Info Service on WTO and Trade Issues (Nov13/10)
25 November 2013
Third World Network
call for permanent solution on food security
Published in SUNS #7702 dated 22 November 2013
Geneva, 21 Nov (Kanaga Raja) -- Rejecting a temporary ‘peace clause'
over food security, over 270 civil society organisations and global
union federations have called instead for a permanent solution over
the G-33 proposal on public stockholding for food security purposes.
This call came in a letter sent on Wednesday to the Director-General
of the World Trade Organisation (WTO), Mr Roberto Azevedo, as well
as WTO Member States.
In their letter, the groups urged the global community, including
the WTO Director-General and the Member States, to address this issue
and make changes in the Agreement on Agriculture (AoA) that allow
developing countries to use such subsidies for public programmes on
food to support poor farmers and consumers.
"We demand that you do not make a mockery of the hunger of millions
round the world by accepting a peace clause that is unusable and damaging
for long term solutions. We urge you to ensure that the international
trade rules work for the people across the globe and not against them,"
the groups said.
Separately, also on Wednesday, several Pakistani civil society organisations
sent a letter to their capital-based officials as well as their country's
negotiators in Geneva, in which they demanded that their government
reject a short-term peace clause (see below).
Last week, a letter was sent by Indian farmers to Prime Minister Dr
Manmohan Singh, in which they had called on the Indian government
to also reject the proposed ‘peace clause' text (see SUNS #7698 dated
18 November 2013.)
[Meanwhile, an informal Heads of Delegation (HOD) meeting on agriculture
was held at the WTO on Wednesday, at which several countries (Pakistan,
Paraguay, Thailand, Ecuador, Uruguay, and Mexico) had voiced objections
to the proposed draft text on the ‘due restraint' (or ‘peace clause').
According to a trade source, concerns were voiced over the number
of traditional staple food crops, the duration of the ‘due restraint',
and the safeguard provision. (More below).
[Meanwhile, French agronomist and civil society activist, Jacques
Berthelot, in three recent posts at the Solidarite website, has questioned
the facts claimed in a letter of the US farm lobby to the USTR and
Senators over puported ‘subsidisation' of food procurement and exports
by India, Pakistan's claims about Indian rice exports in attempting
to mobilise support from Thailand, Vietnam and a few others against
the ‘peace clause', and other agriculture subsidy issues. Berthelot
has said that in fact the US and EU are in violation of the Agreement
on Agriculture, by wrongly placing their subsidies in the green box,
that Indian exports of high quality Basmati Rice is by local procurement
at prices higher than international market prices, and no subsidy
is involved. SUNS.]
Among the international and regional organisations and networks that
signed onto the letter sent to the Director-General and Member States
are ACP Civil Society Forum, Action Aid International, Africa Trade
Network (ATN), IBON International, International Trade Union Confederation
(ITUC), LDC Watch, Oxfam, Peoples' Health Movement, Pesticide Action
Network (Asia Pacific, and Africa), Public Services International
(PSI), Social Watch, and Third World Network (TWN).
A host of national organisations and individuals also signed onto
the CSO letter.
"Unfortunately the G-33 proposal has found stiff opposition from
the developed countries, notably the USA and the EU. Developed countries
[are] using WTO rules to neutralize peoples' right to food,"
said Ranja Sengupta of the Third World Network, one of the signatories
to the letter.
"The opposition of developed countries are unjustifiable in the
light of existing asymmetries between developed and developing countries.
For instance, in 2010, the poor in India received on average of only
58 kg per person, 3.1 times less than the 182 kg per person of the
80 million beneficiaries of cereals food aid in the USA. This is also
4.2 times less than the 241 kg for each of the 46.6 million beneficiaries
of the Supplemental Nutrition Assistance Program (SNAP) or food stamp
programme in the USA," said Jacques Berthelot of the French NGO
The CSO letter urged the Director-General and Member States "to
take the issue of food security in developing countries as a matter
of serious and immediate concern, and not to render the G-33 proposal
on public food stockholding a travesty by asking developing countries
to agree to the current text on the peace clause."
