Identifier
Created
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06PARIS346
2006-01-19 10:45:00
UNCLASSIFIED
Embassy Paris
Cable title:  

OECD: AGRICULTURE COMMITTEE DISCUSSES SOUTH

Tags:  EAGR ETRD OECD 
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191045Z Jan 06
UNCLAS SECTION 01 OF 06 PARIS 000346 

SIPDIS

FROM USOECD

STATE FOR EUR/ERA
USDA FOR FAS/DHANKE/ACOFFING/JLAGOS
STATE PASS USTR FOR ASTEPHENS

E.O. 12958: N/A
TAGS: EAGR ETRD OECD
SUBJECT: OECD: AGRICULTURE COMMITTEE DISCUSSES SOUTH
AFRICA, INDIA, FUTURE WORK


UNCLAS SECTION 01 OF 06 PARIS 000346

SIPDIS

FROM USOECD

STATE FOR EUR/ERA
USDA FOR FAS/DHANKE/ACOFFING/JLAGOS
STATE PASS USTR FOR ASTEPHENS

E.O. 12958: N/A
TAGS: EAGR ETRD OECD
SUBJECT: OECD: AGRICULTURE COMMITTEE DISCUSSES SOUTH
AFRICA, INDIA, FUTURE WORK



1. SUMMARY: The Organization for Economic Cooperation
and Development (OECD) hosted in Paris a Global Forum
on 30 Nov - 1 Dec 2005, followed by two sessions of the
Committee on Agriculture (CoAg). The Global Forum
addressed the topic of Policy Coherence for Development
in Agriculture. It was largely concerned with subject
matter related to the Doha Development Round of World
Trade Organization (WTO) trade negotiations. Speakers
presented the results of research regarding the role of
agriculture, trade, food and financial aid, investment
and other factors in development and poverty reduction.


2. The 143rd session of the COAG on 2 December 2005
constituted a special session held to provide OECD
Members the opportunity to discuss the soon-to-be-
released report on agricultural policies in South
Africa. The report indicated that South African support
to agriculture is quite low, with an overall Producer
Support Estimate (PSE) below 5 percent, although the
sugar sector remains one of the most distorted and
highly protected. The 144th session of the COAG on 5-6
December 2005 covered a variety of important issues,
including discussions on: the India research study; the
upcoming (2007-08) Program of Work and Budget (PWB);
the COAG's Outreach Strategy, together with a separate
proposal on funding; reports on Program Implementation
findings, the Medium Term Review, activities of the
subsidiary bodies, the Joint Working Party on
Agriculture and Trade (JWPAT) and Working Party on
Agricultural Policies and Markets (APM),as well as one
on the status of the Support to African Agriculture
Project (SAAP); and, finally, a proposal from Mexico
for a country study to evaluate its agricultural
policies. The U.S. Delegation was headed by Debra
Henke, Assistant Deputy Administrator for Trade Policy,
FAS, and included Art Coffing, Economist, FAS, as
Alternate, and as Advisors, Marianne McElroy,
International Relations Advisor, FAS, and Helen
Recinos, Advisor for Trade Policy and Agriculture, U.S.
Mission to the OECD. END SUMMARY.

--------------
GLOBAL FORUM
--------------


3. The subject of the fall 2005 Global Forum (GF) was
Policy Coherence for Development in Agriculture and, as

such, it was largely concerned with topics related to
the Doha Development Round of trade negotiations. Neil
Fraser of New Zealand chaired the Forum. The United
States was represented by Arthur Coffing of FAS/USDA
and Susan Thompson of USAID. Helen Recinos and George
Carner of the U.S. Mission to the OECD also
participated in various sessions. Speakers included
representatives of international organizations, such as
OECD, the Food and Agriculture Organization (FAO),
World Bank, and International Food Policy Research
Institute (IFPRI),and from universities who presented
the results of their research regarding the role of
agriculture, trade, food and financial aid, investment
and other factors in development and poverty reduction.
In addition to global discussions, there were also
regional sessions devoted to Brazil, India, China, and
Africa, with governmental or regional representatives
making their presentations.


4. A presentation by Alain Mathews of the Trinity
College of Dublin covered his analysis that indicates
that trade liberalization will not help, and may very
well hurt, the poorest nations. Dr. J. von Braun of
IFPRI made the point that even when poor households
gain from trade, those gains are mostly insignificant.
The World Bank presentation was relatively benign,
making the point that the more dynamic the model, the
greater the gains from trade liberalization. FAO made
the point that, based on current trends, the Millennium
Development Goals (percentage terms) are unlikely to be
met and the 1996 World Food Summit Goals (absolute
reductions) are almost certain to be missed.


