IFPRI
On Food Stocks, “Peace
Clauses” and “Permanent
Solutions” after Bali
Eugenio Diaz-Bonilla (IFPRI)
A Post-Bali Food Security Agenda
May 6, 2104
IFPRI
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Structure of Presentation
IFPRI
 Background
 Legal Issues
 Economic and Operational Issues
 Conclusions
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Background
IFPRI
 Food security not a new issue…
• Emerged during UR, after UR, Doha (breakdown in 2008),
almost breakdown in Bali
 …but changed circumstances
•
•
•
•
Higher prices, volatility?
Recurrence of extreme weather events
Energy developments affecting the food system
Developing countries increases in GDP, agricultural
production/exports, support to agriculture.
• Changes in consumption and marketing channels
 Bali Agreement only part of DDA
• Trade Facilitation; 5 Ministerial Decisions on agriculture
and cotton; 4 on development and LDCs.
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Legal Issues: Background and Proposal
IFPRI
 Annex 2 (“Green Box”), paragraph 1:
• “fundamental requirement” and “basic criteria”
 Food security stocks (Annex 2.3) and domestic
food subsidies (Annex 2.4)
• Purchases at “current market prices.” If “administered
prices,” compare to FERP (1986-1988)
• Selling prices can be at subsidized prices
 G-33 proposal, based on the 2008 Modalities Rev.4
• Not counting in AMS when a developing country
purchases products for FSS from LI/RP producers
• Concerns: violates basic criteria of no price support;
excessive stocks may lead to subsidized exports
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Legal Issues: “Peace Clause” 1
IFPRI
 No time to discuss options; therefore, postpone the
issue…
 Protects developing with existing programs from
complaints under AoA, if they comply with the rest of
Annex 2.3 and additional conditions:

a) notify CoA that it is exceeding or at risk of exceeding DS
 b) be current on notifications of DS
 c) provide timely information on public FSS (template)
 d) FSS do not distort trade or adversely affect FS of others
 e) potential increase in DS only up to that notified in a)
 f) Accept requests for consultations
 Temporary (limited period) versus Interim (until a
“permanent solution” is found)
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Legal Issues: “Peace Clause” 2
IFPRI
 WTO Members have to find “permanent solution”
(until two Ministerial Conferences, about 4 years)
 Only existing FSS protected
 Notification and transparency requirements not
mere formalities, considering many WTO
members are extremely behind schedule
 “traditional staple food crops” ….“primary
agricultural products that are predominant staples
in the traditional diet..”
 LDCs exempted from DS disciplines
 FSS could be challenged under other WTO texts
(e.g. Subsidies and Countervailing Measures)?
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Legal Issues: “Permanent Solution” 1
IFPRI
 Developing countries can provide domestic food
aid (Annex 2, paragraph 4)
 The question is procurement…
• Buy at market prices (Brazil, US)
• Define “eligible production” in a way that focuses on
quantities bought (follow Korean Beef case)
• Define “fixed external reference price” (FERP) in USD
 “in
accordance” with Annex 3 and “taking into account”
constituent data and methodology in original schedule
 With procured quantities and USD FERP, many
developing countries stay below the “de minimis”
(examples in Montemayor, 2014).
Legal Issues: Permanent Solution 2
IFPRI
 The question is procurement (cont…)
• Consider adjustment by inflation

18.4 refers to Committee on Agriculture, not countries
 But one submission was in constant 1991 prices
 Clarify link between “administered prices” and
“market prices” (Diaz-Bonilla, 2013)
• Rebuttable presumed in compliance of not providing
price support if administered prices are in line with
domestic prices or import parity prices (including
allowed border protection under WTO)
• Not exports allowed from food security stocks
 There are other (not good) ideas…
Economic and Operational Issues 1
IFPRI
 Integrated Food Security Framework
• FS: multidimensional ; influenced by many policies and
contextual variables; diverse impacts depending on
other policies, structural issues and type of households
• Role for Public Food Security Stocks?
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Economic and Operational Issues 2
IFPRI
 Tinbergen Rule (1952) and Bhagwati Rule (1971)
 Different types of FSS: Emergency, Food
Redistribution Stocks, Stabilization Stocks (single
price, price bands, extreme values, price support…)
 Triple burden malnutrition: a) under-nutrition, b)
micronutrients, and c) over consumption
• Lack of dietary diversity, child stunting/wasting, mothers
low BMI. Arimond & Ruel,2006; Headey,2013
 Food safety nets: physical delivery, vouchers, cash
• Difficulty to administer? Costs? Vouchers and cash lead to
greater dietary diversity (John Hoddinot et al, 2013)
 If food stocks are to provide income support to
producers, then better Article 6.2, or Annex 2
paragraph 5 (direct income support to LI/RPs)?
Conclusions
IFPRI
 WTO: variety of legal options for FS, some do
not need additional negotiations

“Food security” products a bad idea? It does not
address poverty issues, and dietary diversification
 Main problems are economic and operational
• Analyze different FSS within Integrated Food
Security Framework (multidimensional approach)
 More complex political economy of trade
negotiations and trade issues
• Example India, many poor and small farmers, but
a net food exporter (important in rice, beef, wheat)
IFPRI
 THANKS…
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