This record is a partial extract of the original cable. The full text of the original cable is not available.

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 
 
 
¶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