OECD: AGRICULTURAL POLICIES AND MARKETS GROUP

UNCLAS SECTION 01 OF 05 PARIS 000348

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 SENV OECD
SUBJECT: OECD: AGRICULTURAL POLICIES AND MARKETS GROUP
SUCCEEDS IN CLEARING STUDIES FOR PUBLICATION



1. SUMMARY: The 39th Session of the Working Group on
Agricultural Policies and Markets (APM) of the
Organization for Economic Cooperation and Development
(OECD) met at OECD Headquarters in Paris 3-4 November

2005. The meeting proceeded smoothly even though it
had a large work agenda. The Secretariat exhibited
increasingly less patience as delegations continued to
request more time to review documents. Nevertheless,
all of the papers proposed for declassification either
were declassified immediately or are expected to be
through written procedure. Such approvals included the
"Decoupling-Policy Implications" paper, which received
only minor edits from most delegations. The "Policy-
Related Transactions Costs and Policy Choice" report
was subject to a lot of debate from Norway, Japan, and
Korea, sparking contention with the Secretariat, which
wanted immediate declassification. The Secretariat's
attitude worsened during the discussion over the
biofuels paper, and subsequently became abrasive when
Poland asked for more review time, with the Secretariat
later lashing out at New Zealand's constructive
comments on the private standards paper. Members gave
other documents, such as "Changes in Retailing Buying
Behavior," "Policies that Affect Land Mobility," "The
Role of Compensation in Policy Reform," and "Evaluating
the Degree of Jointness" the most negative reviews,
with many delegates questioning the overall
methodologies, case studies, and other elements of
these papers. The remaining studies received reactions
ranging from general enthusiasm to little to no
interest. The meeting ended on an upswing with a
positive reaction to the roll-out in Brasilia of the
report on Brazil's agricultural policies. END SUMMARY.


2. Both the draft agenda for the current session
(AGR/CA/APM/A[2005]2) and the draft summary record of
the previous APM meeting (AGR/CA/APM/M[2005]1) were
approved.

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Agricultural Policy Reform
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3. Decoupling-Policy Implications (For
Declassification) (AGR/CA/APM[2005]22): The Secretariat
noted changes made from the previous (Spring 2003)
draft of this paper, explaining that it had modified
the background and methodology as well as some of the
conclusions for Asia. Generally, most of the
delegates, who responded with technical comments,
including the United States, France, the EC, and
Denmark, were quite pleased with the progress of the
paper and supported its declassification on the
assumption that the Secretariat would incorporate each
delegate's edits. Japan, however, had significant
concerns with paragraphs 38 and 39 that were not
resolved after a brief exchange with the Secretariat.
Japan agreed to have a bilateral with the Secretariat
so that a decision could be made on declassification by
November 4. The document was declassified on this
date.


4. Policy-Related Transaction Costs and Policy
Choice: Main Report (For Declassification)
(AGR/CA/APM[2003]REV2): This report got a lukewarm
reception, with many delegations expressing their
disapproval of the draft for not having incorporated
many of their previous suggestions. Japan had the most
considerable complaints. Its main concern was that it
did not want dead-weight losses to be added to transfer
losses, and asked for these categories to be analyzed
separately. Norway and Korea also were not ready for
declassification, although only Norway offered to
provide written comments. However, these three
delegations did not garner much support from other
participants, such as Canada, the EC, New Zealand,
Australia, Denmark, Spain, and Germany, who each
thought that the methodology was sound and pushed for
declassification. The United States had no comments.
Because of the pressure from other delegations, Japan
noted that it wanted its recommendations incorporated
since it was unclear what the Secretariat intended to
do with the work in the future. Japan's statement
prompted the EC and Switzerland to chime in that they
wanted more transparency from the Secretariat so that
delegates have a better idea of future plans for the
paper. In the end, the Secretariat stated that it
aimed to work with delegates to address their concerns;
however, it had no more resources/funding to continue
the project, which already had been delayed many times
since some countries provided scant information to the
author. Japan, Norway, and Korea agreed to forward
their written comments to the Secretariat by the end of
November. The final product would be placed on the
Agriculture Directorate's restricted website (Delegates
Corner),with declassification by written procedure
planned for early December.


5. Adjustment Options and Strategies in the Context
of Agricultural Policy Reform and Trade Liberalization
(For Declassification) (AGR/CA/APM[2005]18/REV1): The
Secretariat grew increasingly frustrated during the

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discussion of this paper when two Members requested
additional time for review. France's comments were
mainly editorial, though others were more empirical,
such as a request for further elaboration of the
Australian pork industry. Japan had written comments
that it offered to give to the Secretariat. Canada
expressed the most dissatisfaction with the project,
noting that the Irish example was a poor one, because
Ireland had never truly revamped its agricultural
policy, and that the methodology used in analyzing
Canada's agriculture in paragraph 21 was incorrect.
The United States agreed with Canada and said that some
of the paragraphs should be sharpened, but did not
oppose declassification. The Secretariat was very
surprised by Canada's response since it was the only
delegation that had a serious problem with the
document; Canada and Japan said they would have
bilaterals with the Secretariat to resolve the issues.
All delegations agreed to declassify the paper
contingent on the incorporation of Japan's and Canada's
comments. The final product will be placed on
Delegates Corner, with declassification by written
procedure planned for early December.