5. The regional reports gave the various governments
a chance to express their views. Brazil underscored its
success in developing its agro-food industry and the
relative importance of key exports. While the speaker
noted Brazil's enthusiasm for the Doha round, he
cautioned that only countries like Brazil will benefit
from the negotiations and said that more needs to be
done for the least developed countries. India's
presentation concerned the impact of government
intervention in domestic agriculture and the negative
impacts that flowed from that intervention.


6. Relative to U.S. trade policy positions some
positive points were made. After some discussion of
food aid, the OECD Development Assistance Committee
(DAC) Director indicated that with regard to emergency
food aid situations, a reliable source is of prime
importance, and that in regards to food aid budgets,
OECD and everyone else was kidding themselves if they
believed the U.S. Congress would appropriate the same
amount of money if the commodities were not sourced
from the United States. India's presentation on the
negative consequences of government intervention was
immediately seconded by Russia and others, taking much
of the steam out of other participants' pleas for
increased intervention and more support. Though it was
partially lost in his comments expressing concern for
small farmers hurt by liberalization, the World Bank
speaker made the observation that the more dynamic the
model, the greater the benefits from trade
liberalization, thus lending support to the idea that
trade liberalization is beneficial.

--------------
SOUTH AFRICA'S AGRICULTURAL POLICIES
--------------


7. The 2 December meeting was essentially a special
session of the Committee on Agriculture (CoAg),and its
sole objective was to discuss the soon-to-be-released
report on South Africa's agricultural policies. Suzanne
Vinet of Canada chaired the meeting, while OECD's
Vaclav Vojtech made the formal presentation of the OECD
South Africa report. A delegation of six South
Africans, mainly government officials, provided
insights about the current situation in South Africa.
The United States was represented by Arthur Coffing,
Economist, FAS, and Helen Recinos, Advisor for Trade
Policy and Agriculture, U.S. Mission to the OECD. Some
highlights of the presentation included: South Africa
is the largest economy in Africa, but has very uneven
income distribution and high unemployment. Until 1980,
the economy was highly regulated, but since then has
been largely reformed. However, the reforms have not
helped the unemployment problem significantly. Support
to agriculture is quite low, with an overall PSE below
5 percent. (Note: The percent PSE measures the annual
monetary value of gross transfers from consumers and
taxpayers to agricultural producers arising from policy
measures that support agriculture, as a share of gross
farm receipts.) The report notes, however, that the
sugar sector remains highly protected and distorted and
that land reform remains one of the most difficult but
pressing problems within the agricultural sector. The
Chair noted that delegations had until January 7 to
submit additional comments to the draft report. The
Secretariat will subsequently incorporate any new

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comments into the final version, which is expected to
be released by the end of April 2006.

--------------
NEW COAG CHAIR
--------------


8. The 144th Session of the COAG was held 5-6
December. Director for Food, Agriculture, and Fisheries
Stefan Tangermann introduced the new Chair of the
Committee, Canadian Suzanne Vinet, Assistant Deputy
Minister of Policy at Agrifood Canada. Vinet replaced
Canadian Michael Keenan, who has taken a new position
within the Canadian government. Other items raised by
the Director included an announcement of the recent
election of Angel Gurria, former Minister of Finance of
Mexico, to the position of OECD Secretary-General. Mr.
Gurria will begin his five-year term on June 1, 2006.
Mention was also made of the enthusiastic response
received on the recently published reviews of
agricultural policies in Brazil and China, and
reference made to a one million euro voluntary
contribution from the European Commission to support
work on the measurement of support estimates for the EU-
25 and selected non-OECD members.

--------------
INDIA'S AGRICULTURAL POLICIES
--------------


9. The Secretariat presented its study on Agricultural
Policies in India (AGR/CA[2005]15 and
AGR/CA[2005]15/ADD). Although members expressed
interest in work, many noted their disappointment over
the lack of cooperation from Indian Government
officials. The study was completed with the assistance
of Indian experts, but without official government
participation. Delegates raised a number of questions,
including on the role of central versus state
governments, methods of PSE calculations, and migration
from rural to urban areas, as well as on recent
developments in the commodity chain. The Secretariat
will continue to work to engage the Government of India
and is considering options for a Roundtable and Peer
Review that could involve the participation of Indian
government officials.

