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WTO talks mired in discord as Kenya hosts meet

BUSINESS
By PAUL WAFULA and Agencies | September 10th 2015
By PAUL WAFULA and Agencies | September 10th 2015
BUSINESS

The World Trade Organisation (WTO) conference to be held in Nairobi in December is already mired in discord, international agencies are reporting.

Reuters and agencies reported yesterday that the negotiators of the 10th ministerial conference of the WTO that will take place between December 15 and 18 are unable to agree on a work programme from the previous meeting held in Bali, Indonesia.

At issue are US and European Union (EU) proposals to scrap the texts agreed to thus far in this interminable round of trade negotiations.

“Yet again, the developed world led by the US and the EU are pitched against developing countries led by India, China and Indonesia, who have over the past two years tried unsuccessfully to move towards the promise-made at the ninth ministerial conference in Bali in 2013-of a permanent solution to the public stock-holding issue in food security, while advancing the stalled Doha development round,” Reuters reported.

Foreign Affairs Cabinet Secretary Amina Mohamed has said the conference to be held in Nairobi would have huge gains for the agricultural sector.

Among the issues that her ministry will be pushing in the ministerial conference are slashing barriers to cross-border business, which past meetings have failed to resolve. Developing have been lobbying for a bigger market access, especially for their agricultural produce, in the developed nations.

However, input and export subsidies granted to farmers in the richer countries have meant that imports, mostly from emerging countries, are uncompetitive, effectively shutting the markets from external competition.

High production costs in poor nations ranging from expensive energy to taxes have compounded the problem for prospective exports. The conference to be held over four days in December has been dubbed the Nairobi Round, coming two years after the last meeting in Indonesia.

The irony that a country such as India, which witnessed more than a quarter of a million farm suicides between 1996 and 2014, has to fight to retain its farm subsidies, which are a fraction of what the US and the EU provide their farmers, is not lost on most observers.

Nor is US intransigence in refusing to consider a proposal from the group of 33 countries (G-33) to resolve the stockholding issue simply by bringing the WTO agreement into line with 21st century prices. The 2014 US farm bill is one of the main reasons the US government is walking away from the post-Bali agriculture negotiations.

Crop insurance

The 2014 farm bill, which takes effect this crop year and will be in effect for five years, is decidedly more trade-distorting than its predecessor.It eliminates direct payments to producers, which were considered less trade-distorting than price or production-based programmes.

It replaces them with production and price-based programmes that offer producers of supported commodities a choice between payments to compensate for low prices or payments to compensate for revenues lower than the recent five-year revenue average (agricultural risk coverage or ARC).

On top of that, producers get subsidised crop insurance from the federal government, and special or different programmes support dairy, cotton and other crops.

Kenya, which is projecting the Nairobi ministerial conference as the first African one, wants to make it successful, and that could mean settling on a less ambitious outcome.

Even though many African countries are united behind the G-33 proposal, it is possible that the US and EU may (again) drive a wedge, like they did by pushing a minimalist package for least developed countries in Bali, unless India and China step up the diplomatic effort. The India-Africa summit in New Delhi in October may offer India another chance at making a decisive push to get African countries to close ranks in Nairobi.

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