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| Volume 6 No. 14 | Issue
Theme EC - US Joint Text Agriculture |
31
August 2003 |
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EC
- US Joint Text Agriculture Members reconfirm the objectives as established in paragraphs 13 and 14 of the Doha declaration, including the objective to establish a fair and market-oriented system through fundamental reform in agriculture. Members recognize that reforms in all areas of the negotiations are inter-related, that special and differential treatment for developing countries will be an integral part of the negotiations, and that non-trade concerns should be taken into account. Ministers agree to intensify work to translate the Doha objectives into reform modalities, including by adopting the following approaches for reduction commitments and related disciplines on key outstanding issues on market access, domestic support and export competition. 1. The Doha declaration calls for "substantial reductions in trade-distorting domestic support". All developed countries shall achieve reductions in trade distorting support significantly larger than in the Uruguay Round, that will result in Members having the higher trade distorting levels subsidies making greater efforts. shall take place under the following parameters: Reductions shall take place under the following parameters: 1.1. Reduce the
most trade-distorting domestic support measures in the 1.2. Members may
have recourse to less trade distorting domestic support under the
following conditions: 1.3. reduce de minimis by []%. 2. The Doha declaration
calls for "substantial improvements in market access."
Negotiations should therefore provide increased access opportunities
for all and in particular for the developing countries most in need
and take account of the importance of existing and future preferential
access for developing countries. 2.1. The formula
applicable for tariff reduction shall be a blended formula under
which each element will contribute to substantial improvement in
market access. The formula shall be as follows: 2.2 For the tariff lines that exceed a maximum of []% Members shall either reduce them to that maximum, or ensure effective additional market access through a request: offer process that could include TRQs. 2.3. The use of the special agricultural safeguard (SSG) remains under negotiation, extended use by 2.4. A special agricultural safeguard (SSM) shall be established for use by developing countries as regards import-sensitive tariff lines. 2.5. All developed countries will seek to provide duty-free access for at least []% of imports from developing countries through a combination of MFN and preferential access. 2.6. Having regard to their development and food security needs, developing countries shall benefit from special and differential treatment, including lower tariff reductions and longer implementation periods. 3. The Doha mandate calls for "reductions of, with a view to phasing out, all forms of export subsidies." To achieve this, disciplines shall be established on export subsidies, export credits, export state trading enterprises, and food aid programs. Reduction commitments shall be applied in a parallel manner according to the following parameters: 3. 1 With regard
to export subsidies: 3.2 With regard
to export credits: 3.3. Without prejudging the outcome of the negotiations, reductions of, with a view to phasing out, all forms of export subsidies mentioned in 3.1 and 3.2 will occur on a schedule that is parallel in its equivalence of effect on export subsidies and export credits. 3.4. Disciplines shall be agreed in order to prevent commercial displacement through food aid operations. 3.5. Export State
Trade enterprises shall not restrict the right of any interested
party to export, nor to undercut prices paid to domestic producers
in their export operations, nor shall they benefit from special
financial privileges from Governments. Disciplines, including ending 4. As far as S&D treatment for developing countries is concerned, the rules and disciplines will need to be adjusted for significant net food exporting countries. 5. Issues of interest but not agreed: Peace clause, non-trade concerns, implementation period, sectoral initiatives, continuation clause, GIs, and other detailed rules.. Members reconfirm the objectives as established in paragraphs 13 and 14 of the Doha declaration, including the objective to establish a fair and market-oriented system through fundamental reform in agriculture. Members recognize that reforms in all areas of the negotiations are inter-related, that special and differential treatment for developing countries will be an integral part of the negotiations, and that non-trade concerns should be taken into account. Ministers agree to intensify work to translate the Doha objectives into reform modalities, including by adopting the following approaches for reduction commitments and related disciplines on key outstanding issues on market access, domestic support and export competition. 1. The Doha declaration calls for "substantial reductions in trade-distorting domestic support". All developed countries shall achieve reductions in trade distorting support significantly larger than in the Uruguay Round, that will result in Members having the higher trade distorting levels subsidies making greater efforts. shall take place under the following parameters: Reductions shall take place under the following parameters: 1.1. Reduce the most trade-distorting domestic support measures in the range of []% - []%. 1.2. Members may
have recourse to less trade distorting domestic support under the
following conditions: 1.3. reduce de minimis by []%. 2. The Doha declaration
calls for "substantial improvements in market access."
