Agriculture: Shadow-boxing for 2000?

With further WTO negotiations on agriculture scheduled for 2000, recent discussions at the Committee on Agriculture have highlighted the problems facing the Least Developed Countries and the Net Food-Importing Developing Countries, including a decline in food aid. In the area of non-trade agricultural concerns, industrial and developing countries differed in their respective perspectives, with the latter emphasizing the importance of food security and rural employment.

by Chakravarthi Raghavan

GENEVA: Issues relating to the monitoring of the Marrakesh and Singapore decisions on the impact of the agriculture reform programme on the Least Developed Countries (LDCs) and Net Food- Importing Developing Countries (NFIDCs) as well as non-trade food security concerns were addressed in the second week of November at the World Trade Organization's Committee on Agriculture.

The Committee is engaged in an exercise of "notification and review of related issues" - an euphemism for pre-negotiation talks for taking up the continuation of the agricultural "reform process" in the year 2000.

Mandated negotiations

Under Art. 20 of the Uruguay Round Agreement on Agriculture (AOA), Members have agreed to initiate one year before the end of the implementation period (six years from 1 January 1995), that is, in the year 2000, negotiations for the continuation of the reform process.

This is to be done taking into account:

(a) the experience to date of the implementation of the reduction commitments;
(b) effects of the reduction commitments on world trade in agriculture;
(c) non-trade concerns, special and differential treatment to developing-country Members, the objective to establish a fair and market-oriented agricultural trading system, and the other objectives and concerns mentioned in the preamble to the agreement; and
(d) what further commitments are necessary to achieve the abovementioned long-term objectives.

This mandate in agriculture was reiterated in the Geneva Ministerial meeting this May and is a specific item on the work programme - though the term "agriculture" itself is not mentioned.

The EC has said that it stood by this commitment, but after the Geneva Ministerial, one of its officials was also quoted in the press as saying that the EC is committed only to taking up further negotiations in 2000, but not to complete them within any time frame!

The EC has also been arguing with negotiators here (in pushing for a big "Millennium Round" to include new issues of investment, competition policy and so on) that it would need some concessions on these new issues in order to make the promised concessions in agriculture and elsewhere.

While the Cairns Group of agricultural exporting countries have been willing to have a new round embracing such new themes, other developing countries have been insisting that they have already paid a price in the Uruguay Round to establish the balance (which in fact, they note, is imbalanced) and that the various further liberalization measures including on agriculture are part of that balance. Hence, they need not and will not pay a "new price" for implementation by the EC or the US and others of commitments already made.

The work in the Agriculture Committee to prepare for the negotiations in 2000 is in this context, though the EC has insisted it should not even be called preparations for negotiations.

And the secretariat of the WTO, which is "sensitive" to the major concerns of the major entities, has been very reticent in briefing the media and others on the Agriculture Committee issues.

The ongoing process in the Committee - with informal meetings and discussions, without any records or minutes, but with some conclusions reported by the chairman to formal meetings on his own authority - is one of the very opaque and non-transparent activities of the WTO.

The process set in motion after Singapore, at the insistence of the Cairns Group, has been described by some participants and observers as a preparatory "shadow-boxing" game, where the different countries and groups probe each other's positions and intentions - before the mandated further talks on continuing the agricultural reforms agreed in the AOA.

Uruguay Round experience

Much of the agricultural talks and negotiations during the Uruguay Round became one of negotiations and discussions between the US and the Cairns Group on the one side, and the EC (whose protectionist measures of domestic support, export subsidy and import restrictions under the Common Agricultural Policy have been the main target), other European countries, Japan and South Korea - which have been similarly following policies shielding their domestic sectors from external competition but which have not engaged too much in subsidizing exports - on the other.

Most of the developing countries during the round spoke of ending the GATT situation where agriculture was an exception to the trade rules, and generally repeated the need for agricultural liberalization.

But they were essentially bystanders. The final agreement was one forged by the US and the EC, with the US obtaining some concessions from the EC, Japan and South Korea, to provide some benefits for its most ardent supporters inside the Cairns Group.

