1970. The release of one of the greatest albums of all time. “Déjà Vu” by Crosby Stills Nash and Young (CSNY). We used to listen to bits of it late at night on Radio Caroline. This week, fifty four years later, I was reminded of this album when looking at the draft Ministerial Decision on Agriculture being offered to the world’s trade ministers at next week’s WTO meet in Abu Dhabi.
Because I got a real sense of “déjà vu” reading the text, with growing dismay; a document so bogged down with square brackets [] signifying divergences as to be unreadable, but where fundamentally WTO members’ national positions do not seem to have changed much in the last ten years.
WTO members descend on a hapless UAE next week ostensibly to sign a permanent treaty on reducing fisheries subsidies, extend a ban on levying duties on e-commerce, put the WTO’s judicial function back into operation, and – subject of this article – agree to cut agricultural subsidies and remove other barriers to the free flow of food. Regrettably few if any of these objectives will be met because WTO members (and remember this is famously a “member driven” organisation) remain in violent disagreement on many key points; and there is not the bandwidth in a four day ministerial to resolve them. Confusion will reign.
Carry On
Track 1 on the CSNY album. The best case scenario for MC13 next week is the avoidance of total collapse. The bar is not set very high: the last ministerial in 2022 was trumpeted as a “success” simply because the organisation did not fold, but staggered on like a bar room drunk at closing time on a Friday night. MC13 may well be the same, and several erudite commentators are actually arguing that keeping calm and carrying on, doing no harm, will in itself be a credible outcome: the WTO will survive.
But let’s take a dive into the agriculture agenda for MC13. Historically agriculture has been the most emotional and polarising topic at WTO Ministerials. A make or break issue (usually it breaks them: your correspondent has seen many Ministerials, as early as the Ministerial at the Heysel in Brussels in 1990, being wrecked by disagreements over agriculture). And this should not come as a surprise. Albeit a minute percentage of global GDP, agriculture is the lifeblood of billions of people in the developing world and is politically sensitive in all countries except arguably Singapore and Hong Kong. As the US say, “there is a cow in every State”. Agriculture carries the rural vote and wields disproportionate influence over government policy making, now tied increasingly to considerations around food security, poverty reduction and environmental pressures. Witness the unprecedented rash of farmers’ protests around the world as we speak. MC12 two years ago was the first time that agriculture was not the determining issue of the Ministerial. It was the dog that didn’t bark in the night. But the dog is back and baying at MC13.
Long Time Gone
A favourite track of mine. There are two and a half items on the agriculture agenda next week. The first is getting agreement to reduce trade distorting agricultural subsidies. The 1995 Marrakesh Agreement on Agriculture calls on Members to pursue subsidy reform. That mandate from the halyon days of WTO is still to be discharged. We are still all riding on the Marrakesh Express you might say. In the intervening decades, whereas the EU has reduced its distorting subsidies others – the USA, China and above all India – have massively increased spending. The top priority of the ‘Cairns group’ of competitive agricultural exporters, led by Brazil, Argentina and Australia, is to see those subsidies cut. But the three big subsidisers are content with the status quo and unlikely agree next week to anything more than a work programme to examine the feasibility of possible future subsidy reform. What a wag referred to once as the General Agreement to Talk and Talk.
The second item on the agenda is what to do about Public Stockholding (PSH) schemes such as those pursued by India, whereby the government buys stocks of rice, wheat etc at inflated prices – subsidising the farmers – for subsequent distribution to the public. At the Bali Ministerial of 2015 India obtained an indefinite waiver for its billion crore PSH programmes which otherwise would have breached their limits on subsidy spending. The question before Ministers next week is whether a permanent solution on PSH is feasible ie an Agreement setting out the terms on which PSH schemes can be introduced, which countries can introduce them, what products qualify, and disciplines to ensure they do not distort international trade.
The Cairns Group is adamantly opposed to giving India a free pass on PSH, insisting it be wrapped up in a broader negotiation on subsidy reform. India is equally adamant that the question of a PSH permanent solution be treated on its own merits and not taken hostage by those wider subsidy negotiations. In an election year, and against the background of violent protests in India by farmers asking government to pay a fairer price for their produce, India has limited margin for manoeuvre on this at MC13.
Helpless
Track 4 of the album. The third, half-baked issue on the agenda is agricultural market access ie cutting tariffs on farm goods. The Cairns group again is pushing this, given prohibitively high tariffs around the world for beef, lamb, sugar, dairy and so on. The USA says it will agree to subsidy reform only if there is a simultaneous tariff cutting exercise. A blatantly tactical position because the US has no intention to cut its farm support under any circumstances and knows that, apart from the Cairns Group, few WTO members have any appetite for reducing farm tariffs. So the two issues neatly cancel one another out. Ground zero.
You Don’t Have to Cry
So how will all this pan out? In the view of this correspondent the likely outcome is an eleventh hour Decision to kick the can down the road via a work programme on subsidies, PSH and market access. No conclusions to negotiations next week but ideally a Decision to decide what should be negotiated in future and how fast. The draft Ministerial Decision prepared by the Chair of the agriculture negotiations, Ambassador Arcosoy of Türkiye, proposes essentially this. It looks suspiciously like the draft Decision that I negotiated two years ago at MC12 and which was, for different reasons, killed by Brazil and the US and India at the last moment. A work programme first to agree on subsidy cutting formulae by the NEXT Ministerial in two years’ time; and secondly the launch of a work programme to determine the scope of the permanent Agreement on PSH – to be adopted at that same ministerial in 2026. This should satisfy India in substance but it is questionable whether the Cairns’ group will accept to fast track PSH in this way.
However if there is the prospect of an agreement by MC14 on the subsidy cutting ‘modalities’ ie the depth and speed of cuts, then negotiations on subsidies are essentially over. This may give the Cairns’ group sufficient guarantee that there will be an agreement on subsidies at the end of the day, ands the only difference between the two Agreements will be on the timing of their entry into force. Striking this balance, and having the political will and maturity to swallow it, will be the big test in Abu Dhabi.
As for the half issue of tariff cuts, a linguistic fudge can always be found allowing proponents to argue back home that there is a negotiation starting, and opponents to argue that nothing concrete has been decided at this point. The EU, which given its own domestic agricultural travails has been opposing market access negotiations, will have to hope and pray that it has enough weight in future negotiations to block any outcome that is too ambitious for it.
Down Down Down.
Track 9. So we have three potential scenarios for MC13. Total collapse of the negotiations. I judge the chance of this at 20%. The current political tensions over Ukraine and Gaza make Delegations doubly keen to avoid opening up a further front of international confrontation. Scenario two is the one I have described above – work programmes leading to a decision at MC14 on a permanent agreement on PSH and clear and binding modalities for gradual subsidy cuts. I give this one 20% chance too. And thirdly, the fallback option of intensifying the work on the three key agricultural issues with only a loose commitment to mark progress in two years’ time. The cowards’ option but the most likely. Keep calm and carry on, and face the same choices in two years’ time.
