Agriculture talks about talks

by Chakravarthi Raghavan

Geneva, 25 June -- Non-trade concerns of developing countries in Agriculture, issues of Special Safeguards, tariff and non-tariff barriers impeding exports of developing countries and the future of the "peace clause" in the Agreement on Agriculture, were some of the questions that were discussed at this week's informal meeting of the Agriculture Committee.

The discussions, under the Analysis and Information Exchange (AIE) mandate agreed to at the Singapore Ministerial Conference, is aimed at preparing the ground for further negotiations to continue the reform process in the agricultural sector.

In terms of Art.20 of the Agreement on Agriculture, such negotiations are to be initiated before end of 1999. The informal AIE process which began in 1997, was agreed to at Singapore as a compromise between the position of the Cairns group members, in particular Argentina, which wanted initiation of negotiations and the EU which insisted this was only due by end 1999.

The Agriculture Committee is to hold a final meeting for AIE in September, with the Committee thereafter focusing on the Seattle Ministerial Conference, beginning 30 November, and actual negotiations thereafter.

The discussions and exchange of views show three or four approaches that are emerging - in contrast to the Uruguay Round where it was largely a Cairns group and US pushing for "liberalisation", Europe and Japan trying to preserve their agricultural protection, and most developing countries paying obeisance to "liberalisation", but could not influence the negotiations. Some larger developing countries did raise some of these issues, but beyond some promises of special and differential (S&D) treatment, the negotiations hardly took account of their problems.

Towards the end, the problems of "net food importing countries", figured and were the subject of a ministerial decision at Marrakesh, but these countries were fobbed off with references to help from the World Bank and the IMF.

This time around, judged by initial positions in the analysis and information exchange process, some of the developing countries are raising both questions of market access as well as those relating to their domestic agricultural development, in the context of subsistence farming and large masses of people employed in that sector.

In terms of Art 20, the negotiations for continuing the reform process is to take account, among others "non-trade concerns, special and differential treatment to developing country Members..." Also to be taken into account are the objective of establishing a fair and market-oriented agricultural trading system and other objectives set out in the preamble of the agreement -- which under "non-trade concerns" mentions food security and need to protect the environment.

The need to protect the environment by enabling farmers to be on land has been used by the EU and others to justify support to their farmers, and has been referred in their papers as the "multi-functionality" of agriculture.

But Mauritius has brought up the "multi-functionality" issue to focus on problems of countries with a single-crop economy (for e.g. sugar cane in Mauritius) and the special problems of agriculture in these countries.

In the discussions in the informal exchange process, trade diplomats said the Mauritius position about "multi-functionality" and problems of single-crop economy countries received support from some Caribbean countries. Also, the EU, Japan, Norway and South Korea -- economies that heavily protect their domestic agriculture -- gave fulsome support, seeing the use of "multi- functionality" as supporting their own view of it.

The Cairns group and the US spoke of their sympathy for the concerns of Mauritius, but argued that the special provisions relating to "non-distorting domestic subsidies" -- included in the socalled 'green-box' under the Agreement that cannot be challenged in disputes -- should suffice, and that 'small developing countries' could be given special treatment.

But Third World agriculture experts have said the "green box" itself would need to be very much expanded for developing countries -- since their fiscal positions (including under IMF/World Bank structural adjustment programs) limit their ability to fund or provide income supports not related to production or trade.

Argentina, among the Cairns Group members, suggested that Mauritius and those having a similar position should take care against joining the same camp as the highly-protectionist and heavily-subsidizing industrial countries. It was the heavy protection and domestic support that had enabled EU to become a major sugar exporter, competing with Mauritius and undermining food security of LDCs by depressing prices and forcing them to depend on imports.

The support of EU and others to the "multi-functionality" approach of Mauritius was seen by the Cairns group as an attempt to defend their own positions by bringing some of the concerns of developing countries.

India has raised the issue of agricultural development, and "food security" in terms of large masses of people (600 million in India) dependent on agriculture, for whom food security involves both agricultural production on subsistence farms and wage-income from agriculture and related activities to be able to buy food.

But the approach of India and a few other major developing countries has been to steer away from use of "concepts" similar to those of the EU and other agricultural protectionist countries, but present them as the "non-trade" concerns of developing countries.

India and others have underlined the need to get away from the entire debate based on the strongly held views and positions of the Cairns group and US as agricultural exporters and of Europe and others, but focus on the specific "non-trade" concerns of developing countries, with a large agrarian economy.

The concept of "multi-functionality" could be applied not only to agriculture, but industry too, India argued and said the focus should be on concerns and problems of countries like Mauritius and others in a similar position or India and other developing countries.

