WTO AND AGRICULTURE: A DARK DECADE AHEAD

By Devinder Sharma Reprint | | Print |

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NEW DELHI, Aug 1 2004 (IPS) - A year after the UNDP\’s 2003 Human Development Report showed that poverty in 54 countries was considerably worse than in the previous decade, the WTO has reached a \’historic\’ framework agreement that will further marginalise the developing economies, writes Devinder Sharma, internationally-recognised commentator on trade, sustainable agriculture, and biodiversity, and author of \’\’Seeds of Despair\’\’and \’\’The Famine Trap\’\’. In this article, Sharma writes that during the intense WTO negotiations in Geneva in late July the developed countries finally succeeded in piercing what remained of developing country agriculture while raising even further their own already high level of agricultural subsidies. The reductions in trade-distorting subsidies set out in the new WTO agreement –20 percent in the first year of implementation– are calculated according to a revised formula that, by increasing certain permitted types of support, actually allows the US and EU to increase agricultural subsidies. Importing food is like importing unemployment, yet the WTO has refused to draw a balance sheet showing the human and environmental cost of its trade paradigm. By further opening their borders to trade, developing countries ruined their agricultural sectors.

A year after the United Nations Development Project’s 2003 Human Development Report showed that poverty in 54 countries was considerably worse than in the previous decade, the World Trade Organisation (WTO) has reached a ‘historic’ framework agreement that will further marginalise the developing economies.

During the intense WTO negotiations in Geneva in late July– which included coercion, arm-twisting, and enticements– the developed countries finally succeeded in piercing what remained of developing country agriculture while raising even further their own already high level of agricultural subsidies.

Even the poorest of the poor have been denied trade justice. The four West African countries — Burkina Faso, Mali, Chad, and Benin — have been devastated by the massive cotton subsidies in the United States, European Union, and China. After 12 hours of marathon discussions with negotiators from these countries, all that US Trade Representative Robert Zoellick promised is to ”work on related issues of development multilaterally with the international financial institutions, [and] continue their bilateral programmes”. In effect, cotton growers in these countries should not expect any change in the subsidy regime (despite the latest ruling of the WTO dispute panel) and will continue to live in abject poverty and misery.

The WTO thus further fortified the protective ring around the 25,000 US cotton growers, who receive roughly USD 3.9 billion in subsidy payments for producing a cotton crop that is worth only USD 3 billion at world market prices. The inequity is staggering: American cotton farmers receive USD 10.7 million a day in subsidies as over 10 million cotton farmers in West Africa alone see their livelihoods devastated. In addition, the US provides a subsidy of USD 180 million to companies to purchase the subsided cotton. As a result of the artificially lowered prices, African cotton producers recoup only 60 percent of their costs, although these are less than half what they are in developed countries.

For the rest of the world, the talk of reducing trade-distorting subsidies is mere illusion. Robert Zoellick and the outgoing Trade Commissioner of the European Union, Pascal Lamy, have actually walked away knowing full well that they do not have to make any real cuts in domestic support. The reductions in trade-distorting subsidies set out in the new WTO agreement –20 percent in the first year of implementation– are calculated according to a revised formula that, by increasing certain permitted types of support, actually allows the US and EU to increase agricultural subsidies.

At the same time, the developed countries have managed to keep intact all the elements of their protective barriers: special and differential treatment, special safeguard measures, and provisions for ”sensitive products” . Cotton for instance can now be considered part of the ”sensitive” category, as can the highly- subsidised dairy, sugar, fruit, and vegetable products.

Meanwhile, the developing countries have been forced to open their borders still further. The entire thrust of the Geneva talks was to seek more market access from the developing countries, and the developing countries have obliged. The only redeeming feature is that the developing countries can block imports of a few commodities that are sensitive to food security needs.

As if the destruction that trade liberalisation has already wrought by driving down prices, undermining rural wages, and exacerbating unemployment is not enough, providing greater access to developing countries’ markets will lead to even more displacement of farm communities from their meagre landholdings. Importing food is like importing unemployment, yet the WTO has refused to draw a balance sheet showing the human and environmental cost of its trade paradigm. Despite the World Bank’s flawed estimates of a gain of USD 500 billion emanating from the free trade initiative, the fact remains that by further opening their borders to trade, developing countries ruined their agricultural sectors.

In the Philippines, millions of farmers were driven out of business when the corn market was opened up in 1997. At that time, US corn growers were receiving average subsidies of USD 20,000 a year, while Filipino farmers in Mindanao had average income levels of USD 365 a year. In Central America, the price of coffee beans has fallen to just 25 percent of its level in 1960, and the region lost an estimated USD 713 million in coffee revenues in 2001 alone.

In sub-Saharan Africa, Ethiopia and Uganda reported huge losses in export revenues. Indonesia, among the top ten rice exporters before the WTO came into being, was the world’s largest rice importer in 1998. Peru now imports 40 percent of its food. In India, agricultural imports have increased four times in past six years, and the situation is no better in Pakistan and Bangladesh. The WTO accord makes no real effort to reverse this worrying trend.

With cheap agricultural products swamping developing countries, the world will soon witness the biggest environmental displacement yet, and this time it is not going to be from big dams and hydroelectric projects but from agriculture. And the resulting economic and political costs will have to be borne by the developing countries. (END/COPYRIGHT IPS)