02 August, 2003
probably the last officially organized public symposium in Geneva (June
16-18) before the forthcoming WTO Ministerial at Cancun in early September,
the writing is clearly on the wall: agriculture has for all practically
purposes been abandoned in the ongoing multilateral negotiations.
And with this cleverly
manipulated turnaround, ends the final hope for billions of small and
marginal farmers in the developing world who were initially promised
the stars when the WTO was formally launched on January 1, 1995. Eight
years later, their dreams have been completely shattered. Swamped by
a surge in food imports, and with their respective governments agreeing
to further lower the tariffs, it is only a matter of time before the
collapse of agriculture in the developing world triggers massive displacements
from the rural areas.
The big boys have
done it again. After Doha, where the United States, European Union and
the Cairns Group of grain exporting countries, managed to stage a coup
of sorts by committing nothing more by way of reduction in their mammoth
agricultural subsidies, the focus of the ongoing negotiations has been
very conveniently shifted to market access and its modalities. Except
for a regular mock drill of a tit-for-tat over subsidies
and domestic protection that is staged so eloquently by the EU and the
Cairns group, the underlying emphasis remains on force opening the developing
countries to provide increased market access.
At Geneva too, Mark
Vaile, Minister of Trade for Australia (part of the Cairns Group), and
Ambassador Luzius Wasescha of Switzerland (keen to protect subsidies)
did regale the audience with scathing charges and counter-charges. Trading
charges in open forums is surely meant for the public galleries, the
hidden agenda for both the blocks being to protect their highly subsidized
(and protected) agriculture. The public postures notwithstanding, the
US/EU have a history of arriving at a compromise to protect their economic
interests, and every other country is then made to fall in line. But
what has become more significant during the post-Doha phase is the co-option
of the developing countries as well as the civil society groups in the
process of hijacking the Agreement on Agriculture (AoA).
The AoA hinged precariously
on eliminating agriculture subsidies as a basic step in getting the
fiscal house in order. Knowing well that any reduction in subsidies
would be politically suicidal, the developed countries managed to not
only maintain the level of subsidies but in fact succeeded in increasing
it manifold. At the same time, they continue to arm-twist the developing
countries to reduce tariffs and open up markets for farm goods from
the industrialized countries. Shifting the focus to increased market
access or what some negotiators call as over-ambition on
market liberalization became the rallying point. Agricultural subsidies
have been simply pushed back to the backburner.
An indication to
this clever shift in negotiations was time and again provided by the
US Secretary of Agriculture, Ann Veneman: Some developing countries
argue that they shouldn't have to open up markets until the developed
countries first make domestic support reductions. This is a formula
for failure. Echoing the same brand of hypocrisy, the World Bank
Chief Economist Nicholas Stern, while traveling through India, denounced
subsidies paid by rich countries to their farmers as "sin ...on
a very big scale" but warned India against any attempts to resist
opening its markets. Developing countries must remove their trade
barriers regardless of what is happening in the developed countries.
The only way to
escape reduction commitments was to shift the focus entirely on to market
access, special safeguard mechanisms, tariff rate quotas, and strategic
products. Stuart Harbinson, chair of the agricultural negotiations,
presented his first draft of possible modalities for the agriculture
negotiations on February 12, 2003. This was the culmination of the post-Doha
negotiations and the paper reflected a compromise formula based on the
conflicting positions of the governments. A second draft was released
on March 18, just before the self-imposed deadline of agreeing to new
modalities by March 31, 2003. Harbinson actually has no mandate to present
such drafts in his own individual capacity. But he did,
and no country objected.
of such drafts, and still worse the numerous proposals being put forward
by the chairman of the councils, has in reality marginalized the developing
countries ability to negotiate and exert pressure. Such has been the
bureaucratization of the negotiating process that real power has clearly
shifted to the narrow corridors of the Centre William Rappard (housing
the WTO) in Geneva. Trade experts, who have little idea about the ground
realities in the developing countries, their only brush with subsistence
farming being through the television snippets, are busy framing formulas
and proposals that they think would help farmers in the majority world.
The Harbinson drafts
(including the revised Harbinson 2) nevertheless were largely
welcomed by a majority of the western NGOs. Equally worse, the developing
countries dominant group in WTO agricultural negotiations, better known
as Like-Minded Group (includes India, Pakistan, Nigeria, Kenya, Uganda
and Zimbabwe besides others), actually celebrated the Harbinson
draft 1 as a small victory for the coalition of developing
countries that have fought hard for resisting further opening up their
domestic markets. In reality, the Harbinson drafts are nothing more
than the proverbial bikini protecting more than what it reveals.
It created three
bands for reduction in higher tariffs that would enable more and easy
market access. For the developed countries, tariffs higher than 90 per
cent would be reduced by an average of 60 per cent, with a minimum of
45 per cent cut per tariff line. Tariffs between 15 and 90 per cent
would be cut by 50 per cent, with a minimum of 35 per cent cut. Tariffs
lower than that would be reduced by 40 per cent, with a minimum cut
of 25 per cent. At the same time, it called for a 60 per cent reduction
in domestic support in amber box in the next five years. The draft proposed
the elimination of export subsidies over a period of ten years.
In other words,
Stuart Harbinson had very cleverly proposed a formula that actually
aims at seducing the developing countries with the promise of an increased
market access into the rich industrialized countries. In addition, he
provided another lollipop to the developing countries the option
to classify a number of strategic products with respect
to food security, rural development and/or livelihood security concerns.
Unfortunately, the developing countries were trapped by the discussions
around the new special safeguard mechanism that he had proposed, without
realizing that this new safeguard mechanism does not first remove the
special safeguards provisions under Article 5 of the AoA,
which is a privilege enjoyed by only 21 developed countries, including
the United States.
