U.S., China Won't Budge on WTO Farm Subsidies

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By Bryce Baschuk

July 21 — Two of the most important countries influencing global food prices — China and the U.S. — don't appear willing to modify their farm subsidy policies any time soon, World Trade Organization (WTO) members told Bloomberg BNA.

Despite a fruitful week of agriculture negotiations in Geneva, trade officials said rising trade tensions between Beijing and Washington have reduced expectations for any near-term reductions in their respective domestic support polices.

Their reluctance came as a multitude of small and developing countries in Africa, the Caribbean and the Pacific urged all WTO members — not just developed economies such as the U.S. and European Union — to cut back their domestic support schemes.

If the Chinese and U.S. positions remain fixed, it could jeopardize the WTO's effort to advance a package of trade deals at their 2017 ministerial conference, participants told Bloomberg BNA.

Disagreement Continues

Since 2001, WTO members have sought to achieve “substantial reductions” of trade-distorting domestic support in line with the goals of the Doha Development Agenda.

Despite the Doha Round's lofty ambitions, the domestic support pillar has ranked among the most deadlocked areas of the agriculture negotiations, due in part to the dramatic increases in payments from large, emerging economies such as China and India.

Last year, U.S. trade negotiators failed to convince China to reduce its overall trade-distorting support (OTDS) for farm goods or even agree to a standstill provision (153 ITD, 8/10/15).

Meanwhile, Beijing maintains that any domestic support agreement should provide special and differential treatment for developing countries according to the terms of a 2008 WTO proposal known as Rev. 4.

The U.S. told members of the WTO's agriculture negotiating committee July 18 that finding the “right solution” is essential, though it remains to be seen whether that can happen before, during or after the WTO's 11th ministerial conference (MC11).

‘Gateway Issue.’

An agreement to reduce domestic support is key to advancing any other trade agreements at the WTO's biennial conference in December 2017, WTO members told Bloomberg BNA.

Between now and MC11, trade ministers are discussing ways to advance a package of deals regarding digital trade rules, fishery subsidies and domestic regulation of services, among other issues.

None of these will advance, however, if China and the U.S. can't find middle ground on the domestic support issue, trade negotiators told Bloomberg BNA.

“Agriculture should form part of any outcome at MC11,” Vangelis Vitalis, the chairman of the WTO Committee on Agriculture in Special Session, said in his July 20 report.

‘Reflection to Action.’

Vitalis said he was “encouraged” by the latest agriculture negotiations because WTO members “appeared poised to move from reflection to action” for the first time since their 2015 ministerial conference.

Member engagement was “substantially” improved from the previous meeting in May, and some had signaled their positions with specific proposals regarding domestic support and market access, Vangelis said.

Specifically, Brazil, Argentina, Colombia and Paraguay offered a proposal to reduce members' overall trade-distorting domestic support via numerical limits, percentage limits, specific product caps or other export measures.

Though members offered differing views on the proposal, “it is clear that there is an appetite for enhanced and additional disciplines on domestic support in general and cotton in particular,” Vitalis wrote.

The next session of the WTO's agriculture negotiating committee will be held in October.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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