TWN Info Service on WTO and Trade Issues (Mar09/01)
3 March 2009
Third World Network

Doha deal should be provisional, allow for independent review
Published in SUNS #6648 dated 26 February 2009

Geneva, 25 Feb (Kanaga Raja) -- The results of the current Doha Round of trade negotiations should be explicitly treated as provisional, and a sunset clause appended to the outcome in order to allow for a re-negotiation -- following a period of a few years of implementation -- on the basis of an independent review of the impact of the Doha agreements on the enjoyment of the right to adequate food, the UN Special Rapporteur on the Right to Food has recommended.

In a report (A/HRC/10/5/Add. 2) to the upcoming tenth session of the UN Human Rights Council (2-27 March), the Special Rapporteur, Olivier De Schutter, has said that States should ensure that they will not accept any commitments under the World Trade Organization (WTO) framework without ensuring that these are fully compatible with their obligation to respect the right to food.

The report by the Special Rapporteur, which seeks to explore the relationship between the Agreements concluded under the framework of the WTO and the obligation of the WTO members to respect the human right to adequate food, was the outcome of a mission to the world trade body last June.

The Special Rapporteur had issued some preliminary conclusions in his first-ever report on this issue last December, and his presentation to the Human Rights Council beginning next week is his full official report.

According to the rights expert, the main impacts of the current multilateral trade regime on the right to food include:

-- (a) increased dependency on international trade which may lead to loss of export revenues when the prices of export commodities go down, threats to local producers when low-priced imports arrive on the domestic markets, against which these producers are unable to compete, and balance of payments problems for the net food-importing countries when the prices of food commodities go up;

-- (b) potential abuses of market power in increasingly concentrated global food supply chains and further dualization of the domestic farming sector; and

-- ( c) potential impacts on the environment and on human health and nutrition, impacts that are usually ignored in international trade discussions, despite their close relationship to the right to adequate food.

The report focuses particularly on the WTO Agreement on Agriculture (AoA). It noted that the process of "tariffication" and subsequent lowering of tariffs (under the AoA) has not worked for the benefit of developing countries. Producers from developing countries have been facing important obstacles when seeking access to the high-value markets of industrialized countries.

"Many agricultural products are currently facing tariff peaks and tariff escalation (higher tariffs on processed products) which discourage diversification into higher value-added products, leading developing countries to an excessive dependence on an often limited number of primary commodities."

Referring to the fact that members must reduce existing export subsidies, and cannot introduce new export subsidies that were not already in operation in the
1986-1990 base period, the report said that the system has in fact been advantageous to the developed States, which were the only category of States to have significant export subsidies in place prior to the entry into force of the AoA.

"Export subsidies are the most harmful form of subsidies for the developing countries, since they lead to subsidized products arriving on domestic markets and displacing local production."

The obligations established under the AoA clearly fit under a programme of trade liberalization in agricultural products. While food security is recognized as a legitimate objective, it is to be achieved in principle not by retreating from the programme of trade liberalization in agriculture, but by supporting countries through the reform programme.

However, whether the domestic policies required to accompany the reform programme can be implemented in the countries concerned, with a speed commensurate with the impact of trade liberalization itself, may be doubted, said the report, adding that developing countries face a series of constraints, which in many cases make it difficult or impossible for them to implement policies at domestic level, particularly by fully using the flexibilities they are allowed, which would allow them to maximize the benefits from trade, while minimizing its negative impacts.

The report said that if trade is to work for development and to contribute to the realization of the right to adequate food, it needs to recognize the specificity of agricultural products, rather than to treat them as any other commodities and to allow more flexibilities to developing countries, particularly in order to shield their agricultural producers from the competition from industrialized countries' farmers.

"The reason for this is obvious, and it is at the heart of what justifies special and differential treatment for developing countries: even after the removal of existing trade-distorting measures, which currently are disproportionately benefiting developed countries, the productivity per active labourer in agriculture will remain much lower in developing countries, on average, than in developed countries."

The report noted that in 2006, agricultural labour productivity in LDCs was just 46% of the level in other developing countries and below 1% of the level in developed countries. In addition, these massive differences in productivity are increasing: labour productivity grew by only 18% in LDCs between 1983 and 2003, by 41% in other developing countries and by 62% in developed countries.