Negotiations should therefore provide increased access opportunities
for all and in particular for the developing countries most in need
and take account of the importance of existing and future preferential
access for developing countries. 2.1. The formula
applicable for tariff reduction shall be a blended formula under
which each element will contribute to substantial improvement in
market access. The formula shall be as follows: 2.2 For the tariff lines that exceed a maximum of []% Members shall either reduce them to that maximum, or ensure effective additional market access through a request:offer process that could include TRQs. 2.3. The use of
the special agricultural safeguard (SSG) remains under negotiation,
extended use by 2.5. All developed countries will seek to provide duty-free access for at least []% of imports from developing countries through a combination of MFN and preferential access. 2.6. Having regard to their development and food security needs, developing countries shall benefit from special and differential treatment, including lower tariff reductions and longer implementation periods. 3. The Doha mandate calls for "reductions of, with a view to phasing out, all forms of export subsidies." To achieve this, disciplines shall be established on export subsidies, export credits, export state trading enterprises, and food aid programs. Reduction commitments shall be applied in a parallel manner according to the following parameters: 3. 1 With regard
to export subsidies: 3.2 With regard
to export credits: 3.3. Without prejudging the outcome of the negotiations, reductions of, with a view to phasing out, all forms of export subsidies mentioned in 3.1 and 3.2 will occur on a schedule that is parallel in its equivalence of effect on export subsidies and export credits. 3.4. Disciplines shall be agreed in order to prevent commercial displacement through food aid operations. 3.5. Export State
Trade enterprises shall not restrict the right of any interested
party to export, nor to undercut prices paid to domestic producers
in their export operations, nor shall they benefit from special
financial privileges from Governments. Disciplines, including ending 4. As far as S&D treatment for developing countries is concerned, the rules and disciplines will need to be adjusted for significant net food exporting countries. 5. Issues of interest
but not agreed: Peace clause, non-trade concerns, implementation
period, sectoral initiatives, continuation clause, GIs, and other
detailed rules.. US-EC
agriculture paper not acceptable as basis for negotiations Numbers for reducing
tariffs, export subsidies and domestic support would be filled in
through negotiations after Cancún. Both stressed that these
should be ambitious, the US saying the outcome should be more ambitious
than in the Uruguay Round. What follows are
the first two pages of a detailed analysis on the EC-EU joint paper
on agriculture. The 14 page analysis is written by Martin Khor and
can be accessed on the Third World Network Website: www.twnside.org.sg On 13 August the EC and US presented a joint Text on agriculture. It is meant to be a draft text to be adopted by Ministers at Cancun. It is clear from the paper that it is meant to suit the interests of the US and EC. It does not even aim or pretend to take account of the interests of all Members. Indeed, in introducing the paper at the WTO on 13 August evening and at a press briefing, the EC and US made clear that the paper’s function is to try to bridge the differences between EC and US, and they did not discuss nor aim to cover the interests of developing countries or others. Given the admitted limited function of the paper, it is unfortunate that the proponents drafted it in language meant to be a draft text for Ministers to adopt in Cancun. This can create confusion that it is meant to be the basis for negotiations. But it is clear that the paper cannot be accepted as the basis for the further negotiations on agriculture modalities as it is drafted to suit only EC and US interests. It is not acceptable that a paper drafted to bridge differences between two members can then be used for all members to “fill in the gaps and figures”. The EC-US paper
should thus be treated like other papers that have been submitted
throughout he past three years of negotiations, as an input. All
other proposals by other members should be equally taken into account.
The Chairman of the General Council 2.
Bridging differences at whose expense? There are at least three negative aspects of how the two have tried to overcome their differences: 1. The differences
between the US and EC are sought to be bridged in a manner of an
agreement for each to let the other off the hook and to escape their
commitments to reduce and stop their protectionism in agriculture.