While initial analysis by the then GATT Secretariat, and by the OECD and the World Bank, made some extravagant claims of trade and welfare benefits, subsequent objective analyses have shown that apart from exporters of some temperate-zone products among the Cairns Group, most developing countries have gained little, and that in some respects the rules and disciplines are likely to make agricultural development and the eradication of poverty and hunger more difficult.

Writings and analyses of non-governmental organizations and experts like Kevin Watkins and others, and of trade specialists like Bhagirath Lal Das,have brought out the issues involved and the inequities of the current agreement.

Some of these have begun to surface in the current work of the Agriculture Committee as well as in the WTO preparatory process for the 3rd Ministerial meeting in 1999 in the US.

In this Agriculture Committee meeting, the problems and difficulties were raised by several of the delegations, but the actual proposals or ideas they may have for remedying their difficulties may surface only in the preparatory process, some trade officials say.

The issue of implementation of the Marrakesh and Singapore Ministerial decisions favouring the LDCs and NFIDCs, and the non-trade issues including special and differential treatment to developing countries and other objectives set out in the preamble of the AOA, but without any operative provisions in the rules, have figured in the Committee discussions, some participants said.

Decline in food aid

In the discussions on the problems relating to the Marrakesh decisions on LDCs and NFIDCs, a secretariat note has brought out that the volume of food aid declined by one-half between 1987 and 1997. Food aid shipments declined over the period from 12.7 million tonnes in 1987 to 5.43 million tonnes in 1997. The secretariat paper does not give any reasons for this.

Among others, the US spoke about the difficulties in getting a new Food Aid Convention (to replace the current one due to end on 30 June 1999) negotiated, while Norway spoke of the need to tackle this and address the decline in aid. Egypt expressed its alarm over the decline in food aid. Other problems raised included the issue of export credits, and the role of the multilateral financial institutions and their not having done enough to provide help to the NFIDCs.

The multilateral financial institutions have been explaining away their positions by saying that there were no increased import costs that could be attributed to the rise in food prices due to the reform process!

The UN Food and Agriculture Organization (FAO) has explained that at the moment food prices were lower, except for rice, and this was one of the reasons for the decline in food aid. But the FAO has projected an increase in prices in 1998-99.

On the issues relating to non-trade concerns and other issues - set out in Art.20 (c) - adverted to in the preamble of the agreement, participants said that the substantive discussions on these will continue at the next meeting (scheduled for March 1999).

Some points of agreement on some of these issues have emerged. Firstly, everyone recognized the importance of these issues. Secondly, the objectives mentioned in the preamble have not been dealt with by rules and provisions of the agreement. Thirdly, there was near unanimity that non-trade concerns should not be used to take steps and measures inconsistent with the WTO rules.

But this general agreement or consensus did not extend to how these issues could be tackled.

Differing perspectives

The perspectives of industrial and developing countries on what are "non-trade" concerns in agriculture themselves differ.

Industrial countries speak of these in terms of measures for preserving the rural landscape, the environment, biodiversity and so on. The EC uses this term to refer to the "quality" of food.

For most of the developing countries, except for the Cairns Group members, non-trade concerns involve issues of food security and rural employment, given that agriculture is the largest sector of rural employment. They do not accept the US or Cairns Group views that freeing the markets would enable imports that would give food security.

If a country does not have the foreign exchange or resources to buy and import food, or if the rural people have no employment or earnings to pay for food and these needs, there is neither security nor any prospect of ending poverty, hunger and underdevelopment.

In the discussions, the LDCs and the NFIDCs were anxious that their special positions recognized by the Marrakesh decisions not be diluted or undercut.

Development issues of the 60s, 70s and early 80s in this area that have been brushed aside in the neo-liberal dogma of the "Washington Consensus" and the GATT/WTO trade theorists are thus resurfacing.

And several analysts, in looking at individual agreements, including agriculture, have brought out that the promises of "Special and Differential" (S&D) treatment favouring developing countries have become "Special and Discriminatory" treatment against developing countries.

India at this meeting presented a paper on "Food Security - An Important Non-Trade Concern". A number of other developing countries, including South Africa and Mauritius, as well as some developed countries like the EC, Japan and South Korea, made preliminary comments supporting this viewpoint. A more detailed consideration is expected at the next session of the Committee in March 1999. (Third World Economics No. 199, 16-31 December 1998)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.