India expressed doubts whether the present "green-box" approach covered the problems faced by the developing countries.

Malaysia and the Philippines among others supported this, and a number of them suggested the problems could be addressed through clearer and more operational provisions for S&D treatment.

On market access and "special safeguards" (SSG) in agriculture, El Salvador, Honduras, Cuba, Nicaragua, the Dominican Republic and Pakistan have presented a paper on the problems of developing countries in accessing the markets of developed countries.

The SSG provisions in agriculture (Art.5), enable countries that have converted their various agricultural protection measures into ordinary customs duties (the socalled 'tariffication' exercise), and designated in their schedules with the symbol "SSG" as being the subject of a concession in respect of which the special provisions could be invoked.

By invoking the provision, an importing country eligible to use SSG can apply discriminatory protectionist measures against imports from a particular country (and not imports from all sources as the GATT MFN would require), and without having to show any "serious injury" test as in the safeguards action provisions of GATT.

The only conditions to be satisfied for SSG are either import volumes of a product in any year exceeds the "trigger level" stipulated in the concession, or the C.I.F. import price expressed in the domestic currency of importing country falls below the average reference price (1986 to 1988) -- in effect protecting the agricultural import against currency fluctuations (and/or devaluation of the currency of the export country) that make the imports more competitive. According to the schedules filed in agriculture, some 38 members have notified their intention and right to invoke the SSG provisions, and many of them have invoked the provisions based on price movements, even if there had been no imports, arguing that nevertheless their farmers need to be protected against price falls.

A New Zealand paper before the group has pointed to the major shortcomings of the provision. There was something basically wrong when such provisions could be invoked even if the prior imports were zero. Also, the prices used to invoke them were not "transparent"

Discussions showed a split among the countries that wanted to continue SSG (like EU, Japan, South Korea and Poland) and others (the US and Cairns Group) arguing that normal safeguard provisions of GATT should suffice and there was no need for continuing these transition or special exceptions.

India and others said that these SSG provisions were put in, whether viewed as transition or special safeguards, on the basis that the reform and liberalisation was in uncharted territory and there was need for some safeguard.

But as the provisions stood it could be invoked only by the developed countries concerned, whereas a number of developing countries would face similar problems of a sudden surge in imports as they liberalised their external trade. There was a need to address these concerns and introduce some equity into the SSG provisions.

The paper by Pakistan, El Salvador, Honduras and others has focused on the high tariffs on the socalled "sensitive products" that face their exports, the tariff escalation in the developed countries, and the way the Sanitary and Phyto-Sanitary (SPS) regulations are used and misused to keep exports from the developing world. The paper also focuses on the problems faced by the developing countries in terms of marketing infrastructure.

The position was supported by US, Cairns Group and other developing countries. Japan argued that the tariffs and quotas in this sector were the result of negotiated concessions on a range of issues and the balance had to be maintained. The EC also took a similar stance.

The socalled "peace clause" in agriculture provides that the negotiated commitments like those on export subsidies, could not be challenged in disputes under other provisions of the WTO agreements.

This provision, in Art. 13 of the Agriculture Agreement is due to expire on 31 December 2003.

The EU has suggested that the period should be extended, and this has the support of countries like South Korea.

The Cairns Group and the US are opposed to any extension. There is either an outright objection or like Australia and New Zealand willing to consider extension subject to substantial cuts in subsidies.

Some others like Argentina and the Dominican Republic have indicated they may agree to extension in return for extension of the period or moratorium on "non-violation" complaints under TRIPS.

A non-violation complaint in GATT is the provision (Art. XXIII.1.b) that enables a complaining members to raise a dispute on the basis that its "expected legitimate trade benefits" have been impaired by the application by the other member of any measure, whether or not in conflict with a provision of the Agreement, or the existing of any other situation (Art XXIII.1.c:)

These two provisions are not to apply for disputes under TRIPS for five years from 1 Jan 1995, and the TRIPS Council has been asked to review the scope and modalities for such disputes, and make recommendations to the Ministerial Conference (where adoption is to be specifically by consensus).

In the discussions in the TRIPS Council the EU, as also the US, are opposing any extension.

The next meeting of the Committee is set for September, and by then, a secretariat study (of over 600 pp) about the tariffs faced by developing countries on their exports is expected to be readied and made available. (SUNS4464)

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

[c] 1999, SUNS - All rights reserved. May not be reproduced, reprinted or posted to any system or service without specific permission from SUNS. This limitation includes incorporation into a database, distribution via Usenet News, bulletin board systems, mailing lists, print media or broadcast. For information about reproduction or multi-user subscriptions please contact < >