6. OECD Agricultural Policies 2006: At a Glance (For
Information and Guidance) (AGR/CA/APM[2005]23): For the
most part, the delegations received this paper very
well. France noted it would like the creation of a box
to compare the data of different developing countries.
Switzerland also had a very positive reaction and was
pleased with the second revision. The EC favorably
reviewed the report and noted that France had a good
point about adding a box since it would help the reader
better visualize different developing nations.
Although the Secretariat at first questioned the value-
added of the box, it finally agreed to incorporate it.


7. Improving Indicators of Support for Agricultural
Policy Evaluation (For Information and Guidance)
(AGR/CA/APM/RD[2005]3): The Secretariat began the
discussion by mentioning that it plans to have a second
meeting of experts on this issue in 2006. The outcome
will be discussed at the May 2006 APM, where it will be
determined if it is possible to start collecting data
from OECD members for a new Producer Support Estimate
(PSE) analysis. During the October 2006 meeting,
Members will decide whether to use the collected
information for reports prepared in 2007. The
Secretariat apologized for the late arrival of the

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paper, explaining that many expert comments did not
arrive until the last day of the deadline and
expressing regret that many experts did not respond.
It further stated that a clear explanation will be
available to delegates on PSE changes and the formula
will be provided, so that OECD members can test the PSE
and provide feedback.

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Clarifying Global Market Impacts
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8. Agricultural Market Impacts of Future Growth in
the Production of Biofuels (For Declassification and
Guidance on Further Work) (AGR/CA/APM[2005]24): Most
countries supported this study, with only slight
reservations coming from Germany and the United States,
which noted that Members had only agreed at the April
APM meeting to having a scoping paper prepared. The
Nordic countries were generally quite pleased with the
document. Conversely, Netherlands wanted to know the
Secretariat's intentions for projects based on this

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analysis before it would agree to declassification.
Canada and France offered similar sentiments. Japan
asked for annexes that would provide figures and data.
The EC ended the round by remarking that the data on
Poland contradicted other Polish studies. Immediately,
Poland responded by saying it was not informed of the
inconsistency and wanted to talk with its experts at
home before it could agree to declassification. The
Secretariat welcomed almost all of the comments, but

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consequently lashed out at Poland, saying that that it
wanted the paper to be declassified and was "tired of
playing cat and mouse games" with all the delegations.
Poland remained firm and continued to ask for more time
to review the document. At one point, Canada requested
that the Polish piece be pulled out of the study in
order to advance the issue. In the end, Poland agreed
to send written comments to the Secretariat within 7-10
days. The paper, with tracked changes, would be posted
on Delegates Corner for declassification under the
written procedure by late November.

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Analyzing Developments in the Food Economy
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9. Changes in Retail Buying Behavior and the Impacts
on Structure and Returns on Agriculture (For Discussion
and Guidance and Further Work) (AGR/CA/APM[2005]25):
Most delegations gave lukewarm support to the study and
thought it had the potential to add value to existing
scholarship, although many found limitations in its
scope. For example, Slovakia questioned the
fundamental methodology since it focused on only a few
nations. Canada similarly thought that the study was
too narrow and complicated. France agreed and
critiqued some of the case studies. The United States
offered a few technical comments to clarify
distribution channels available to farmers and asked
for a more geographic discussion of markets. The
Secretariat concurred and promised to incorporate all

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the delegates' comments.


10. Private Standards and Developing Country Access to
Global Supply Chains (For Discussion)
(AGR/CA/APM[2005]26; AGR/CA/APM[2005]27;
AGR/CA/APM[2005]28): Many delegations warmly supported
this work and encouraged further studies on the
subject. However, there were solid critiques from
Mexico, France, and New Zealand. Mexico stated that
the study should not only focus on the benefits of
meeting private standards, but also show the
difficulties, poking briefly at the UK for having asked
Mexico to have emergency exits in its avocado fields.
France agreed in principle that the paper needs to
improve its approach and also recommended it
distinguish between public and private standards.
Likewise, New Zealand asserted that the work should
focus on factors that are important for developing
countries, and also made some solid points on the
applicability of the questionnaire used in the study,
which asked general questions and did not seem to delve
into specific issues. The Secretariat responded, in
what some considered an unduly harsh manner, that: 1)
Mexico needs to be more specific; 2) it had addressed
the differences between public and private standards;
and 3) the questionnaire is sound and does not need to
be narrowed.


11. Analysis of Price Transmission along the Food
Chain (For Discussion and Guidance on Further Work)
(AGR/CA/APM[2005]29): The Secretariat said that it
would keep this document unclassified as a working
paper, meaning it will be available publicly. The
methods suggests in the paper would be used to complete
other studies, such as one to be completed in May 2006
on retail buying behavior, which will focus on the
policy implications of price transmission based on a
number of case studies. Most delegations thought the
work had merit and only criticized the highly technical
language it used, asking for a glossary and
explanations in the "common tongue." Members also
wanted to know what an unclassified "working paper"
meant. The United States had a few comments on the
methodology, which the Secretariat explained in detail.

