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Towards A People Centred Fair Trade Agreement On Agriculture

By Vandana Shiva

13 January, 2004

The collapse of the Cancun W.T.O. Ministerial was to a large extent due to the blatant unfairness of the rules of the Agreement on Agriculture which is killing farmers, killing biodiversity, killing fair and just distribution and killing food security and food safety. The Agreement, drafted by global agribusiness is designed to invade into domestic markets by dismantling rural livelihoods and food security, and removing all safeguards to prevent dumping of artificially cheap agricultural products on Third World markets backed by subsidies of $400 billion.

New rules are urgently needed. But all rewriting of trade rules for agriculture is being driven by the same forces and interests that brought agriculture into the Uruguay Round of GATT, with its genocidal impacts on peasants and the poor.

December 15 is the deadline for restarting negotiations in Geneva and prior to that the G-21 countries that countered the U.S.-E.U. proposals on Agriculture with their own proposals in Cancun will be meeting in Brasilia to evolve their negotiating stand for the follow-up to Cancun. Meantime, a group of 33 countries are objecting that the W.T.O. is ignoring their demands to safeguard food security and rural livelihoods through Special Products and Special Safeguard Mechanism.

The need for a people's text on trade in agriculture

While food is the most basic need of people, and farming is a livelihood for three quarters of humanity, the future of food and farming is being shaped by undemocratically written agreements imposed on the people and governments of the world.

The Uruguay Round was based on the Dunkel Text written Arthur Dunkel, the Doha Round was reduced to the Harbinson text written by Stuart Harbinson, the post Cancun negotiations are being straight ¬¬¬¬¬¬jacketed¬ by the Derbez text which reproduces the U.S.-E.U. biases and avoids the key issues raised by the South which led to the collapse of negotiations at Cancun, including

Food sovereignty Agribusiness monopolies Export subsidies and dumping Special products, special safeguard mechanism and quantitative restrictions (QRs) to protect domestic producers from unfair dumping.

It is time to initiate a people's text that reflects the interests of poor peasants and poor countries.

It is time to go beyond texts dictated by rich countries and powerful corporations. It is time to rewrite the trade rules in agriculture on the basis of principles of food sovereignty, sustainability, farmers and justice, and protection of the environment and public health.

The process to reform the W.T.O. rules is in any case a mandatory part of the review of the Agreement on Agriculture -- Art 20 which the Third World countries had demanded to be addressed in Doha as part of the implementation agenda. This included assessing the impact of trade liberalisation on food security and farmers livelihoods and changing the rules of the Agreement on Agriculture accordingly. The Doha demand for evaluating the impact of free trade was ignored and the "Doha Round" became the opposite - pushing trade liberalisation further and faster on poor countries.

This one-sided globalisation, with rich countries forcing poor countries to remove import restrictions and lower tariffs progressively, while increasing their subsidies and hence increasing the levels of dumping which is annihilating the very lives and livelihoods of peasants, was the core reason for the breakdown of the W.T.O. Ministerial at Cancun.

What the Cancun collapse revealed was the need and right of poor countries to protect their farmers and food security. Yet this is precisely what is being ignored in the follow-up to Cancun. The Derbez text has totally ignored the call for flexibility for developing countries to designate Special Products which can be exempted from tariff reductions and special safeguard mechanisms to protect themselves against dumping.

This is why an alliance of 33 countries on agriculture has told the W.T.O. General Council Chairman, Carlos Perez del Castillo, that they are deeply concerned that the concepts of Special Products (SP) and Special Safeguard Mechanism (SSM) have not been given due attention during the consultations he has held on agriculture after the Cancun Ministerial.

The Indian Movement has been demanding a reintroduction of QRs given the unfair global market in agriculture which is costing Indian peasants more than $ 26 billion in terms of reduced incomes and hence increased poverty. More than 25,000 peasants have committed suicide under the unjust and brutal pressure of unfair prices and markets. The Korean farmer Lee's suicide in Cancun to highlight the fact that "WTO kills farmers" was not just symbolic. It reflected a tragic reality.

Rewriting the W.T.O. rules on Agriculture has therefore became an imperative to reflect the human rights of peasants to survival.

On a day dedicated for human rights let us just ignore human rights of a threatened community - the small and marginal farmers of the world..

