NEXT STEPS TOWARD REFORM

CIRCULATED ON BEHALF OF THE FOLLOWING CAIRNS GROUP MEMBERS: AUSTRALIA, ARGENTINA, BRAZIL, CANADA, CHILE, COLOMBIA, COSTA RICA, GUATEMALA, 
NEW ZEALAND, PARAGUAY, PERU, URUGUAY AND VIET NAM

The following submission, dated 30 November 2018, is being circulated as the request of the aforementioned Cairns Group Members.

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1.   The Cairns Group remains committed to fundamental reform to agriculture that removes current distortions to global markets. We will continue to pursue this vision and contribute positively toward negotiations in the WTO with this in mind.

2.   In light of the discussions undertaken on agriculture since MC11, the Cairns Group offers the following observations and comments with the aim of furthering our negotiations and scoping the potential outcomes for MC12 and beyond.

Domestic Support

3.   Since the 10^th Ministerial Conference the vast majority of WTO Members have demonstrated a strong interest in pursuing reform in the pillar of domestic support. The Cairns Group shares this interest, and views the limitation and reduction of support which is production and trade distorting as an important next step in the reform process mandated by Article 20 of the Agreement on Agriculture (AoA) .

4.   In submissions in 2018 Cairns Group Members demonstrated that global trade-distorting support remains persistently high. While support declined significantly in some Members between 2001 and 2010 following domestic reforms, there is evidence that these reforms may have stagnated, and levels of support are again increasing. Additionally, the significant reductions in support provided by some major Members since 2001 has been replaced by increasing levels of support provided by other major Members.

5.   Support is also concentrated amongst few Members. In particular the top ten providers of trade-distorting support represent around 90% of all trade-distorting support notified by all Members under Article 6 of the AoA. It is clear also that a large group of Members – including those from the Cairns Group – are particularly concerned about the impact of product-specific support on agricultural markets. To that end, some Cairns Group members have recently circulated an in-depth analysis on product specific support using notified data. Product specific support continues to account for the majority of notified trade and production distorting support and therefore remains a priority issue for Members to address.

6.   A number of observations can be drawn from discussions this year on domestic support. Firstly, in order to achieve an outcome, it is necessary for all major providers of trade-distorting support to make a contribution to a negotiated outcome. There is no prospect of a deal if major providers of trade-distorting support are exempt from commitments. This requires a cross-cutting approach to addressing global trade-distorting support; we cannot attack the entitlements to trade-distorting support of one set of Members whilst leaving the entitlements enjoyed by another group of Members completely free from commitment.

7.   Product-specific support should also remain a focus for current discussions. It is a major part of unfinished Uruguay Round business. Our discussions should cover product specific support in all its forms. Other forms of trade-distorting support also require further attention. This includes non-product specific support, as well as those forms of support which are currently exempted from any reduction or limitation in the AoA.

8.   Finally, we cannot allow Members to rest on the laurels of past reforms. While reform is not to be discounted, the presence of water in the entitlements of Members remains a risk to agricultural markets. Reducing this water is in every Member's interests.

Market Access

9.   Since MC11 work on Market Access has continued to attract attention from Members. From analysis presented in 2018 it remains clear that tariffs in agriculture remain significantly higher than those in other sectors. Many Members also continue to retain high bound tariffs whilst their applied tariffs are much lower, whereas other Members may apply tariffs at a high level or impose restrictive quota arrangements. Members have raised options for further discussion including cuts to bound and/or applied tariffs, improvements in transparency and tariff simplification, and addressing tariff rate quotas, tariff peaks, tariff escalation and special safeguards.

10.   We should continue to pursue discussions on market access with an open mind toward possible outcomes. The Cairns Group supports further work to improve market access to provide a fairer and more open trading system.

Export Competition

11.   Members have reaffirmed their interest in addressing the unfinished business in the export competition pillar, including progressing discussions on export financing, state trading enterprises, and international food aid. Members must remain vigilant in ensuring the full and timely implementation of the agreement to eliminate export subsidies at MC10 in Nairobi, including ensuring that the application of export subsidies or measures with equivalent effect are not circumventing this historic outcome. This includes more universal participation by Members in the annual review process, in particular by responding to the related Secretariat questionnaire. The Cairns Group supports work to strengthen disciplines in the export competition pillar to provide a fairer and more open trading system.

Cotton

12.   Cotton is a particular area where progress is regrettably lacking in agricultural negotiations. Very little has been achieved, despite the repeated, unfulfilled mandates to address cotton "ambitiously, expeditiously, and specifically". Cairns Group Members are willing to pursue incremental steps to address the current distortions affecting cotton global markets, with realism and taking into account the proportional responsibilities of WTO Members. There is work to be done also in terms of enhancing the quality and comprehensiveness of data on the cotton sector, by timely and complete notifications as well as by the technical support of the WTO Secretariat and international agencies.

Data and Transparency

13.   Greater efforts need to be made to comply with the notification requirements of the AoA and relevant Ministerial Decisions across all three pillars. The submission and circulation of this data will tangibly contribute toward our negotiations. We urge all Members to redouble their efforts and strengthen notification compliance.

14.   We further suggest that the Secretariat continue to provide updated, readily accessible data across the three pillars for the Membership to use in its consideration of possible options for further reform. In particular the provision of a searchable database of all notified domestic support would be particularly beneficial for Members to understand current trends in domestic support and to assess the impacts upon individual Members. Improvements to enhance the accessibility of notified market access and export competition data should also be considered.

Special and Differential Treatment

15.   The Cairns Group reaffirms that the principle of special and differential treatment for developing Members, particularly least developed countries, continues to be integral to all negotiations. The framework for trade reforms must continue to support the economic development needs, including technical assistance requirements, of these WTO Members.

Process for Negotiations

16.   The Cairns Group supports the efforts of the CoA Special Session Chair and suggests that to continue to make progress he should pursue a balanced workload. Informal, open-ended meetings of the CoA Special Session should be scheduled on a regular basis in the lead up to 2020, but not so often as to limit the time available for engagement between Members. The topics for discussion should be scheduled in accordance with the interests of the Membership, and reflective of the submissions made.

17.   We suggest that the process should be inclusive and transparent and the Chair use consultations and smaller group meetings to enhance and support the broader CoA Special Session process. These meetings could focus on individual issues and be used to help the Chair frame areas for continued work.

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