In this context, "the idea of establishing a level playing field is meaningless," said the report. The deepening of the reform programme under the AoA will not result in agricultural producers in developing countries being able to compete on equal terms with producers in industrialized countries, unless wages in developing countries are repressed at very low levels to compensate for a much lower productivity per active labourer.

Certain developing countries have a highly mechanized agricultural sector and, particularly since the wages in the agricultural sector remain comparatively low in comparison to those in Organization for Economic Cooperation and Development (OECD) countries, have a strong comparative advantage in agriculture and would clearly benefit from the removal, or at least the lowering, of the trade-distorting subsidies of the developed countries. But in other developing countries, particularly LDCs, agriculture remains a fragile sector.

"Encouraging these countries to open up their agricultural sector to competition by binding themselves to low rates of import tariffs may therefore constitute a serious threat to the right to food, particularly if we take into account that food insecurity is mostly concentrated in the rural areas and that a large portion of the population in the countries which are most vulnerable depends on agriculture for their livelihoods..."

The report examined the impacts of the reform programme in agriculture both at the macro- and micro-economic level.

At the macro-economic level, the removal of barriers to trade in agriculture may increase the vulnerability of countries as a result of their dependency on international trade, and it may further fragilize the situation of agricultural producers in certain developing countries.

The report said that the example of sub-Saharan African countries is illustrative. Due in part to the highly penalizing structure of tariffs in OECD countries through tariff peaks and tariff escalation, and in part, to the presence on international markets of highly subsidized foods produced in industrial countries, sub-Saharan Africa has remained dependent on traditional non-fuel primary commodity exports such as coffee, cotton, cocoa, tobacco, tea and sugar, and was essentially unable to develop into an exporter of processed food.

De Schutter stressed that it is the dependency of countries on food imports for feeding their population which produces the most immediate impacts on the right to adequate food. Import surges may threaten the ability of local producers in net food-importing countries to live from their crops and therefore the ability to feed themselves and their families, when such import surges lead to such low prices on the domestic markets that they are driven out of business.

The report noted that import surges have been a frequent occurrence, both before and after the entry into force of the Agreement on Agriculture. A survey covering 102 developing countries over the period 1980-2003 documented 12,000 cases of import surges. The countries most affected were India and Bangladesh in Asia, Zimbabwe, Kenya, Nigeria, Ghana and Malawi in Africa, and Ecuador and Honduras in Latin America.

Yet, said the report, the provisions contained in the current version of the AoA are insufficient to allow countries to react to the disruptions caused by import surges. Under the AoA, members which resorted to tariffication of their non-tariff barriers may impose "special safeguard measures" (SSG) in the form of additional tariffs when confronted with import surges of certain products -- that is, imports exceeding a specified trigger level, or whose price falls below a specified trigger price.

However, since most developing countries did not use tariffication, they cannot rely on that clause. The SSG mechanism was triggered by only 10 members, including 6 developing countries, between 1995 and 2001; and between 1995 and 2004, developing countries triggered the SSG in only 1% of the cases in which they could have applied it.

"As protection against such surges, the current SSG mechanism is ineffective," said the rights expert.

At the micro-economic level, the removal of barriers to trade in agriculture contributes to reshaping the global food supply chain in a way which favours transnational corporations, whose freedom to act is broadened at the same moment as the regulatory tools States may resort to are being limited.

The report also noted that concentration in the food system is significant. In industrialized and developing countries alike, farmers need to go through commodity traders which a have a dominant position: two companies control 40% of the grain exports from the United States.

The report observed that the human rights obligations of WTO members and the commitments they make through the conclusion of agreements under the WTO framework remain uncoordinated.

At the international level, this lack of coordination is one example among others of the problem of fragmentation of international law into a number of self-contained regimes, each with their own norms and dispute-settlement mechanisms, and relatively autonomous vis-a-vis both each other and general international law.

All too often, this failure of global governance mechanisms is replicated at domestic level: trade negotiators either are not aware of the human rights obligations of the Governments they represent, or they do not identify the implications for their position in trade negotiations, said the report.

This approach thus leaves it to each State to ensure, in its domestic policies, a consistency which is not pursued in the international legal process. This is not satisfactory, the report underscored, adding that it amounts to treating obligations incurred under trade agreements as equivalent in normative force to human rights obligations.

