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TWN Info Service on WTO Issues (Feb03/4)

26 February 2003

NGOs CALL FOR REJECTION OF WTO’S AGRICULTURE MODAILITIES PAPER

Dear friends and colleagues

More than 80 NGOs took part in a Hearing on the Review of the WTO Agriculture Agreement on 19-21 February in Geneva.  They were very critical of the draft paper on modalities for agriculture negotiations prepapred by the Chairman of the agriculture negotiations group, Stuart Harbinson.

During the meeting, the participants heard the views of a trade expert as well as representatives from various government delegations to the WTO.  Many of the Third World delegates also expressed unhappiness with the modalities paper.

On 24 February, some of the NGOs took part in a press conference during which they presented a statement signed by over 50 NGOs criticizing the draft and putting forward their own proposals for new rules.

The following is a report of the Hearing as well as the NGO joint statement, written by TWN researcher Goh Chien Yen.

A shorter version of the report was published in the South-North Development Monitor (SUNS) of 26 February.

With best wishes

Martin Khor

Director, TWN

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NGOs AND EXPERTS CALL FOR REJECTION OF WTO AGRICULTURE MODALITIES PAPER

Third World Network Report

by Goh Chien Yen,   Geneva, 24 Feb 2003

Over 50 non-governmental organizations from around the world have called for the rejection of the latest Agriculture Draft modalities paper presented to the Special Sessions of the WTO Committee on Agriculture by Chairman Stuart Harbinson.

The NGOs said that the Harbinson draft of a modalities for commitments ignored promises made at the last WTO Ministerial to place “development, food security and rural livelihoods at the heart” of the negotiations.

The NGOs issued a joint statementn which came out of a meeting on 19-21 February in Geneva titled “Farmers, Food and Trade: A Hearing on the Review of the WTO Agriculture Agreement.”   It was organized by several NGOs including World Council of Churches, EED, Third World Network, IATP, CAP (Malaysia), APRODEV, Canadian Foodgrains Bank, and Germanwatch.

The statement criticized the draft on a number of points including:

·        It does not change the underlying structure of agriculture trade rules, which are causing widespread hardship for farmers and discourage sustainable models of agriculture.

·        The current Agreement and the Harbinson text legalizes dumping, at the same time as erodes developing countries’ only defense against dumping - tariffs and other border measures.

·        It fails to recognize the central role played by women in food production and the nutritional well-being of the family and community.

·        It ignores the increasing stranglehold exerted on agricultural trade by a small number of transnational corporations, which in turn depresses farmgate prices around the world.

The NGOs urged the governments to reject the current Harbinson draft modalities as an acceptable basis for negotiations and proposed that they should work to create new trade rules in agriculture that:

·        Address the real source of distortions in world agricultural markets

·        Take food security and food sovereignty fully into account, in particular in allowing developing countries to protect their poor farmers against low world prices and to recognize the special cultural role of food in many communities.

·        Allow countries to introduce import controls and tariffs on dumped agricultural products

·        Act on governments’ multilateral commitment to increase employment by promoting rural livelihoods. In particular, taking into account the needs of vulnerable groups and women, who produce the majority of the world’s food.

·        Rectify the imbalances between rich and poor countries in agricultural trade

One clear reason for distortions, the NGOs said, is the high level of export subsidies and domestic support used by the EU which has displayed little resolve in ending their subsidies.

During the meeting, Tim Rice from Action Aid, had pointed out that the recent EU proposal to the WTO, offering to reduce its aggregate measure of support by 55% from its final commitment in the Uruguay Round (UR), would in effect not commit the EU to do anything in a new round that it was not already doing.

Similarly,  the EU proposal to reduce the value of export subsidies by 45% from its final bound commitment in the UR would  not commit the EU to anything in a new round that it is not already doing.

Jesus Zorrilla, EC trade negotiator who was at the meeting, admitted that the EU has already achieved the reductions in the aggregate measure of support and export subsidies offered in the EC’s recent proposal on modalities for agricultural products. He explained this by arguing that the EU had done so “in order to get credit” for it at the WTO.

Speaking at the NGO meeting, an international trade expert, Mr.Bhagirath Lal Das, said there are many inadequacies and inequities in the current AoA and the Harbinson modalities draft followed  the same pattern of imbalance.  Das said that when a chairman’s text is put forward in any international negotiation, this became the basis of the negotiations.

While  negotiators might react to the Chair’s text, they would be doing so within the broad framework established by it. Hence, the Chair had a great responsibility to capture all the views of all the negotiators. However, the tenor of the discussions that have been taking place, were not reflected in the Harbinson text. A chair “is not empowered to say what he pleases, but is only authorized to produce a text which is faithful to the negotiations.”

