On Food Security Stocks, Peace Clauses, and Permanent Solutions After Bali

Eugenio Diaz-Bonilla WORKING PAPER | June 2014

I. Introduction1 The WTO 9th at Bali, Indonesia closed on December 7, 2013 with an agreement on the first com- prehensive multilateral trade package negotiated since the organization’s creation in 1995. The Bali agreement is the latest step in the process known as the Doha Round, launched in Doha, Qatar in 2001 during the WTO 4th Ministerial Conference. The Doha initiative was an attempt to negotiate a multilateral deal building on the unfinished work of the . In mid-2008, in the WTO headquarters at Geneva, , the last sustained effort to finish a complete package of the took place in Geneva, Switzerland. Those negotiations collapsed, in large part due to disagree- ments related mainly to the operation of a Special Safeguard Mechanism, which was considered by several developing countries to be a food security-related issue, linked to the market-access component of the agricultural negotiations.2

Since 2008, WTO Members have instead attempted to tackle negotiations in smaller packages rather than as a whole; thus, the Bali Agreement forms a subset of the general Doha program. However, negotiating smaller deals still did not eliminate the challenges faced by Members. During the frantic days of the Bali negotiations, even this more circumscribed package was at risk of not being completed, and once again food security concerns were invoked as a major reason for the disagreements. The food security debate at Bali shifted from the market access pillar to the pillar of domestic support for agriculture and focused on the WTO’s treatment of the use of administered prices to build public food security stocks in developing countries. Unlike 2008, however, failure was averted this time through the establishment of a mechanism dubbed a “peace clause,” which provides additional time for Members to resolve their disagreements over these food security issues.

The Bali Ministerial covered a larger set of issues in addition to the specific problem of procurement prices for food security stocks. The Agreements can be divided into three groups, as shown in Table 1; this table also lists the relevant documents as identified in the Bali Ministerial Declaration, WT/MIN(13)/DEC/W/1/Rev.1, 7 December 2013 (the basic document identifying all the decisions agreed upon at the Ministerial Conference; see Díaz-Bonilla and Laborde (forthcom- ing) for a more complete overview of the Bali agreements).

1 I want to thank Lars Brink, Stefan Tangermann, and Antoine Bouet for very detailed comments on earlier drafts, which saved me from inaccuracies and mistakes. All remaining errors are mine. 2 The three pillars of the agricultural negotiations within the WTO are domestic support, market access, and export competition. The debate about the SSM focused on whether tariff increases on products affected by import surges could under certain circumstances go above the levels previously negotiated and bound. Whether the SSM really addressed food security concerns was a matter of debate. Simulations in a global model suggested that, if the protection afforded by the SSN was sustained over time, developing countries using that safeguard would have been worse off in terms of food security (measured as food consumption) and in other dimensions as well, such as employment, production, and exports (Diaz Bonilla, Diao and Robinson, 2004).

The main outcomes from Bali include the agreements and decisions related to a subset of components of the Doha Round (sometimes called the “”). Those Ministerial Decisions, linked to trade negotiations, are listed in Table 1.A. There were also d