It is necessary to rewrite the rules to also transcend the false polarity between the position on food sovereignty --"W.T.O. out of Agriculture" and the position that multilateral rules are needed to prevent the weak from the powerful, and the Third World peasants from the threat of dumping. The proposed agenda for reform archieves both -- retaining food sovereignty by deleting W.T.O. disciplines on domestic support for domestic production and consumption, while strengthening the capacity of countries to protect themselves from dumping.

2. Why trade rules for agriculture need rewriting

Food is not just a tradable commodity like cars and computers where it is produced how it is produced makes a different. Food is a vital need, a fundamental right, an embodiment of culture and nature. Agriculture is relatedly a multifunctional activity -- involving conservation of soil, water and biodiversity, providing livelihood to rural communities, the foundation of culture and cultural diversity, and the source of a vital and essential need. Rules for trade in agriculture cannot be based on the paradigm of trade liberalisation if rural livelihoods, the environment, public health and cultural diversity has to be protected.

The W.T.O. is supposed to regulate to ensure fairness in international trade. However, the Agreement on Agriculture of the W.T.O. is based to unfairness. It goes beyond the trade jurisdiction of W.T.O. and interferes in domestic policy through clauses on domestic support. Not only does this threaten and undermine farmers livelihoods, it undermines the distribution of powers at local, provincial and national level. Through rules on domestic support in agriculture, W.T.O. is blocking the sustainable agriculture and food security objectives, and is in violation of national constitutions under which agriculture is a sub-national subject. The decision making powers of local and regional governments are being usurped, thus subverting democracy.

The legitimate role and function of W.T.O. is to prevent unfair trading practices like dumping and monopoly control over markets. However, the current W.T.O. rules have facilitated increase n export subsidies leading to enhanced rates of dumping.

A recently released report from the International Agriculture and Trade Policy Institute has shown that in four major U.S. commodities, the level of dumping has increased since 1995 when the W.T.O. came into force, even though the proclaimed aim of W.T.O. is to "reduce distortions in trade". While the full cost of U.S. wheat in 2001 was $6.24/bushel, its export price is $3.5/bushel. In the case of soya bean, the cost was $6.98/bushel, the export price was $4.93/bushel. For maize, the full cost was $3.47/bushel, export price was $2.28/bushel and the export price was $0.3968/bushel, a dumping of 57%. The cost of production of rice was $18.66/bushel and it was sold internationally at bushel $14.55/bushel.

From 1995 to 2001 dumping jumped from 23% to 44% in the case of wheat, 9% to 29% in the case of soya beans, 11% to 33% in the case of maize, from 17% to 57% in the case of cotton.

While the W.T.O. Agreement on Agriculture claimed to achieve reduction of rich country subsidies, the $248.6 billion farm Bill of 2002 has increased farm subsidies by $83 billion. This dramatic increase threatens the livelihoods of Third World farmers. According to the World Bank, low cotton prices in U.S. resulting from high subsidies are costing African countries, $250 million each year.

The call of movements for food sovereignty as the framework and context for production and trade in agriculture demands that the rules on domestic support for domestic production in the current W.T.O. Agreement on Agriculture be deleted. This gives affect to the movement call for "W.T.O. out of agriculture".

The call of the G-22 for removing export subsidies demands that the rules on dumping be strengthened and in cases where countries continue to subsidize exports and artificially lower prices, other members have a right to restrict imports to protect themselves from dumping. This implies that QRs have to be brought back to deal with dumping.

QRs are also the only reliable means to protect "Special Products" and have Special Safeguard Mechanism (SSM) on which large numbers of agricultural producers depend and which the group of poorer countries are demanding.

QRs are a necessary instrument of fairness in a world dominated by unfairness of agribusiness monopolies and oligopolies.

The W.T.O is, therefore, doing what it should not be doing (interfering in domestic policy and domestic products) and is not doing what it should be doing (regulating and preventing dumping). The rules of W.T.O. on agriculture need to be changed to correct both flaws -- the flaw of inappropriate invasion into sovereign domestic space by imposing disciplines for domestic agricultural production which interferes in the objectives of sustainability and food security, and the flaw of failing to prevent unfair trade practices based on unfair, unjust and false prices leading to dumping.