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AGRICULTURE: NEGOTIATING WITHOUT COMPARABLE DATA?

by Chakravarthi Raghavan

Geneva, 5 July 2000 -- In the sixth year of the WTO, four years into the agriculture analysis and exchange of information (AEI) process, and six months into the negotiations for continuance of the reform process in agriculture, negotiators don’t appear to have tariff-line, product-specific comparable data assembled on a common basis.

In the negotiations for continuance of the reform process under Art. 20 of the Agreement on Agriculture (AoA), WTO members are to negotiate for continuing the process of reform—on market access, domestic support and export subsidy fronts.

At the Special Session of the Committee on Agriculture last week, Brazil supported by Argentina and several other developing countries complained that the data and background papers of the secretariat did not seem to have a common basis to enable comparison, and specifically, there was an absence of information according to the products expressly listed in the AoA as those to be covered in the commitments and schedules.

The Committee had before it three secretariat notes and background papers: a paper dated 23 May on Agricultural Trade Performance by developing countries, another dated 7 June providing an overview of information with the secretariat on tariffs and import flows of agricultural products, and a statistical background paper on effect of reduction commitments on world trade in agriculture.

Though the term ‘agriculture’ covers a large spectrum of items, in terms of the commitments under the AoA, they are listed under 14 HS code headings or sub-headings - but with fish and fisheries products excluded.

One of the secretariat papers provides information on effects of reduction commitments on world trade under 14 categories: wheat/wheat flour, coarse grains, rice, sugar, skim milk powder, butter and butter oil, cheese, whole milk powder, bovine meat, pigmeat, poultry meat, oil seeds, fruit and vegetables, and ‘other’ agricultural products. But these are not easy to correlate or compare with export subsidy reduction commitments, which in any event, the exporting countries can vary in terms of total amount deployed year to year.

For tariff commitments, as in other tariff areas for market access, under the AoA too, countries have to schedule their commitments on a tariff-line basis.

The commitments on cutting domestic support have been calculated as an aggregate measure of support (AMS), and incorporated in the country schedule, with each country committed to reducing this overall AMS over the six-year implementation period by a specified percentage. On export subsidies, there is a commitment to reducing the overall export subsidies over the period, and a volume-specific commitment of the subsidised export product.

The WTO secretariat explanation to the Brazilian complaint was that the data in the documents was generated by using the UN’s SITC classification (which is at a four-digit level).

The WTO system relies on mutual monitoring as a means to assess implementation of agreements, and this in turn depends on notification by members, as the Singapore Ministerial Conference of the WTO (Dec 1996) noted.

It is not clear from the three secretariat papers, why in the agriculture sector, the data and analysis available from the UN’s database and SITC classification have been used, and not the WTO’s own data from the HS tariff line system and/or the notifications by members.

Some trade diplomats say privately that when it comes to notifying the exact subsidy on product line basis in each year, the industrialized countries (who are the heaviest subsidisers) take their own time to notify. And given the flexibility that the US and EC gave themselves in the AoA on setting overall limits and reductions across a whole sector in regard to subsidised exports, the data collation and analysis is at least a year or so behind time.

And perhaps since this is considered a ‘controversial’ area as between the US and EC and other industrialized nations, the WTO secretariat is less forthcoming either in drawing attention to the tardy notifications, or when notifications (in an agreed computer data format) have been made and data is available, they are not quickly collated and assembled.

Anyhow the net outcome appears to be that the agriculture negotiators have set themselves some targets for market access negotiations (dealing with tariffs, tariff quotas and the like) -- normally conducted on a tariff-line basis or an overall tariff-cutting formulae -- without a clear and comparable picture of the amount of domestic subsidy available to the producer for that product and the amount of subsidy by the exporting country for that product. This last would determine not only the competitive market conditions for other exporters in third markets, but also how far developing countries could go in reducing their border tariffs, without wiping out their entire agriculture sectors—as they would be competing against subsidised exports after tariff cuts.

This is apart from the complaints and disputes, such as in relation to the US, whether other support such as export credits to farmers and assurances of credit even at market terms (that no bank or commercial lender would provide in advance for a number of years) is or is not an agricultural subsidy.

At Singapore, at the insistence of Argentina, a work programme for analysis and exchange of information (AEI) was set up, and has been undertaken in the committee on agriculture.