--------------
SUPPORT TO AFRICAN AGRICULTURE PROJECT
--------------


10. The Secretariat presented a report on the Support
to African Agriculture Project (SAAP)
(AGR/CA/RD[2005]1). The Secretariat outlined the
progress thus far in implementing this project, which
aims to build capacity by first fostering the
development of African agriculture through the
identification of principal bottlenecks constraining
the performance of the sector, and then by assisting
African governments to define appropriate national and
international agricultural policies to address those
constraints. Currently, the project is focusing on the
countries of Cameroon and Ghana. Financial support has
come from a voluntary contribution provided by the
French Government in the amount of 135,000 euros, and
assistance from the International Fund for Agricultural
Development (IFAD),which has provided personnel to the
effort. The Project is being undertaken in coordination
with an ongoing FAO project to develop agricultural
policy indicators for a wider range of developing
countries, like those in the Sahel and West Africa Club
(SWAC). OECD expects to have an initial report
available in March 2006 for the Cameroon segment and a
report on Ghana in September 2006.


11. The Secretariat would like to expand the project
to cover the country of Mali (one of the C-4, West
African cotton-producing countries) and privately
requested financial assistance from the United States
to initiate work. The U.S. delegate indicated that she
would follow up on the request upon return to
Washington.

--------------
EVALUATING THE PROGRAM OF WORK
--------------


12. Under the agenda item, "Evaluating the Output of
the Program of Work and Budget(PWB)," CoAg delegates
reviewed three separate topics. The first focused on
the results of the 2004 Program Implementation Report
(PIR),outlined in AGR/CA/(2005)16 and
AGR/CA/RD(2005)2, which reviewed the ratings of members
regarding the output areas in terms of both quality of
work and potential impact. The PIR is considered a
useful tracking tool for the PWB, although some Members
expressed doubt regarding the reliability of the PIR
mechanism and suggested improvements in the
methodology used to measure and communicate impacts.
The results of the PIR for 2004 did not suggest the
need for any changes in focus for the upcoming (2007-
08) PWB. The low completion rate for COAG projects was
below the average for OECD (68 versus 86 percent). In
general, it was felt that the low rate was of minor
concern and that, in the future, greater attention
should be given to the size of the workload when
developing the next PWB.


13. The second topic reviewed by the COAG under this
agenda item was the medium term orientations survey
that Members had completed in early fall 2005 at the
request of the Secretary General and the Council.
Delegates had been asked to indicate whether budget
allocations for the individual PWB output areas should
be increased, decreased, maintained, or exited in the
next (2007-08) budget biennium. For the COAG, the
results indicated that many Members (specifically,
several EU countries, Norway, Turkey, and Korea) wished
to decrease the budget allocation for the output area
of "Agriculture and Trade." Some delegations, including
those of Canada and New Zealand, indicated that the
survey results should be interpreted with a great deal
of caution as they did not reflect the number of votes
for keeping resources on a constant level.
Additionally, the low scoring for trade work could also
reflect the sensitive character of such work as it
relates to the WTO negotiation. The United States
recommended keeping about constant the budget
allocations for the three agriculture-related output
areas, as did most of the Friendlies and Japan.


14. The final topic raised under this agenda item
addressed plans for the upcoming renewal of the mandate
for the COAG in December 2008 (AGR/CA/RD(2005)3). The
work of the Committee will first be evaluated. The
Committee Chair and the Secretariat will develop the
terms of reference for the review. The process will
involve interviews with various stakeholders and a
questionnaire survey for policy-makers on the national
level. The in-depth evaluation will be conducted in the
first half of 2008 by an evaluation subgroup of the
Council and the Internal Evaluation Coordinator, and
will be presented to the COAG within six months after
launching the evaluation. Currently, there are no plans
for an independent third party review.

--------------
ORIENTATIONS OF THE PWB FOR 2007-08
--------------


15. The Committee held preliminary discussions on its
broad policy priorities and direction of future work
for the next budget biennium (2007-2008),using
AGR/CA(2005)18, "Orientation of the Program of Work and
Budget." The core work of policy monitoring and
evaluation was supported by many delegations (including
the United States),as was greater focus on
distributional issues and on the food economy.
Countries such as Canada, Australia and New Zealand
called for increased efforts to work in these areas,
some of which is already underway. The EC advocated a
focus on issues such as food security and societal
concerns, including specifically issues related to
animal welfare and rural development. Some delegations
(Australia and New Zealand) took issue with the topic
of food security. New Zealand made clear that issue of
food security is associated globally with access to
food and pertains to countries that are food insecure -
- which is clearly not the situation for EU countries.
The United States underscored its desire to see more
country-specific studies along the lines of the Brazil
and China work and suggested that Thailand might be a
future candidate for review. Further, the United
States suggested that the COAG could be helpful in
analyzing the outcome of the current round of WTO
negotiations post-Hong Kong. Japan called for
increased attention to the work related to agri-
environmental concerns.