It also creates the risk that, faced with situations of conflict, States will opt for compliance with their obligations under trade agreements: since these agreements are commonly backed by the threat of economic sanctions - as is the case within the WTO, under the Dispute Settlement Understanding - setting aside their human rights obligations will appear to Governments less costly economically and even, often, politically.

De Schutter stressed that human rights obligations of WTO members must be taken into consideration at the negotiation stage of trade agreements: doing so later may be too late. In this context, the report underlined that States should ensure that they will not accept undertakings under the WTO framework without ensuring that these commitments are fully compatible with their obligation to respect the right to food.

This requires that they assess the impact on the right to food of these commitments. It also requires that any commitments they make be limited in time, and re-evaluated subsequently, since the impacts of trade liberalization on the ability of States to respect the right to food may be difficult to predict in advance, and may become visible only after a number of years of implementation.

For instance, said the report, whatever the results of the current round of negotiations launched in Doha in November 2001, these results should be explicitly treated as provisional, and a sunset clause should be appended to the outcome in order to allow for a re-negotiation, following a period of a few years of implementation, on the basis of an independent review of the impact on the enjoyment of the right to adequate food.

States should define their positions in trade negotiations in accordance with national strategies for the realization of the right to food. Indeed, said the report, the usefulness of adopting such national strategies, based on a reliable mapping of food insecurity and vulnerability, goes far beyond the assistance it would provide negotiators in the WTO context.

These strategies also should support the position of Governments in their discussions with international financial institutions, with donors, or in bilateral trade negotiations. "It is a particular source of concern that, in a large number of cases, States have been unable to use flexibilities allowed under the WTO agreements - or to apply certain tariffs remaining under their bound tariffs - because of prescriptions from such institutions or because of bilateral free trade agreements."

The report also said that States should avoid excessive reliance on international trade in the pursuit of food security. Their short-term interest in procuring from international markets the food which they cannot produce locally at lower prices should not lead them to sacrifice their long-term interest in building their capacity to produce the food they need to meet their consumption needs.

It noted that throughout the developing world, agriculture accounts for around 9% of GDP and over 50% of total employment. In the countries where more than 34% of the population are undernourished, agriculture represents 30% of GDP and 70% of employment.

"Therefore, for the realization of the right to food, there is no alternative but to strengthen the agricultural sector, with an emphasis on small-scale farmers."

States, particularly developing States, in accordance with the principle of special and differential treatment, must retain the freedom to take measures which insulate domestic markets from the volatility of prices on international markets. Unless the trade agreements they conclude provide for the necessary flexibilities, States may find themselves bound by certain disciplines which will make them vulnerable to the variations of prices on international markets, said the report.

Noting that one risk is that local producers will be driven out by import surges, the report said that it is this which the establishment of a special safeguard measure seeks to avoid. "Indeed, the measures States may take in order to strengthen their agricultural sector, including the measures which fall under the 'green box' of allowable forms of domestic support to agriculture, will remain ineffective in the absence of such flexibility."

The report makes a number of recommendations to WTO Member States, the WTO Secretariat and the international community.

It called on WTO Member States to ensure, notably through transparent, independent and participatory human rights impact assessments, that their undertakings under the WTO framework are fully compatible with their obligation to respect, protect and fulfil the right to food. They should also define their positions in trade negotiations in accordance with national strategies for the implementation of the right to food.

WTO Member States should limit excessive reliance on international trade in the pursuit of food security and build capacity to produce the food needed to meet consumption needs, with an emphasis on small-scale farmers, and maintain the necessary flexibilities and instruments, such as supply management schemes, to insulate domestic markets from the volatility of prices on international markets.

The rights expert called on the WTO Secretariat to maintain and deepen the existing constructive dialogue with the Office of the UN High Commissioner for Human Rights. The Secretariat should encourage WTO members to conduct human rights impact assessments prior to the conclusion of trade agreements or to accepting new schedules of commitments, with the assistance of the relevant United Nations entities.

The rights expert called on the international community to explore means of limiting the volatility of prices on the international commodities markets, particularly for tropical products, oilseeds, sugar and cotton, for instance, through commodity-stabilization agreements.

The international community should also take steps towards the establishment of a multilateral framework regulating the activities of commodity buyers, processors, and retailers in the global food supply chain, including the setting of standards by these actors and their buying policies. +