The secretariat in response to the queries of Brazil and others do not appear to have been able to explain why it has relied on the 4-digit UN SITC classification and not used its own database on the HS system.

The background paper on reduction commitments on world trade in agriculture says that it is based on the data of the Food and Agriculture Organization (FAO), but adds in a footnote that the FAO definition of agricultural products is not the same as in the AoA.

But given the differences in the SITC data and classification, and the FAO classification, why is the WTO secretariat, which is supposed to be servicing negotiations, not using data available to it, or has not brought these problems pointedly to the attention of members so far?

Is the data in the Integrated Data Base (IDB) and the Consolidated Tariff Schedules (CTS) of the WTO inadequate, and if so why? Who are the parties that have been remiss or slow—the EC and other majors who account for the bulk of the trade or others? And why have these inadequacies and difficulties not specifically been brought out by the secretariat either in terms of the six-monthly general trade policy review reports of the Director-General, the secretariat’s Annual Reports, or other reports and documentation that are used to pinpoint deficiencies of non-compliance by developing countries?

The secretariat, for the respective committees, does circulate from time to time, the notifications received from each member - and it is for others to raise questions or voice complaints. It is not clear though whether the failure to notify or adequately notify could be a matter that could be pursued through the dispute settlement process.  Even if this were done, the way the process is functioning (guided by the secretariat) nothing much could be expected when the majors are at fault.

In relation to their own push for negotiations to cut industrial tariffs and increase the access for their corporations to the markets of the developing countries, the US as well as the EC and Japan have been pushing for gathering and collation of a proper data base, showing the bound and applied rates for each product along tariff lines.

But they do not seem to be that much anxious to do this for agricultural products. The US with Canada, and the Cairns group behind it, is zeroing in vis-a-vis the EC, more on cutting export subsidies and domestic support, in the view that once this is done or even partially achieved, it could export and compete in the EU markets (as well as those of Japan and a few others).

Perhaps it is part of the fault of developing-country negotiators that in the last months of 1993, anxious to conclude the Uruguay Round, they accepted without too much demur the bilateral deals of the US and EC.

But several trade experts of the developing world have been warning developing countries against following the same path once again.

They point out, for example, that any agreement to negotiate (whether under a broad tariff cutting formula or on a request-offer basis) market access for agriculture, without first setting right these problems and without a clear picture of the commitments of the industrialized countries, particularly of the US and the EU, in respect of their domestic support and export subsidy (including the US versions of it), would mean that developing countries would again lose out.

Writing 30 years ago—in his book ‘The Challenge of World Poverty’— Gunnar Myrdal questioned whether it was in the interest of clarity of thought and of honesty when the Paris-based rich nations' organization, the OECD, and the secretariat of its Development Assistance Committee (DAC) published annually data by simply adding up ‘private flows’ to ‘official flows’.

Myrdal, a Nobel Prize winner in economics and who had headed in the early days the UN’s Economic Commission for Europe (ECE), then referred to the way others blindly cite these data as authentic, and the particular responsibilities of the secretariats of the intergovernmental organizations within and outside the UN family, complaining of the way the statistics on growth of incomes and production, and rates of growth of under-developed countries, were produced by the UN statistical office and commonly accepted and used uncritically by others.

“This inter-agency courtesy (of each accepting the other’s statistics),” Myrdal said, “results in a sort of polite camaraderie that is unethical from a professional point of view and in its effects decreases the scientific value of the work of the secretariats of the intergovernmental organizations (emphasis in original). As these secretariats have become bureaucratized and... less in a position to attract the most qualified in a certain profession, this has contributed to rendering their output of statistical information stale and less problem-oriented.”

What Myrdal wrote then, appears to be even more true within the UN system and in the Bretton Woods institutions and the WTO—where statistics and data are being used to mislead the public about the benefits of neo-liberal, neo-mercantalist policies to benefit TNC and major industrialized countries where they are based.

For the agriculture negotiations (and this is also true of the services talks), information provided to negotiators by the WTO secretariat, is not only less than problem-oriented, but more dangerously, problem-creating.

It will result in the current ‘generation’ of negotiators of developing countries writing rules and entering into commitments, which would then be interpreted in the interests of the rich - and leave a further legacy of correcting past inequities on their successors at the WTO— if the system should survive such inequities.-SUNS4703

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

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