WTO: Agreement on Agriculture

-- Srilata Swaminathan

It should come as no surprise that that the lead up to the Cancun Ministerial meeting in September of this year is going the same way that all previous WTO meetings have. The developed countries continue to utilise WTO as a means to maintain and further their stranglehold over the global economy. Nowhere are the intentions of the developed countries spelt out as clearly as in the new text on modalities for the Agreement on Agriculture (AoA) by Stuart Harbinson, the Chairperson of the Special Session of the Committee on Agriculture. Finalisation of the modalities is an important step as it will be the basis of the AoA and what gets left out cannot be added later. So, it becomes very important that developing countries make sure that their needs are addressed.

Cost of Production
Export Price
1. Wheat $ 6.24 per bushel $ 3.50 per bushel
2. Soya Bean $ 6.96 per bushel $ 4.93 per bushel
3. Maize $ 3.47 per bushel $ 2.28 per bushel
4. Cotton $ 0.93 per bushel $ 0.39 per bushel
5. Rice $18.66 per bushel $14.55 per bushel

Harbinson’s text came out mid-February and already many developing countries and international organisations are up in arms against it. Firstly, Harbinson’s draft addresses only those issues that were in the Uruguay Round such as (i) tariffs (ii) domestic support and (iii) export subsidy; it does not attempt to go beyond that. It takes no cognisance of those issues that are priorities for the developing countries and so the underlying inequalities in the structure of agricultural trade rules remain unchanged. It is precisely these inequalities that are the main reason that farmers in the third world are facing hardships and also the reason that unsustainable methods of agriculture continue to be encouraged in developing countries.

Dumping in 1995
Dumping in 2001
1. Wheat
2. Soya Bean
3. Maize
4. Cotton

Even though the text tries to give some concessions to developing countries such as concepts like ‘strategic products’ for food security, the protection of small farm families and for rural development, it remains extremely superficial and ineffectual on these fronts. In fact, the text actually enhances the distortions, imbalances and handicaps faced by poor nations.
The text brazenly continues not only to defend but even legalise the subsidies being given by the Developed countries to their farmers and allows them to continue, in one form or another. All the domestic supports given to their farmers under ‘green box’ and ‘blue box’ subsidies will continue, some will be phased out in five years, others in nine years and some will go on indefinitely! These are subsidies that are, supposedly, not trade distorting and cover a wide range of domestic support to farmers such as giving farmers specialised training, environment and soil protection, payments to farmers to leave land unploughed etc. etc. But this is a fallacy as these domestic supports definitely are trade distorting. Combined with export subsidies farmers in the Developed countries are able to export their produce well below the actual cost of production and hence undercut the world market prices in their own favour. The text thinks it is being equitable by allowing developing countries to have the same subsidies but in its magnanimity it forgets that developing countries do not have the means to give them to their farmers. While in the US these subsidies are only 2-3% of their GDP, in India or any other third world country the same subsidies to their farmers would be more that 50% of their GDP!
Furthermore, the text allows the Developed countries to use high export subsidies to boost up the export of their agriculture products. The OECD countries give a whopping $400 billion in annual subsidies to their farmers. Contrary to the claims of the WTO, which maintains that the Developed countries have reduced agricultural subsidies, we see that the US Farm Bill for 2002 shows an increase of $83 billion! African countries are facing a loss of $250 million each year due to the subsidised export rates in the US. The table below shows the extent of US export subsidies to their farmers so that they are able to export their produce well below the actual cost of production without suffering any loss in five major crops in the year 2001.
One of the greatest concerns of developing countries is the subject of dumping by the Developed countries. Dumping of exports is a major way in which our farmers are being hit, are unable to sell their produce, are being forced to cut back in cultivation etc. The only effective way for countries like India to put an end to dumping is through Quantitative Restrictions (QRs), which are more effective than raising tariffs. But countries like India have been forced to remove all QRs so that Developed countries can have unfettered access to their markets. While one of the prime objectives of the WTO is to end practices like dumping, what we are actually seeing is the exact opposite, as the table below shows:
Harbinson reiterates article 4.2 of the AoA text in wanting all developing countries to stop using QRs or tariffs to counter dumping! Developing countries must see that this article is dropped, that all domestic support and export subsidies in developed countries are eliminated as soon as possible and until this happens they, the developing countries, should have the right to continue with QRs.
A further example of how the rich are favoured over the poor is in the provision for Special Safeguards (SSG), which is a provision whereby a country can take action to protect its farmers against surges of import and fall of prices, and these are available only for the developed countries. While most of the developing countries, which have overriding need for SSG, are denied this provision, developed countries can use these provisions for another 5-7 years! Thus the developed countries that distorted trade by applying non-tariff measures earlier and converted them to equivalent tariffs in the Uruguay Round continue to get the benefit of the SSG, while the developing countries that did not apply such trade distorting measures earlier and thus did not have the necessity of conversion of such measures to tariffs will continue to be denied the use of SSG.
The delegates from many countries, Brazil, Barbados, the Philippines and India made clear their unhappiness and disappointment with Harbinson’s text. However, many critics feel that what is needed is a totally new text that will firmly address the inequalities and distortions in the AoA.
On 13 March the Indian People’s Campaign Against WTO held a convention in Delhi outlining the problems of third world countries in the Cancun Meetings to be held from 10-14 September where the rich nations want to push through the ‘new issues’ such as investment. Competition, policy, government Procurement and trade facilitation which will further their imperialist agenda. It was decided that in Delhi a massive rally would be held on 26 August against the Cancun ministerial meeting of WTO. All over the world public opinion is being created and people are being prepared, educated and mobilised to derail the Cancun Meeting.

‘NGOs call for Rejection of WTO Agriculture Modalities Paper’ by Goh Chien Yen,
Third World Network Report.
AgBioIndia bulletins of the Forum for Biotechnology & Food Security.
WTO & Agriculture, The Cancun Series No.1 – RFSTE/Navdanya.
WTO Virodhi Bharitiya Jan Abhiyan’s Press Release: 13.3.’03.