The first draft modalities paper of the chairman’s text was prepared and rushed to the Tokyo ‘mini-ministerial’ meeting, but with wide divergence of views there on the validity of the text. According to media reports, the ministers at Tokyo were not prepared to use it as the basis for the negotiations.

It was apparently rejected because it did not capture the concerns of many countries, especially those of developing countries. This, Das said, had dealt a big blow to the Chairman’s text and this should be taken note of.

Das argued that the response and relief did not lie in members commenting on the text, but rather in a total change to the structure and approach of text. Since 1995, when the AoA was implemented, the many inadequacies and inequities of the agreement have become more apparent.  But the Harbinson text followed the same pattern of imbalance, though there were some small positive features in the text which could be made use of. The introduction of a ‘a strategic product category’ was important though the treatment to it was “far from adequate.”

The text also recognised the problem of food security and the plight of small farmers in developing countries, but again the treatment was inadequate.

It was hence necessary to restore the balance in  the AoA, and correct past mistakes and iniquities. Only then special and differential treatment to developing countries could  be meaningfully extended.  The Harbinson draft did not talk about restoring balance at all. Restoring balance was a priority and should be done without making it appear as a favour to developing countries.

In restoring balance, subsidies must be removed, especially export subsidies, and removed immediately by all OECD countries, Das argued.

The rules and disciplines on domestic support enable mechanisms for developed countries to use them to elude discipline. The classification between trade distorting and non-trade distorting measures and correspondingly reducible and non-reducible subsidies “is a fraudulent one,” Das said.

By allowing the ‘green box’ subsidies to continue, the OECD countries can escape any discipline. These subsides should be brought under reduction discipline and towards elimination.

On food security, the Harbinson text talked only of using tariffs and subsidies. The last option was effectively closed to the developing countries and tariff itself may not offer quick and effective protection.  The general solutions of anti-dumping measures and countervailing measures were impractical for developing countries, because of the need to demonstrate ‘injury to domestic production’. Even a genuine claim can be easily challenged and be very costly to defend in financial terms. Ironically, the special safeguard provision has been framed in such a way that only developed countries could effectively employ them. The developing countries should be able to use special safeguards should be allowed for developing countries for all agricultural products.

Given the basic imbalances in the Harbinson text, Das advised developing countries to prepare their own alternative text and table it, rather than comment on the current one.

Some of the developing country delegates who were present echoed the comments of Mr. Das.

The delegates from Brazil, Barbados, the Philippines and India made clear that many developing countries, including themselves were disappointed and unhappy with the Chairman’s  text.

“On a careful review it is doubtful whether the proposed modalities will bring about substantive balance”, said Maria Fe Alberto, the Filipino delegate. The proposed modalities would act disproportionately against the tariff structures of developing countries, forcing deeper liberalization on them.

She added, “Philippines is disappointed. The Filipino proposal to correct the iniquities in the agreement has not been captured by this draft text.  The proposal attempts to deal with the three pillars of market access, export subsidies and domestic support and their interlinkages which the Chairman’s text ignores.”  She also warned that this text sent a negative political signal by the developed countries that trade-distorting subsides cannot be eliminated by this round.

Nicole Clarke, trade negotiator from Barbados pointed out that developing countries such as Barbados do not provide export subsidies and domestic subsidies beyond the de minimis level. Developing countries such as Barbados were disappointed with the lack of ambition in disciplining subsidies and the lack of flexibility in the pace and pattern of agricultural trade liberalization for developing countries. The common stand of all developing countries, Clarke said, is for greater liberalisation of agricultural trade in the developed countries and more balance to the AoA.

The Brazilian WTO negotiator, Flavio Damico argued that the WTO is tilted against developing countries, especially the rules governing dumping in the AoA which is something that must be addressed. However, the real issue was not whether this round can be a so-called development round, but rather “the larger problem of  how to mainstream development into the WTO”.

The Indian WTO delegate, Rajesh Agarwal, said India’s large population is dependant on agriculture and they cannot be shifted to other sectors. It is even difficult to shift from one crop pattern to another as cultivation depends on factors such as terrain such as hills and deserts.  India is looking for safeguards to prevent and protect the livelihood of farmers.

He added that the post WTO agriculture regime has educated Indian farmers about how much of support farmers in EU and US get.  Other farmers therefore have a right to say that there must be balance and equity. This is not even a SDT agenda but even more basically one of balance.

Rajesh said the key question was what kind of reductions are being taken?  He said the Harbinson text is not ambitious enough.  There was nothing in it to prevent the shifting of domestic support from one box to another.   He stressed that for India food self-sufficiency is important. Unless this is provided for adequately, India could not agree.

 


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