In all three pillars of domestic support, export competition and market access, the EC-US text proposes modalities and measures that protect their narrow interests whilst further denying developing countries from defending themselves from aggressive protection and promotion of US-EC products, and indeed forcing developing countries to further open up to these subsidised products. An inefficient farm can remain in business even if amber box subsidies are removed (eg it no longer receives a higher price through price support) provided it receives enough grants and income support schemes. The blue and green box subsidies provide a wide range of grants on various grounds, allowing farmers to remain in business and to also export, even though the prices their receive for their products are below production cost. Since blue and green box subsidies are allowed without restriction, both the US and EC have planned to shift their subsidies from the amber to the other two boxes. The US is ahead in this. In 1999, its green box subsidies were $50 billion, amber box $16.9 bil and blue box $831 mil. The EU had $47.3 bil in amber, $19.6 bil in blue and $19.7 bil in green box subsidies, according to WTO data. But in a few years, especially with the CAP reform, the EU will also be able to shift more and more of its support to the green box. It is well known that the overall domestic support in OECD countries have not decreased and in fact has even significantly increased (at least in some years) since the end of the Uruguay Round, because the reduction in amber box subsidies can be offset by increases in oher allowable subsidies. And so the OECD farms are even more protected, and since the support is decreasingly price based, the domestic prices can decline and yet the farms remain profitable. In future, these low-priced products can flood other markets even more devastatingly as they do not need even require export subsidies. The protection will be more disguised and thus even more dangerous as it is harder to detect and counter. This major flaw
of the AoA should be addressed. The Harbinson draft has not adequately
dealt with this problem. But it at least recognised some of the
problems. It proposed current blue box payments be capped and bound
and either reduced by 50% for developed countries or be merged into
the amber box. Despite many calls by developing countries and others
to also subject the green box subsidies to reduction, Harbinson
did not do so, only proposing minor measures to tighten rules. He
also proposed amber box subsidies (the AMS) be reduced by 60% over
5 years for developed countries. In the current negotiations for a new Agreement on Agriculture (AoA), developing countries must fight hard for an agreement that will provide small farmers and the rural poor the protection needed to ensure the continued viability of their livelihoods. Over the last two decades, the experience of household farmers (subsistence farming) from Central to South America, Africa and Asia have been strikingly similar. Many have been forced to switch from diverse traditional farming practices to monoculture farming for export markets. The provision of extension services and credit were conditioned upon farmers accepting the new technologies in export crops that were promoted. Farmers have been likewise forced to switch to export crops when local prices have plummeted as a result of cheap subsidised imports from developed countries flooding the local markets. In fact the list is endless for the many disadvantages that peasant farmers have faced across the developing world. Peasant farmers have gone through a process of systematic impoverishment. Many have been squeezed out of farming altogether. Instead of abating food scarcity that many thought AoA would do coupled with the rhetoric in agricultural technology, hunger and food insecurity are now more pronounced than it has never been in previous decades. US/EU impoverishing small farmers While there have been a number of proposals from different interest groups for the new AoA towards the 5th World Trade Organisation (WTO) Ministerial Conference in Cancun, Mexico, the one that has been proposed by the big players (US and EC) has been particularly disturbing. What makes it so is the fact that it has been presented to the WTO meeting as the basis for modalities negotiations to be adopted by Ministers at Cancun. The proposal has been a kind of compromise text between the US and EU to narrow their differences in agriculture negotiations and has not taken any step to place the interests of small players as mandated by the provisions of the Doha Declaration. What it does is to further place farmers in the developing countries at the mercy of free-fall liberalisation especially in the area of market access. But the market does not work in their favour. It works in the favour of big players. The big players have been leaders in subsidising and protecting their agriculture sectors at the expense of small players. Proposals for further liberalisation and the standardisation of the flow of goods, services and capital may bring about further inequities between and amongst the member states of the WTO and generate even greater difficulties for developing countries. While it is known that international trade is an integral part of growth and development, its expansion through unbalanced agreements like AoA does not automatically benefit poor nations. Consequently, the pressure being put on WTO members by industrial giants such as Nestle to ensure “progressive cuts in tariffs on farm products of "at least 50 percent", with the highest tariffs cut the most” should be rejected. The preoccupation now for developing countries should be mostly on the protection of household agriculture. Farmers need protection against dumping and unreasonable competition from subsidised producers in the US and EU. Providing greater security for the rural masses will bring about more even and equitable development for countries worldwide. In this sense developing countries should be able to use quantitative restrictions and import prohibition, not to be forced to reduce tariffs further. The line of thinking proposed by the Like-Minded Group of developing countries should be pursued where they are