Across the developing world, it noted, millions of people, most of
them poor, still do not have basic and minimum access to food.
According to the FAO, 868 million were undernourished in 2011-12,
of them 304 million in South Asia and 234 million in Sub Saharan Africa.
Even more disturbing is the fact that nearly 3.1 million children
under the age of 5 die each year because of poor nutrition (Hunger
Statistics, World Food Program 2013).
At the same time, in a volatile global economy, millions of small
farmers are engaged in precariously poised food production that provides
them essential livelihoods and caters to their own as well as their
country's food requirements. Eradication of global poverty and hunger
would be impossible without addressing these concerns.
"It is clear that the global economy, with all its growth, has
failed to take care of both poor farmers and food consumers across
the vast majority of developing countries and least developed countries
(LDCs). In sum, they still need support from their own governments,
supported by the global community."
However, said the CSO letter, the rules of multilateral trading that
have been institutionalised through the WTO make it impossible for
developing country governments to provide this support. When GATT
(WTO's predecessor) was negotiated, all, except 17, developing countries
which were not giving any subsidy at that time were barred from increasing
subsidies, and were to adhere to a limit of 10% of additional production
that could be given out as subsidies.
In contrast, developed countries that gave massive subsidies to their
agriculture sector were asked to reduce these trade distorting subsidies
(OTDS) by only about 20%. Moreover, they were allowed to shift most
of their subsidies to a "green box" which was marked as
"It is by now well established that both types of subsidies are
very much trade distorting and have undercut prices, encouraged dumping
of subsidized agricultural products in developing country markets
and has threatened global market access for developing country farmers."
The CSO letter added: "This twisted legacy of the WTO has resulted
in a gross imbalance in global agricultural production, distribution
and trading system. This has prevented developing country governments
from providing essential support to their numerous small producers,
or to poor consumers through direct measures, price supported public
food stockholding or other processes, even if financially they are
now able to do so."
For example, India's recently passed Food Security Act, which aims
to provide minimum food entitlements to the poor 67% of the population,
will need an allotment of US$20 billion and will conflict directly
with WTO's set limits. The WTO mandated obligations will constrain
India from fully implementing its Food Security Act.
The letter noted that this peculiar juxtaposition in WTO's agricultural
trade rules has led the G-33 group of developing countries to table
a proposal on food security at the WTO that argues that public food
programmes for supporting livelihoods of small farmers and food consumption
of the poor should be considered part of the "green box"
and allowed without limits by changing the existing Agreement on Agriculture
Under the WTO rules, a subsidy through price support shall be calculated
using the gap between the fixed external reference price and the applied
The reference price was fixed at average f. o. b. (free-on-board price
from farm gate till its delivery on the ship) price notified by each
country for 1986-1988. Since the "fixed external reference price"
is much lower than the minimum support price levels (MSP), the subsidy
tends to get much inflated in comparison to reality.
In addition, said the letter, the entire production "eligible"
to receive the subsidy and not the "actual" production is
to be the basis for subsidy calculation, thus inflating subsidies
further. Obviously for large developing countries the total subsidy
calculated under broad price support programmes tends to significantly
overstate the actual financial support provided to farmers.
On the other hand, the total domestic support of the USA grew from
US$61 billion to US$130 billion between 1995 and 2010. The EU's domestic
support, which went down from 90 billion euro in 1995 to 75 billion
euro in 2002, bloated again to 90 billion in 2006 and 79 billion in
2009. A broader measure of farm protection, known as total support
estimate, shows the OECD countries' agriculture subsidies soared from
US$350 billion in 1996 to US$406 billion in 2011.
Unfortunately, said the groups, the G-33 proposal has found stiff
opposition from the developed countries, notably the USA and the EU.
This is despite the fact that in 2010, the poor in India received
on average of only 58 kg per person, 3.1 times less than the 182 kg
per person of the 80 million beneficiaries of cereals food aid in
the USA. This is also 4.2 times less than the 241 kg for each of the
46.6 million beneficiaries of the Supplemental Nutrition Assistance
Program (SNAP) or food stamp programme in the USA.