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Linking Policy Goals and Instruments
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12. The Six-Commodity PEM model: Preliminary Results
(For Discussion and Guidance on Further Work)
(AGR/CA/APM[2005]30): An experts' meeting on this paper
is planned for Spring 2006. The Secretariat asked
whether OECD Members would be able to provide more
national data. The United States gave the Secretariat
some written comments after the meeting. A few
delegations, such as France and Canada, questioned the
numbers used in the model, with only France, Canada,
the EC, and the Czech Republic committing to send
experts to the upcoming meeting. The Secretariat
explained that many of the numbers used in the model
are merely placeholders for those to be settled on
during the experts' meeting.


13. Scoping Paper on Information Deficiencies and
Agricultural Policies (For Discussion and Guidance on
Further Work) (AGR/CA/APM[2005]31): Japan was the only
country that explicitly praised the project. France
and Australia also supported the work, although less
enthusiastically, asking for clarification on a few
grammatical and logistical issues. The United States
and Canada were the only delegations that expressed
reservations, saying that the project was low on the
priority list, especially since the proposal did not do
a good job in defining its objectives and prioritizing
its components, which seemed to be overly focused on
environmental issues. The Secretariat was hopeful that
it would be able to work with the United States and
Canada to make the study more attractive and plans to
take a broader approach than just the environment.


14. Policy Design Characteristics for Effective
Targeting: Preliminary Report (For Discussion and
Guidance on Further Work) (AGR/CA/APM[2005]32): The
Secretariat asked the delegations to provide their

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experiences with targeting policy and any advice that
could help better the scholarship. Most countries
showed interest in the work, requesting further
clarification on many of the piece's theoretical
points. For instance, the EC wanted the paper to use
more empirical methodologies. Other delegations, such
as France, New Zealand, Denmark, and Australia, had
more questions on modeling techniques, definitions,
expected conclusions, having a more geographical focus,
and the necessity of defining targeting from income
assistance. The United States questioned the lack of
direction, since part of the piece had a more general
theme while other sections were more specific. The
Secretariat agreed to incorporate most of the

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suggestions.

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Overcoming Constraints to Reform
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15. Policies that Affect Land Mobility and Land/Quota
Values: Project Proposal (For Discussion and Guidance
on Further Work) (AGR/CA/APM[2005]33): Most
delegations had an initial negative reaction to the
paper and wondered what its purpose was. However, many
were helpful in giving direction to the Secretariat.
The United States suggested doing a literature review
to better focus the study and ensure it does not
produce any inaccurate or misleading results.
Delegations, including France, Canada, Japan, the
Netherlands, and New Zealand, supported the U.S.
proposal, stressing that the work's use of the PEM and
GTAPEM models were not useful in understanding land
mobility and quota values. The Secretariat agreed to
come back with a literature review in the revision and,
after, to seek further ideas from Members.


16. The Role of Compensation in Policy Reform: Project
Proposal (For Discussion and Guidance on Further Work)
(AGR/CA/APM[2005]34): At the onset, the Secretariat
was particularly enthusiastic about the study and eager
to hear comments from the delegations. The reaction
from most members was generally more quizzical than
negative in nature. For example, many delegates wanted
more information, since there was neither discussion of
methods of research nor a description of which case
studies would be used. Canada and Australia did not
particularly like the paper's definition of subsidy as
a fundamental right and said the Secretariat should
characterize subsidy as a privilege. Although the
Secretariat agreed with most of the comments provided

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by other delegates, it strongly disagreed with Canada
and Australia on terminology, though ultimately
consented to redraft the paper with new language.

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Agriculture Sustainability
--------------


17. Evaluating the Degree of Jointness: Project
Proposal (For Discussion and Guidance on Further Work)
(AGR/CA/APM[2005]35): Most of the delegations supported
the proposed work's going forward, but reaction
generally was mixed. Several, including Norway, the
Netherlands, France, Australia, Japan, Korea, and the
EC, requested that the document have more empirical
examples. Canada offered the most scathing criticism,
questioning whether there was any value to the study.
The United States and New Zealand took more moderate
positions, with New Zealand requesting more rigorous
analysis, and the United States asking for a scoping
paper to be drafted. The Secretariat easily agreed to
add more empirical analysis and will have a synthesis
report by the May 2007 APM. Moreover, it plans to
organize a workshop from November 13 to December 1,
2006 to review three papers that provide policy advice
within the theme of jointness.


18. Other Business: The Secretariat gave an update on
past and future OECD activities. The Global Forum
(which took place in early December 2005) was to have
participation from five ambassadors, five or six
Agricultural Secretaries/Under-Secretaries, and five or
six high level officials from nonmember economies. The
study on Brazil's agricultural policies had been
released in-country and received an enthusiastic
reaction from the government and the local press. The
workshop on policy coherence for agriculture and rural
development policies in Slovakia went very well, and
focused on agricultural and rural development policy.

REID