calling for the exemption of key agricultural products from new reduction commitments as well as renegotiate low tariff bindings. The WTO’s single undertaking structure should be modified into a more flexible and development friendly structure. Developing country members should be given the flexibility to sign on to only those agreements which their economies and industries are ready for and which they can benefit from. This should be considered a central component of effective and real Special and Differential Treatment. A treatment that is based on the practical needs of developing countries to address issues particularly of protecting vulnerable groups while ensuring the growth and survival of the agricultural sector. Such a structure would mean that those developing countries whose agricultural sectors are not ripe for competition, and whose small farmers, food security and sovereignty will be severely affected, will be able to opt out of the agreement until such time when their farmers and economies are ripe. What the US and EU are proposing is to protect their own interests and further poverty in already impoverished developing countries. Special and Differential treatment is particularly important in the face of unfair competition and dumping which characterises a huge part of developing countries’ trade with the developed block. Declaration
of Brazilia The Ministry of Agrarian Development in Brazil together with other government departments brought together representatives of governments and civil society organisations to deliberate on Household Agriculture and International Negotiations. The importance of family farming as a driving force of development in poor countries has to be understood by developed countries, so that the right to development be granted through trade and international agreements particularly AoA. The seminar, which
brought participants from Africa, Latin America, Asia and Caribbean
countries, issued a declaration, which recognised household agriculture
as the mainstay of development in developing countries thus: Considering that: 1) Household and peasant farming from Latin America and Caribbean, Africa and Asia composed by a variety of rural communities, have a fundamental role in social stability and in environmental sustainability of developing countries due to their economic, social and cultural functions, being equally important to fight rural poverty, towards a more balanced demographic and income distribution. 2) This sector of agriculture represents a major part of rural activities of Latin America and Caribbean and other regions, is fundamental to food security, plays a significant role in trade flows and stimulate social and economic regional life 3) The international trade agreement affect the structure and dynamics of agriculture, especially household agriculture, as well as international agricultural trade practices, inclusive of unfair trade competition policies 4) That household agriculture must be recognised and receive due attention in national development strategies and in international agreements; Thus they hereby endeavour to: A- work individually and collectively to ensure that international agreements will strengthen and improve the income and quality of life of those involved in household agriculture in all its diversity; B- Strengthen the economic, social and political organisation of household agriculture in our countries C- Widen the participation of civil society in each country, notably rural workers and family producer organizations in international negotiations; D- Implement in developing countries policies aimed at strengthening household agriculture and sustainable development to combat poverty in order to ensure food security and to transform the rural environment and to extend rights universally. E- Ensure that all proposals presented here reflect and recognize the strengthening of the role of women in household agriculture, as well their effective participation. F- Promote coordinated actions in international negotiations in order to preserve flexibility in the policies of strengthening of household agriculture and capacity to implement national policies of food security in developing countries, as well as fight unfair trade practices such as domestic support and export subsidies used by developed countries that generate distortions in production, prices and international agricultural trade. Also act towards guaranteeing special and differential treatment for small economies; G- Promote dialogue, in order to favour the exchange of experiences of rural development in the context of the integration of countries of Latin America, the Caribbean, Africa and Asia, that enhance access of household farmers to land and credit, that maintain the cultures and traditions, that recognise their territories and strengthen this family based agriculture. H- Expand collaboration in bilateral, regional and multilateral agencies for technical and financial cooperation in order to expand and coordinate actions to strengthen household agriculture and sustainable rural development. This is a very significant development considering that Brazil is a member of the Cairns Group which has been pushing aggressively for market opening for their commercial agriculture interests. In fact developing countries attempting to protect the livelihood of small farmers, and hence requesting for the expansion of Special Products category have been opposed by the Cairns Group developing countries arguing that such measures could impede South - South trade. Over the years the Brazilian agriculture has been dominated by large-scale commercial farming for export markets. Only a few players have been involved, including transnational corporations and rich individual land owners. Because of this, the majority of the farmers have been left out of the international arrangements as WTO agreements tend to benefit only a few powerful agro businesses. The realisation by the Brazilian government, under a new leadership, to recognise peasant-based farming is a noble one, which should be supported throughout the developing world. The increasing dependence of developing countries on external markets for their food and the increasingly distorted world markets is particularly disturbing. While only 2 – 5 per cent of the population are agricultural producers in the US and EU, 75 – 80 per cent (for example in Zimbabwe, India, Senegal and China) depend on farming for their livelihoods and source of food. So for developing countries, this conference was a major success in recognising the interests of the majority of people in the developing world. Rangarirai Machemedze