The concept of strategic
products is merely a proxy for the development box,
a proposal that will eventually turn out to be more damming if implemented.
More and more countries have lately understood the dangers of supporting
the development box and have by and large backed out. The
strategic product concept, therefore, is equally harmful
for the developing countries. It does not realize that production of
crops and its imports into developing countries cannot be equated with
industrial production. This is a mistake, which was earlier committed
also by some Indian macro-economists, when they computed agriculture
trade in the same manner as they would do to scooter manufacture or
bicycle production capacity of the industrial units. The much-hyped
big-bang theory that came up as a result failed, and is
no longer talked about.
did propose minor tinkering in the composition of subsidies in blue
box and amber box, it is nothing significant to rejoice. Such rope tricks
have earlier been performed, and will continue to be performed so as
to hoodwink the developing countries to believe that the rich countries
are moving in the right direction. We are aware that the the European
Union in 1995-96, had provided US$ 48 billion under amber-box
subsidies and another US $ 40 billion under blue and green
box subsidies. In 2002, it shifted and juggled the figures to
provide US $34 billion in amber box and US $ 52 billion
as blue and green box subsidies. The net subsidy
level however did not show any significant shift, and in fact remained
almost at the same levels: US $88 billion moving to $86 billion.
On the other hand,
Cairns group has vociferously campaigned for the elimination of food
subsidies and for increased market access. They claim that they do not
provide any agricultural subsidy and still trade at competitive prices
because of high efficiency. At the same time, the two major pushers
of the Cairns group approach Australia and New Zealand
do not talk about the subsidies being granted by way of market promotion
and still worse the massive subsidy that goes towards freight and transportation.
Further, these countries have practically blocked developing country
imports under the stringent norms of sanitary and phytosanitary measures
(often more tougher than what is prescribed by Codex Alimentarius).
In reality, the
talk of high quality of farm produce is only for academic purposes and
trade negotiations. The fact remains that Australia and New Zealand
have dumped sub-standard agriculture produce on developing countries,
including India. Australia had exported one million tonne of wheat to
India in 1996, which was nothing but cattle feed. New Zealand continues
to export poor quality butter oil to India. The quality of apples (and
other fruits) that comes in from New Zealand and Australia too is very
low. Wheat and soya from Argentina has been tested to be sub-standard
a number of times. It is simply because of the inability of the developing
countries to have adequate monitoring facilities for checking quality
of food imports that the claims of these countries remain unchallenged.
Regardless of the
commitments being reached at the WTO negotiations, the US merrily goes
on flouting these under one pretext or the other. The world is expected
to behave like an Ostrich when it comes to the WTO violations from the
worlds only super cop. Whether it is the additional federal support
of US $ 180 billion for the next 10 years that has been promised for
American farmers, or the grant of US $ 110 million for export promotion
that has recently been announced, the WTO seems helpless. Who
can tell the United States? is what a senior WTO official at Geneva
replied when confronted with the inequalities in the trading system
that are being perpetuated.
It is very clear
that the US and the European Union (along with Japan, Switzerland and
South Korea) are not going to phase-out, what to talk of eliminating,
agriculture subsidies. Harbinsons proposal for elimination of
export subsidies (not all subsidies) over the next ten years is therefore
no sop to the developing countries. What is not being understood is
that it is not only export subsidies that distort trade, all kinds of
domestic support whether it is de-coupled income support or credit for
insurance and the support for export promotion are equally damaging.
These subsidies insulate the rich country farmers from the volatility
of the global markets thereby throwing a strong protecting ring.
farmers are therefore being very conveniently led to a slaughter house.
As long as the farm subsidies in the rich countries remain, no amount
of safeguards can protect the developing countries from highly subsidized
imports and the resulting impact on the livelihood security of the farmers
would be catastrophic. For the developing countries, the need of the
hour is not to be lured by diversion tactics that the rich and industrialized
are specialists in. The focus has to be brought back to the elimination
of agriculture subsidies as a pre-requist to further negotiations. The
modalities that developing countries need to ensure are:
Developing countries must strive for the elimination of all agricultural
subsidies. Subsidies under all boxes green box, amber box and
blue box need to be first abolished before any more commitments
are made. Agriculture negotiations should only be confined to the timeframe
under which these subsidies can be removed. Peace Clause
that allows the European Union the privilege to increase subsidies,
needs to be culminated when it ends in Dec 2003. Along with farm subsidies,
the monumental subsidies provided for freight also need to be disciplined.
Market Access: No
further concession on market access till the subsidy issue is resolved.
The new special safeguard mechanisms, including the denomination of
strategic products, need to be debunked. Strategic products
do not protect the socio-economic interests of the developing nations.
Peas, for instance, is not a strategic product for Indias food
security. But its import has increases four times in the past four years.
In fact, the import of fruits has vegetables into the country, which
is the biggest producer of fruits and vegetables in world, has increased
two-fold in the past one year. While it may be practically difficult
to classify each of these crops as strategic, the cumulative
impact of imports is leading to a serious crisis.
(QRs): Developing countries need to be allowed the same provisions of
the special safeguard mechanism that protects agriculture in 21 rich
countries from import surges. In addition, developing countries should
have the right to re-impose quantitative restrictions that in reality
are the only measures that protect food security and the livelihoods
of millions of small farmers.
Against Hunger: Among the new issues to be introduced at Cancun, the
developing countries need to strive for the inclusion of a Multilateral
Agreement Against Hunger. This should be based on the guiding principle
of the right to food and should form the basis for all future negotiations.
Such a multilateral agreement would ensure that countries will have
the right to take adequate safeguard measures if their commitment towards
the WTO obligations leads to more hunger and poverty.
is a New Delhi-based food trade policy analyst. Email: email@example.com;