A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Focus on issues

Will the EU-Brazil common proposal save the WTO in Buenos Aires ?

Frédéric Courleux, advisor of Momagri

September 4, 2017

The EU and Brazil recently submitted a joint proposal to amend WTO rules on agriculture. This proposal, entitled “Proposal on domestic support, public stock holding for food security and cotton by Brazil, the European Union, Colombia, Peru and Uruguay” was circulated at the WTO on 17th July 2017 in preparation for the next ministerial meeting in Buenos Aires early December. This proposal has already given rise to several analyses and points of view, including those of Alan Matthews
1 who published a post on the blog CAP Reform and Jacques Berthelot2 who also delivered his analysis on the site SOL.

The aim of this proposal is to modify the way in which the different forms of agricultural aid subject to cuts are currently accounted for. The EU and Brazil appear to want to respond to the common criticism aimed at Europe and the United States whereby they would benefit from the current rules. Indeed, their aid ceiling levels were set very high, because they were based on historical references from 1986-88, when aid policies were at their highest on both sides of the Atlantic. This means the EU and Brazil would therefore have to abandon these historical references in order to adopt a new discipline in which the aid subject to cuts would represent a percentage of the value of the country's total agricultural production. At this stage, the Euro-Brazilian proposal has not put forward a value on the ceiling level, but a 2% bonus would be granted to developing countries (the least developed countries being exempted).

In addition, it would also be necessary to consider blue box subsidies (which combine coupled aid but impose a reduction in production) in a more favorable light than other more distortive subsidies.

Finally, the proposal aims at responding to criticism from G-33 countries that challenge the current rules where public stock-holding policies remain largely illicit despite some progress since the Bali conference in 2013. An ICTSD
3 study on the subject, conducted by Alan Matthews, is available on their website. Thus public stock-holding in the aim of food security could be exempt from reduction measures for developing countries also if stock volumes do not exceed the equivalent of 10% of national production.

For Momagri, abandoning the historic ceiling appears to be a laudable proposition insofar that by linking it to production value it would tend to favor agricultural policies that are not based on agricultural price deflation. To consider that blue box subsidies not be placed on equal footing with other distortive subsidies, is understandable since such subsidies are granted under the condition that production is reduced. One could even go further by arguing that the blue box is more virtuous than the green box because the latter does contain any requirements with regards reducing production, whereas, currently challenged by the global phenomenon of overproduction, this type of aid should be endorsed.

Finally, the opening on public stock holding has little chance of satisfying major producing countries such as India and China, let alone importing countries, since it is the equivalent of 10% of their production, which is low by definition.

On this basis, one can only agree with the conclusion proposed by Alan Matthews: there is little chance that a real agreement will be reached in Buenos Aires in December. He reminds us of the stance recently expressed by the Trump administration and the beginning of the dispute between the United States and China. It could also be said that this Euro-Brazilian proposal, a little like chalk and cheese, such is the difference in their agricultural profiles, does not directly challenge the current status quo, criticized by many developing countries who argue the dumping effect of decoupled aid.

It is therefore safe to bet that the next round of negotiations will not bring the issue of global agricultural governance out of the rut in which it finds itself. A renewed multilateralism in agriculture can only be achieved through the genuine desire to establish coordination between stabilizing policies and sustainable agricultural policies to ensure global food security and to free international markets from the phenomenon of overproduction.

1 http://capreform.eu/eu-brazil-wto-proposal-on-domestic-support/
2 https://www.sol-asso.fr/wp-content/uploads/2017/01/Commentaires-de-SOL-sur-l'évaluation-dAlan-Matthews-(...)
3 https://www.ictsd.org/sites/default/files/research/Food_Security_and_WTO_Domestic_Support_Disciplines_(...).pdf

Page Header
Paris, 11 December 2018