AGRICULTURE: Developing Countries Clamour for Free Trade

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Sep 1 2001 (IPS) - While the industrialised North loudly extols the benefits of free trade for the South, it is developing countries that are fighting the battle to liberalise trade in agriculture, while the rich countries keep their markets clamped tightly shut.

The United States, European Union (EU), Japan and South Korea increase the subsidies handed out to farmers year by year, and set quotas limiting imports of farm products.

Meanwhile, they sign agreements pledging to lift protectionist measures, although in exchange for a greater opening of markets in the developing South to services and manufactured goods.

In the 1990s, developing countries saw their farm exports grow, while their share of global trade in agriculture increased from 40 to nearly 43 percent, according to a report by the Organisation for Economic Cooperation and Development (OECD), which added, however, that most of them had experienced trade deficits.

The OECD stated that the main cause of the decline in the developing South’s overall balance of trade were subsidies for farm production and exportation.

Governments in the industrialised North make their farm products competitive by shelling out around 370 billion dollars a year in subsidies, to the detriment of countries with more efficient farm sectors, said the report.

The question of subsidies and barriers to farm imports will be debated once again at the ministerial meeting of the Cairns Group next Monday through Wednesday in the Uruguayan resort city of Punta del Este.

The countries comprising the Cairns Group, which was created in 1986, produce one-third of global farm exports. The 18 member countries, 15 of which are developing nations, are pressing for the liberalisation of trade and the opening of talks on the issue in the World Trade Organisation (WTO).

The Cairns Group – made up of Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Fiji, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, South Africa, Thailand and Uruguay – wants farm products to be given the same treatment granted industrial goods, instead of subjected to levels of protection that are up to 10 times higher.

(Egypt and Pakistan will also send representatives to Punta del Este, and may join the group within the next few months).

The foreign and agriculture ministers gathering next week in Uruguay will try to reach agreement on a common position regarding the liberalisation of trade in agriculture, to take to the fourth ministerial meeting of the WTO, slated for Nov 9-13 in Doha, Qatar.

Concerned over the decline in prices caused by farm subsidies, representatives of the private sectors of the Cairns Group countries will also meet next week, parallel to the gathering of ministers.

Although the chances are strong that agreements will be reached in both the ministerial and private sector meetings, the Cairns Group does not necessarily have the strength to tip the debate on international agricultural trade in its favour.

Alejandro Delfino, a spokesman for the Rural Society, a powerful Argentine association of agribusiness interests, told IPS that very little progress had been made in that sense.

“The big leaders in agricultural trade, especially the EU, the United States and Japan, resist the pressure for progress towards liberalisation of the sector,” said Delfino.

However, he made a distinction between the United States and the rest of the countries that protect their agriculture sectors, pointing out, for example, that U.S. Trade Representative Robert Zoellick would be present at next week’s Cairns Group event.

Although Washington earmarks 100 billion dollars a year to farm subsidies, it has expressed its interest in slashing such aid, in opposition to the EU. “It is in the interests of the United States for the Cairns Group to be battling the EU,” said Delfino.

The Cairns Group is basically demanding the elimination of trade-distorting subsidies, as well as a substantial improvement in access of farm products to other markets, which “would bring significant benefits in terms of economic growth, well-being, food security and sustainable development,” as the group’s ministers declared last year.

The case of honey is illustrative of the difficulties faced in terms of gaining access to rich world markets, said Delfino. Argentina is the world’s leading exporter of honey, and until this year, 50 percent of its exports went to the United States.

But U.S. apiarists complained of dumping – the exporting of products at prices deemed artificially low -, filed a lawsuit, and got the U.S. Department of Commerce to impose a 50 to 60 percent duty on Argentine honey last May.

The decision by the Department of Commerce triggered an outcry among Argentine apiarists, who warned the government of Fernando de la Rúa that the high tariff jeopardised 50,000 jobs in beekeeping cooperatives in Argentina.

The Foreign Ministry complained to the U.S. government, and conditioned negotiations in other areas on a review of the duty slapped on honey.

Foreign Minister Adalberto Rodriguez Giavarini warned Washington that the negotiations for the Free Trade Area of the Americas (FTAA), a U.S. initiative, would be in danger if restrictions were imposed on imports from Latin America.

The two governments finally reached an understanding, which amounted to a defeat for Argentine apiarists.

The Department of Commerce promised to sign an agreement in September allowing a “temporary” quota of 30,000 tonnes of Argentine honey – 30 percent below previous levels of imports – which will not begin to be shipped until December.

The South and North are clashing over a growing number of products, illustrating the difficulties that farmers in the developing world face when they knock on the doors of other markets with their goods that were produced efficiently in both economic and environmental terms.

Argentina, Brazil, Paraguay and Uruguay, the four full members of the Southern Common Market (Mercosur), will take advantage of the Cairns Group meeting to begin discussing, with Zoellick, a possible free trade agreement with the United States.

The United States announced the talks with the Mercosur at the same time it backed an eight billion dollar credit package from the International Monetary Fund for crisis-stricken Argentina.

The Mercosur, a market of 215 million potential consumers that accounts for nearly 80 percent of South America’s combined GDP – stands to benefit from a “four plus one” agreement, although it will not be easy to secure major concessions from the United States, Mario Marconini, a former Brazilian secretary of Foreign Trade, told IPS.