16. The Secretariat outlined the process for
developing a draft Program of Work and Budget, to
include an interim draft to be circulated before the
end of 2005 compiling the ideas raised in the COAG
discussion. Member countries will then have the month
of January to develop more specific proposals for
submission to the Secretariat. Based on the input
received following member country consultations, a
detailed program proposal will subsequently be
developed, for discussion by the Committee at its
meeting in April 2006. The Secretariat noted that the
final draft proposal will include a budget
corresponding to about 75 percent of the program of
work, leaving a margin of 25 percent to be allocated
among the competing priorities suggested by Members.
It is expected that Members will debate their
respective priorities at the April meeting,
particularly with respect to new or controversial areas
of work, such as rural development and food security.

--------------
OUTREACH TO NON-MEMBERS
--------------


17. The Committee approved the proposed graduated
approach to outreach outlined in AGR/CA(2005)11 and
AGR/CA/RD(2005)5, which involves three levels of
activities ranging from broad dialogue initiatives,
such as the Global Forum, to country/region specific
activities to eventual Committee observership. It was
further agreed that although a full-fledged OECD
country review is an important step in effective
engagement with non-members, it should not always be a
prerequisite to consideration of observership status.
The COAG further stressed that the number of observers
should be limited and that an appropriate "mix" of
economies be represented. Based on the discussions, it
was decided to recommend to Council that the current
observerships of Argentina, Brazil, Chile and Russia
(in Russia's case, for the commodity groups only) be
extended until December 31, 2007, and that studies for
Argentina and Chile be initiated during this period.
Further, it was decided to defer again the decision on
observership for Thailand in the Committee, although
the Secretariat would continue discussions with
Thailand for a country study. The Secretariat
confirmed that it is already engaged in discussions
with Thailand, Argentina, and Chile regarding voluntary
contributions to conduct the work on their respective
agricultural policies and that early indications of
support are very promising.


18. There is no consensus in the committee on
additional countries that might be approached with
regard to regular observership. Japan noted, however,
that it does not support observership for Thailand, but
would prefer that Indonesia and Taiwan be considered.
New Zealand countered this suggestion by underscoring
its belief that countries must first make a request to
become observers and, to his delegation's knowledge, no
request has been forthcoming from Taiwan nor Indonesia,
whereas Thailand has made a specific and formal request
for observership with the COAG. With regard to the
general issue of observership, Australia, Canada and
New Zealand voiced serious concerns privately to the
United States on the specter of enlarging EU
representation within the OECD. This followed the
fervid intervention by the EC opposing the suggested
invitation of Estonia, Latvia, Lithuania, and Slovenia
as ad hoc observers to some agriculture meetings, with
the EC arguing that those four would more properly be
full OECD Members.

--------------
STUDY OF MEXICAN AGRICULTURE
--------------


19. Under "Other Business," Mexico proposed that the
COAG undertake an evaluation of its agricultural
policies and expressed willingness to cover the entire
costs of the review. Mexico, in conjunction with the
Secretariat, had prepared a room document giving

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details of the proposal. The Mexican delegate noted
that the timing is crucial as transition arrangements
under NAFTA were coming to an end, as was its
agricultural support program, PROCAMPO. Such a review
would, therefore, assist Mexico in determining the best
policy direction. CoAg was agreed to undertake the
study as part of the 2006 Program of Work.

--------------
U.S. MAINTAINS POSITION ON SUGAR PAPER
--------------


20. The "Analysis of Sugar Policy Reform and Trade
Liberalization" (COM/AGR/TD/WP(2004)54/REV2) was
discussed for declassification during the April and
November 2005 meetings of the Joint Working Party on
Agriculture and Trade. The United States blocked
derestriction at the November meeting, citing the
sensitivity of the subject matter and the potential
negative impact on ongoing WTO negotiations. Since no
agreement could be reached in that venue, it was
decided to refer the matter to the parent committee for
discussion. At the COAG, many delegations, including
the Friendlies - specifically Australia and Canada,
called again for declassification. The United States
remained firm in its refusal to derestrict the study,
leaving the Chair to conclude that the report would
remain "for official use only."

--------------
2006 MEETINGS
--------------


21. The Secretariat distributed the tentative schedule
for upcoming meetings in 2006. Privately, the United
States raised its concerns that the Fall meeting for
the COAG coincides with Thanksgiving and could prove
difficult for U.S. delegations. The Secretariat
recognized the problem and also noted that the spring
meeting of the COAG might change from April to May
because of the Easter holidays in Europe. They will
inform Members of any changes in meeting dates.

REID