"A matter of urgent concern is that all elements of the G-33
proposal have now been rejected for consideration in Bali and a peace
clause (or due restraint clause) on the G-33 proposal is currently
the only element being discussed at the WTO. A peace clause means
that the use of such subsidies is still illegal but WTO Members will
not go to dispute settlement for this period."
The letter noted that the Director-General has suggested a "take
it or leave it" text on the due restraint clause for Bali. However,
this is to be effective only for 4 years and does not guarantee that
a permanent solution will eventually materialise.
Further, the conditions sought to be imposed are severe, said the
letter, noting for example that the Anti-Circumvention/Safeguard clause
asks the member states to "ensure that stocks procured under
such programs do not distort trade".
"This broad condition may make it virtually impossible for any
developing country to use this provision. This will dilute the already
weak peace clause rendering it totally ineffective and would sound
the death knell for millions of poor in India and in other developing
countries," said the groups.
"The time to act, therefore, is now. Before it is too late, before
millions perish because the global leaders could not rise above their
own myopic agendas. Before hundreds of thousands of children are not
able to make it to school or play or laugh because they are too weak
from hunger. Before millions go to sleep not knowing what they will
give to their family for food the next day," the letter underscored.
"In the complex labyrinth of international norm setting, it is
the poor and marginalised who are being denied their livelihoods and
minimum access to food. Global rules are challenging public provision
of essential goods and services across the developing world. It is
important for the WTO to address these concerns in its forthcoming
and crucial ninth ministerial conference at Bali," it concluded.
In the letter sent on Wednesday to their own government officials,
several Pakistani civil society groups expressed serious concern over
the recent development in the WTO negotiations with respect to the
Peace Clause on the G-33 proposal.
"We demand a long-term solution to protect livelihoods and food
security of our farmers and vulnerable communities of our country.
As Pakistanis, it is the right of our farmers to have access and control
over food production," said the letter.
In this respect, the groups demanded that their government reject
a short-term Peace Clause.
Among the groups that signed onto the letter are Pakistan Kissan Mazdoor
Tehreek, Roots for Equity, Job Creators Development Society, Human
Unity Movement, United Rural Development Organisation, Young Writers
Forum, and Social Alternatives for Community Empowerment.
In their letter, the groups were of the view that the proposed peace
clause is in fact a threat to food security, further noting that Pakistan
is among the top six countries at the Global Hunger Index, "which
is a very alarming situation".
The proposed peace clause further contributes in intensifying the
hunger since it has a negative trend towards the ability of developing
country governments to procure food from their producers for public
stock-holding and distribution to the poor.
The price being asked to be paid at Bali for this Peace Clause is
very high, the groups said.
"For a very weak Clause that only lasts for four years, developing
countries have been asked in return to agree to a Trade Facilitation
Agreement. This Agreement will be very expensive to implement for
lower income countries. In addition, it will increase imports for
The letter argued that this will be an immense challenge for the domestic
national industries, increase countries' trade deficits, and lead
to countries diverting scarce resources from more deserving budget
priorities at the national level towards putting in place very onerous
and unnecessarily elaborate customs procedures geared towards clearing
the goods of exporters quickly.
Meanwhile, an informal HOD meeting at the WTO on Wednesday saw several
countries objecting to the proposed text on the ‘peace clause'.
According to a trade source, Pakistan told the meeting that it appreciated
the hard work of the D-G, but that it had a ‘red line' on the issue
of safeguards and the coverage (the number of staple food crops).
It also had a commercial interest, saying that its farmers would also
demand a similar programme. It said that it cannot accept the text
in its present form.
According to the trade source, Thailand said that the interim solution
would affect the rules, including exempting members from domestic
support limits. Exporters must ensure that there is no harmful effects
on them, it added.
Mexico had major concerns on its effects on international markets,
said the trade source.
According to the trade source, the US said that it had listened carefully
to all the concerns and that it shares these concerns. But it has
come to the conclusion that this is the landing zone. It believed
that the text is workable in relation to these concerns.
According to the trade source, India asked if there was no consensus
so that it can report back to capital.