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TWN
Info Service on WTO and Trade Issues (July09/12) The G8, Obama, and food insecurity in Africa Just
before that, the G8 Summit in In
a press conference, Obama compared The implication of all this is that East Asian countries like South Korea did well because they had good governance and democracy while African countries have lagged behind because of undemocratic practices and bad policies. The
assumptions of the G8 Summit, and of Obama, are correct only to a limited
degree (for example, Of
course governance and good policies are crucial elements. But any comparison
between developments in Africa and The decline in agriculture in many African countries was due to the structural adjustment policies of the IMF and World Bank. The countries were asked or advised to dismantle marketing boards and guaranteed prices for farmers’ products; phase out or eliminate subsidies and support such as fertilizer, machines, agricultural infrastructure, and reduce tariffs of food products to very low levels. Many countries that were net exporters or self-sufficient in many food crops experienced a decline in local production and a rise in imports which had become cheaper because of the tariff reduction. Some of the imports are from developed countries which heavily subsidize their food products. The local farmers’ produce were subjected to unfair competition, and in many cases could not survive. The effects on farm incomes, on human welfare, on national food production and food security were severe. The
case of The
policies were reversed starting from the mid-1980s.and especially in
the 1990s, when The fertilizer subsidy was eliminated, and its price rose very significantly. The marketing role of the state was phased out. The minimum guaranteed prices for rice and wheat) was abolished, as were many state agricultural trading enterprises and the seed agency responsible for producing and distributing seeds to farmers, and subsidized credit was also ended. Applied tariffs for most agricultural imports were reduced significantly to the present 20%, even though the WTO bound rate is around 99%. This, together with the dismantling of state support, led to local farmers being unable to compete with imports that are artificially cheapened by high subsidies, especially in rice, tomato and poultry. Rice
output in A
government study found that 57% of
Tomato
was a thriving sector in Tomato
paste imported in In 2002, 15 European countries exported 9,010 million tonnes of poultry meat for Euro 928 million, at an average of Euro 809 per tonne, while the subsidy for the exported poultry was an estimated Euro 254 per tonne. Between
1996 and 2002, EU frozen chicken exports to In
2003, Another major problem facing Ghana and other African countries is the free trade agreements (known as the Economic Partnership Agreements) they are scheduled to sign with the European Union this year. Under the EPA, African countries are asked to lower their tariffs to zero on 80% of their products. Agricultural products are among those affected. This will lock them into a trade policy that will perpetuate what the IMF and World Bank started, with artificially cheapened imports continuing to overwhelm the domestic food market. Thus,
if the G8 countries really want to assist The
following needs to be done if 1. The countries’ economic and trade policies, often the result of advice of international financial institutions, have contributed to the stunting of their agriculture sector. African countries must be allowed to provide adequate support to their agriculture sector and to have a realistic tariff policy to advance their agriculture, especially since developed countries’ subsidies are continuing at a high level. The developed countries should quickly reduce their actual levels of subsidy. 2. The agriculture policy paradigm in developing countries must be allowed to change. Countries should have the policy space to expand public expenditure on agriculture. African governments must be allowed to provide and expand support to the agriculture sector. 3. Developing countries should place high priority on expanding local food production. Accompanying measures and policies should thus be put in place. The countries should be allowed to calibrate their agricultural tariffs in such a way as to ensure that the local products can be competitive and the farmers’ livelihoods and incomes are sustained, and national food security is assured. 4. The proposals of developing countries (led by the G33) on special products and special safeguard mechanism, aimed at food security, farmers’ livelihoods and rural development, at the WTO should be supported. Effective instruments that can meet the aims should be established. 5. The policies of the World Bank, IMF and regional development banks should be reviewed and revised as soon as possible, so that they do not continue to be barriers to food security and agricultural development in developing countries. 6. The actual levels (and not just the bound levels) of agricultural domestic subsidies in developed countries should be effectively and substantially reduced. There should also be new and effective disciplines on the Green Box subsidies to ensure that this category does not remain an “escape clause” that allows distorting subsidies that are detrimental to developing countries. 7. There should be a review of the EPAs between the EU and African countries. In light of the food crisis and the global economic crisis, developing countries that have signed or are in the process of negotiating FTAs should ensure that the FTAs provide enough policy space to allow sufficiently high tariffs on agricultural imports that enable the fulfillment of the principles of food security, farmers’ livelihoods and rural development. In the case of the EPAs, there should not be any pressure on African countries to sign them until the proper policy framework is put in place. (* Martin Khor is the Executive Director of the South Centre, and was formerly the Editor of the SUNS).
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