TRADE: World Agriculture Negotiations Take Shape

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Oct 1 1999 (IPS) - The cards seem to be irretrievably on the table for future multilateral talks on liberalising agricultural trade, the fate of which depends on the power and determination of the players.

The president of the Agricultural Committee of the World Trade Organisation (WTO), Néstor Osorio Londoño from Colombia, this week outlined the “wide range of positions and aspirations that can be observed” among the “players” less than two months before negotiations are expected to begin.

For the developing countries, the goal is to create more equitable conditions, “because it is undeniable that they are unable to compete with the treasuries” that finance agricultural protectionism in industrialised countries.

The second goal of developing countries is to improve market access for their products. Without better access, their competitiveness becomes meaningless because it affects “their only viable economic possibility,” said Osorio.

These countries also need special treatment that allows them to address rural development, food safety and a reasonable level of protection, he added.

Osorio believes the aspirations of developing countries should take priority, though he warned that they will run up against the interests of the WTO’s “main players.”

On that side of the agricultural negotiating table sits the European Union, which since 1959 has applied its Common Agricultural Policy (CAP), one of the union’s pillars.

CAP provides support for the agricultural sector through a combination of measures such as direct payments, export subsidies, price supports, production controls, high tariffs and quantitative restrictions.

These protectionist measures absorb approximately half of the European Union’s annual budget.

The World Bank reports that members of the Organisation for Economic Co-operation and Development (OECD), a group of wealthier industrialised nations, spent 280 billion dollars on agricultural sector protection measures in 1997.

Together with the WTO, the World Bank organised a seminar in Geneva over the weekend to discuss agriculture and the new plan for trade negotiations “from a development perspective.” Several interpretations on the effects of agricultural protectionism arose during the course of the conference.

One World Bank study suggested that under eventual commodities market liberalisation in OECD and developing countries, global welfare would improve by 260 billion dollars per year.

The World Bank prediction did not specify how this new wealth would be distributed, but it did say that one third of such gains would come from agricultural reforms in the OECD member countries.

Another key player in the negotiations is the United States, which currently faces implementing substantial cuts in its agricultural supports as a result of its fiscal imbalances.

Osorio observed that the United States shares some of the positions held by the Cairns Group, a bloc of 15 countries known for its ongoing defence of liberalising agricultural trade.

But at the same time, the United States has been subjected to criticism for maintaining its policy of credits for exports.

Also at the negotiating table are countries that maintain closed agricultural regimens and whose internal conditions make change unlikely, including Japan, Norway, Switzerland and South Korea.

This group, said Osoria, will undoubtedly try to limit any step forward in the reform process included in the Agriculture Agreement that was passed at the closing of the Uruguay Round of multilateral trade talks in 1993.

Though there is a restrictive mandate for carrying out agricultural trade negotiations, as there is for trade in services, the outcome will depend on the course of action adopted by a new WTO round, as well as the agenda.

The Third Ministerial Conference of the WTO will meet in the U.S. city of Seattle, Washington, from November 30 to December 3, to study the functioning of the multilateral trade system and to eventually decide if there will be another round of negotiations.

Osorio said at the World Bank and WTO seminar that negotiations on agriculture will play a decisive role in resolving bio- technology issues.

The United States has stated that it would like the WTO to define some parameters for the debate on genetically modified organisms. Osorio believes that concrete proposals will begin appearing soon.

From the beginning, agricultural talks will concentrate on three dominant issues: export subsidies, market access and internal support, asserted the WTO’s Agricultural Committee president.

But negotiations will be subject to external influences from other issues in an eventual “Millennium Round” of multilateral talks, which some expect to begin in Seattle. These other issues include non-trade concerns, like the environment and technology.

The director for Rural Development at the World Bank, Alexander McCalla, warned that WTO members will have to take into consideration the new issues that will dominate world trade in the 21st century.

McCalla specifically pointed to trade-related environment and labour issues, two areas that several developing nations have also targeted.