efforts must be made to arrive at a permanent solution by MC10, as mandated by the General Council Decision of 2014. The current Peace Clause shall also be applicable to new public stockholding programmes for food security purposes until a permanent solution is found.
SECTION C: Organisation and Management of the Doha Work Programme
- The Doha Round cannot be concluded until all the elements important for the African Group outlined above have been satisfactorily addressed.
 "The contribution of subsistence farming to food security in South Africa", Baiphethi & Jacobs, Agrekon, Vol 48, No. 4 (December 2009), http://ageconsearch.umn.edu/bitstream/58216/2/6.%20Baiphethi%20%26%20Jacobs.pdf.
 Impact of Green Box Subsidies on Agricultural Productivity, Production and International Trade, Rashmi Banga, June 2014, http://unctad.org/en/PublicationsLibrary/ecidc2014misc1_bp10.pdf.
 These products include: shell, oil and other food products, cosmetics, pesticides and agricultural inputs.
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