The need to correct WTO rules on public stocks — Franck Galtier (CIRAD)

Read the report:

The question of public stockholding for food security will be at the center of the next WTO negotiations in Bali in December 2013. Broadly speaking, two approaches (which are not mutually exclusive) have been proposed. The first one is to add flexibility for individual countries that are at risk of exceeding their Amber Box limits: under specific threshold conditions, countries would be allowed to build food reserves even if it implies that their domestic support for agriculture exceeds their Aggregate Measurement of Support (AMS) bound level. This approach has been developed in the framework of “Question 4” in the list of four questions presented to negotiators by the chairperson of the agriculture negotiations (New Zealand’s ambassador, John Adank).

The second approach is more ambitious. It aims to modify the rules used to calculate the contribution of public stocks to AMS. The G33 proposal on stockholding is along these lines: it says the “acquisition of stocks of foodstuffs by developing country Members with the objective of supporting low-income or resource-poor producers shall not be required to be accounted for in the AMS”. More generally, this second approach includes the debates around “Question 3” on Ambassador Adank’s list.

Each approach has given rise to lively debates among WTO members.

The present note aims to provide a first step toward a consensus by focusing on a technical issue: showing that current WTO rules strongly overestimate the real subsidies to agriculture provided by public stocks and correcting the rules accordingly. This discussion should be straightforward as it concerns a technical matter (correcting errors in the AMS calculation) rather than a change in the scope or intent of the rules. After explaining how developing country governments use public stocks for food security purposes (section 1), we will consider current WTO rules on public stocks and explain why they overestimate the level of domestic support for agriculture that is actually provided by public stocks (section 2). We will then propose new rules that correct the biases of the current rules and would therefore allow the AMS calculation to align with a more accurate measure of the contribution public stocks make to domestic support for agriculture (section 3). We will close by showing what the consequences would be of maintaining unchanged the WTO rules on public stocks (section 4).

This note benefited from the helpful comments of Philip Abbott, Jacques Berthelot, Ralph Cummings, David Dawe, Christophe Gouël, Sébastien Jean, Tom Lines, Sophia Murphy, Peter Timmer and Steve Wiggins. The views expressed in this note are those of the author and do not necessarily reflect the views of Cirad, the French government or the above-mentioned experts.

More on the four questions can be found here: