Agriculture Talks At The WTO Empty On Development

Trade Information ProjectInstitute for Agriculture and Trade Policy, Geneva

Last week, the Agriculture Committee met in the WTO to see if the current deadlock on all aspects of the agreement on agriculture (AoA) can be bridged. After statements from various countries, it became obvious that the membership is still not even close to agreement on any aspect of the negotiations, including the formulae for tariff and domestic support reductions.

Most critically, it appears that two key development provisions fought for by developing countries are in danger. These are first, the exemption of food security and livelihood crops from further liberalization and second, the ability of developing countries to protect themselves against import surges through a special safeguard mechanism. Several developing countries, such as the Philippines, made hard-hitting statements that underline their frustrations as they are once again being targeted in the agriculture talks to reduce their tariffs. Developing countries are once again being put on the defensive to explain why these two key elements (crop exemption and special safeguards) are necessary. The US and developed country Cairns group members are demanding justification of these in private meetings, while the EU remains equally supportive of eliminating any provisions to exempt crops and to limit the usage of a special safeguard.

Developing countries have the right to such provisions on their own merit given the critical role of agriculture in their economies. But at a minimum, they need these provisions since neither the US nor the EU is willing to change any of the practices that continue to depress world market prices in agriculture-the practices that put crops on world markets at below cost of production prices. In practice, the current agreement on agriculture has served as special and differential treatment for developed countries. Similarly, developed country Cairns members have little to offer developing countries in return for their aggressive demands for access to southern markets. Instead of making drastic commitments to reduce domestic support that buffers their agribusiness industries and promotes dumping, the major powers are demanding further tariff liberalization from developing countries and dismissing necessary countervailing and protective measures to deal with dumped products from the North.

The Philippines addresses this inequity stating, 'Let me tell colleagues that if these negotiations is (sic) all robustly hinged on and are about proper economics, the elimination of those persisting trade distorting support and non-tariff barriers should be equally important targets of the reform program. Our agricultural sectors that are strategic to food and livelihood security and rural employment have already been destabilized as our development program initiatives are frustrated by the gross unfairness of the international trading environment. Even as I speak, our small producers are being slaughtered in our own markets, even the more resilient and efficient are in distress.'

They ask that as long as countries continue to distort the world market by consistently depressing world market prices, developing countries should have recourse to protection because so much of their economies depend on agriculture. However, in talking with delegations, it has become obvious that the US is completely opposed to any crop exemption, while the European Union is encouraging countries to keep the current tariff reduction formula (this would allow the EU to continue protecting its own markets) as a substitute for crop exemption. They are trying to convince countries that the current formula will allow countries to maintain high tariffs in certain crops and offer the flexibilities developing countries need for their livelihood concerns. However, this argument ignores the basic reality that trade liberalization and disciplines enforced by the AoA have severely restricted space for sound agriculture policy in the South and that governments are finding that certain sectors should not be subject to AoA disciplines. In fact, many farmers around the world are asking why agriculture should be subject to WTO disciplines at all. Clearly, many developing countries cannot afford to reduce further their tariffs after the Uruguay Round since they already have low bound tariffs. Some even want to raise them.

With regards to the special safeguard, to link protection against import surges to further tariff reductions of developing countries is patently absurd. The US and the EU themselves have been using the special safeguard to protect their own crops that have high tariffs, yet now they want to limit the use of a mechanism for developing countries and even question whether it should be put in place in the first place. Special Safeguards are meant to deal with emergency temporary situations where countries can protect their domestic economies against sharp drops in world prices and prevent import surges from wiping out domestic producers. To deny this right to developing countries or to link this right to further tariff liberalization is to ignore the reality of the agricultural sector in developing countries and the structural problems of the world market. It is actually a gross injustice that continues to be institutionalized by the WTO.

A Chair Driven Process Further Sidelines Weaker Members

Unfortunately, the process of the talks in the months leading up to Cancun is not conducive to real change and is extremely non-transparent. Chair Stuart Harbinson has produced a draft report on agriculture for the Trade Negotiating Committee (TNC). It outlines the areas where there are still disagreements and where certain progress could be made. However, the report is his own assessment of the progress to date and it met with opposition when it was discussed on June 27th. It also opens the door to sideline the two key development issues mentioned above. Furthermore, it adds issues that have not been substantively debated by the membership for Cancun such as whether to renew the peace clause.

Traditionally, international fora negotiate on texts that are discussed and debated by members themselves and it is members who propose the areas of agreement and where problems still exist. The WTO is deviating from this norm by allowing chairs tremendous powers to put forward texts based on their own interpretation. It is likely that by mid July and subsequently, Harbinson will revise this report (once again 'on his own responsibility') and that version will be the basis for ministerial decisions in Cancun. As we speak, Harbinson's report and others from other WTO bodies are being 'harmonized' with the help of the WTO secretariat to put together a draft package for Trade Ministers for the Cancun Ministerial. Members will perhaps have time to comment on the language in this package for ministers at the TNC meeting July 14-15 and on July 24th at the final General Council meeting that is scheduled before Cancun.

However, it is unclear how their comments will be taken into account by a Chair's text, especially since the current consultations are informal and thus undocumented. Chairs are also conducting consultations with a small number of countries. It is often not known how many consultations are being conducted and with which countries. It is likely that the Chair will then formulate draft language for a 'communiqu