TRADE: Convergence on Agriculture Matters

By Mario Osava Reprint | | Print |

Mario Osava

SAO PAULO, Jun 14 2004 (IPS) - The ”Five Interested Parties” – P5, the leading actors in international agricultural trade – have achieved a ”convergence” that officials and activists alike agree could prove an important step towards a global agreement

The ”convergence” achieved by the informal group that has been dubbed the ”Five Interested Parties” (P5) – the leading actors in international agricultural trade – marks historic progress, says Brazil’s Foreign Minister Celso Amorim.

The P5, comprising Australia (representing the Cairns Group), Brazil, European Union, India, and the United States, concluded their meeting late Sunday night, just as the eleventh United Nations Conference on Trade and Development (UNCTAD) got under way in this Brazilian metropolis.

The members of the group agree that ”export subsidies need to be removed gradually, domestic farm aid needs to be reduced substantially, and market access needs to be increased substantially,” EU Trade Commissioner Pascal Lamy announced.

This consensus gives a green light to asking experts to study figures, deadlines, tariffs, quotas and other concrete matters. The possibility for advancing in this area is very promising, ”but there is a great deal of work ahead,” said Amorim.

”We are just five” amongst the many countries and trade blocs, and an international understanding on farm trade must involve the 147 members states of the World Trade Organisation (WTO), U.S. Trade Representative Robert Zoellick told a joint press conference after the group’s four-hour meeting.

India’s Trade Minister Kamal Nath said there is now a convergence of opinion instead of divergence, giving credence to hopes for effective progress in the technical negotiations slated for the coming weeks, to culminate in July with the meeting of the WTO committee on agriculture.

”One must look upon the P5 announcement with caution,” says Martin Khor, director of the Third World Network and an expert in international trade issues for non-governmental organisations which are meeting in Sao Paulo in parallel to UNCTAD XI.

This group of five does not represent the consensus of WTO members, he told IPS. ”I’m not convinced that it takes seriously the issue of special and differentiated treatment for development countries, and particularly their small farmers.”

The understanding reached by the P5 is ”a small advance, although insufficient,” because technical and implementation details must be worked out, but it is important because it implies burying the ”mixed formula” through which the United States and EU sought to maintain the status quo in international farm trade, said Khor.

The Doha Round, launched during the WTO ministerial meet in the Qatari capital in 2001, has been mostly paralysed since the 5th conference of ministers, held in September 2003 in the Mexican resort of Cancún.

The stagnation is due largely to the fact that a large group of poor countries from Africa, the Caribbean and Pacific regions rejected the inclusion in the talks of what are known as the ”Singapore issues”, pending since the 1996 WTO conference. These include investment, competition rules, transparency in government procurement and facilitation of trade through streamlined customs regulations.

Also in the context of Cancún, the Group of 20 developing countries emerged, seeking correction of the imbalances in international farm trade caused by production and export subsidies, and working for a reduction in farm trade barriers.

Brazil and India are the participants in P5 that are also part of the G20, alongside fellow developing world giant China and countries of Latin America, Africa and Asia.

Australia, meanwhile, has a significant role as a major agricultural exporter and leader of the Cairns Group, created in the 1980s by farm exporting countries – rich and poor – to combat subsidies and protectionism in the sector.

The United States and EU, in addition to erecting trade barriers to protect their farmers, are responsible for most of the subsidies granted in the industrialised world, totalling a billion dollars a day, and driving down international prices for many commodities that are important to developing countries.

Consensus among the five leading actors in farm trade could pave the way for a multilateral agreement on what is seen as the touchiest issue on the Doha Round agenda, and which the developing world is demanding be resolved if there is to be progress in other areas.

But there are no guarantees that such an agreement will be reached. Amongst the 25 members of the EU represented by Lamy, several resist reducing farm subsidies and opening their markets, admitted the commissioner.

Furthermore, the Doha Round is an all or nothing deal. As long as there is not agreement on all 20 chapters, no single chapter can be considered resolved, including, for example, those on reducing industrial tariffs, trade in services and investment, said Lamy.

The industrialised nations are demanding progress on issues of interest to them in exchange for ”concessions” on their part in the agricultural area.

”Parallelism and equivalence are the names of the game,” said the EU commissioner.

These concepts initially applied to the European demand that an end to export subsidies be accompanied by the elimination of other sorts of ”disloyal competition” in farm trade, such as privileged credits for the sector, insurance systems and government purchase of surplus for use in food aid.

All of the participants in P5 underscored the importance of maintaining the ”three pillars” of farm trade negotiations: export subsidies, domestic supports that distort the market, and market access.