is a Programme Ofiicer with SEATINI It is clear that the United States and the European Union have, once again, done a deal on agriculture over the heads of the developing countries. As the first three articles in this issue show, the US and the EU did not even pretend to honour their commitment that they would work for the “development agenda” of the Doha Declaration. The gloves are off. The big powers now display their naked fist. As the EC Ambassador to Geneva, Peter Carl, is reported to have said, “We were working out solutions for ourselves.” So there you are. Globalisation is not an agenda for the good of everyone; it is for those like the US and the EU that can cut a deal that excludes the developing countries. The tragedy about the World Trade Organisation (WTO) is that when the US and the EU have decided on something, that then becomes the lightening rod for the others. In an African saying where elephants fight, the grass suffers. The WTO shows that the grass suffers even when the elephants make love. On Agriculture, the sudden display of affection between the US and the EU means that the developing countries have simply become the unwanted members of the agriculture league. This should come as a reminder to those in the Cairns group who had thought they might use the United States to pressurise the EU to come down on their agricultural subsidies. The US had no such intention, and the Cairns group, even if it has among others such countries as Australia, Argentina, Brazil and South Africa – not trivial players in the agriculture sector – they have very little clout in the WTO. South Africa must be particularly displeased about this, because its negotiators in Geneva and at Doha had gone out of their way to distance themselves from their African colleagues in the hope of winning concessions in agriculture. The other sad fact about the WTO is that the agreements between the US and the EU are treated as if they are already part of the Cancun Draft declaration. They should not be. They should be treated like any other proposal put before the General Council. And yet, by some unwritten rule that contradicts all claims about the WTO as a “rule-based” system, the joint position of the US-EU become almost automatically, the substantive content of the draft declaration. Thus, the draft Ministerial Text for Cancun released on 24 April 2003 bases its agricultural text almost entirely on the US-- EU proposal, This is entirely unjustified, unfair and subversive of the rule-based system. As it now stands, the draft Cancun text on agriculture is completely one-sided. It takes into account the interests only of the EU and the USA. It should be rejected. The US and the EU and the WTO secretariat must be put on notice that if they are not prepared to be sensitive to the needs of the developing countries, then they leave no choice to the developing countries but to reject their text. The choice, sadly, is as clear as that. If the WTO Secretariat and the chairman of the General Council, had desisted from taking on lock, stock and barrel – the EU-US proposal as a substantive part of their draft declaration, then there was at least some room for negotiations. But they seem to have fallen on the bad behaviour displayed before the Doha Ministerial, namely, issue a text on the chairman’s “personal responsibility”. Under the circumstances, what option do they leave the developing countries but to refuse to be part of this chicanery. As it is, the developed countries are getting away with murder. They have crafted a text that allows them minimal commitment to what is agreed at Doha and maximum sacrifices by the developing countries. Even to try now to amend the text is to get involved in an exercise which ab initio, is a reject. How does one tamper with broken pieces of furniture? How does one even begin to repair a four-legged stool when two of its legs are already missing? By contrast, the outcome of the conference organised by the government of Brazil on small holder and household farming ought to be taken seriously. The Bulletin carries a report on this. The present Lula government, unlike its predecessor, is not wedded to promoting only commercial interests in agriculture. Commercial agriculture may be important in the export sector, but the livelihood of the bulk of the population in the developing countries including Brazil depends on household, or what in Zimbabwe is called, communal agriculture. The WTO has no time for peasant agriculture. Already one of the inequalities of the Uruguay Round of Agreements on agriculture was that it limited it to only three issues – market access, export subsidy and domestic support. These do not address the more fundamental aspect of agriculture in the developing countries – namely, that it is the very basis of the livelihood of the bulk of the population. The conference in Brazil addresses this glaring gap in the WTO’s handling of the agricultural sector. Unfortunately, most of the DC negotiators also got caught up in the language of the WTO, and, for sure, at Cancun they will be haggling over these issues, now already so narrowly circumscribed by the incorporation of the US—EU text in the Cancun draft. Injustices are piling upon injustices. Time will come when the people of the developing countries will have to come on the streets of their capitals and withdraw their mandates from their negotiators in Cancun, and say to them enough is enough, withdraw from the negotiations, as African states did at Seattle. This is not the way to conduct negotiations in a rule-based system. Y. Tandon, Director,
Editor.
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Produced by SEATINI
Director and Editor:
Y Tandon; Advisor on SEATINI:
B. L. Das
Editorial Assistance:
Helene Bank, Rosalina Muroyi, Percy F Makombe and Raj Patel
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