2001-2002: Fighting the North’s Farm Trade Barriers

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 30 2001 (IPS) - The group of nations that are major exporters of farm products, which includes countries at varying degrees of economic development, will face the challenge in 2002 of tearing down protectionist barriers during the new round of multilateral trade talks.

The Fourth Ministerial Conference of the World Trade Organisation (WTO) agreed in November in the Qatar capital to convene a new round of global trade negotiations that include the sticky issue of agriculture. If farm trade had been left off the agenda, agree experts, the WTO conference in Doha would have been a failure.

The talks are slated to begin in January 2002 and last until the end of 2004, unlike the Uruguay Round (1986-1994), which gave rise to the WTO. The negotiations had no deadlines and extended over eight years due to the complexity of the issues involved.

But the shorter time limits do not mean that the matters to be discussed are any less delicate, nor that the negotiating conditions have substantially improved. The agricultural debate continues to be a point of contention between countries that subsidise farm production and export and those who demand competition free of state assistance.

The leaders in providing farm subsidies are the European Union (EU), Japan, South Korea and the United States, with their different levels of commitments to their agricultural producers and thus different portions of gross domestic product (GDP) set aside for that purpose.

The Organisation for Economic Cooperation and Development (OECD), whose 31 members include all industrialised nations, calculates that its affiliates spend a combined total of a billion dollars a day on direct and indirect farm subsidies.

Among the countries that do not provide government aid for the agricultural sector are the 18 of the Cairns Group, which demands efficient farming and trade without subsidies and without non-tariff barriers.

The Cairns Group is made up of Argentina, Australia, Bolivia, Brazil, Canada, Colombia, Costa Rica, Chile, Fiji, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand and Uruguay.

These countries used pressure tactics at the WTO conference in Doha to get the EU to agree to discuss the ôprogressive dismantlingö of export subsidies, a ôsubstantialö reduction in state support for farming and a commitment in favour of market access ôwithout pre-judging the outcome of the negotiations.ö

But while the discussions are following a pathway that at times prompts optimism among the nations party to the talks, the reality of global trade is following another course that seems more like a roadway rush hour, where offences, ill humour and bottlenecks slow any progress toward the final destination.

One example of this is the fact that the United States, which buys half of the honey that Argentina exports, put the breaks on those imports in May due to suspicions that the prices were below production costs, a practice known as ôdumpingö or disloyal competition through unfair pricing.

The 45,000 small farmers in Argentina have experienced one of their worst years in decades. In August, the United States agreed to lift the barrier that had been imposed on Argentine honey – a 60-percent tariff – but set an import quota of 30,000 tons of honey per year, a volume smaller than its normal annual purchase. The United States will allow the honey in as of January 2002.

The round of talks slated to begin next month ômust achieve substantial benefits for the exporters of agricultural products otherwise it will be considered a failure,ö Alberto de las Carreras, an Argentine expert in international trade, told IPS.

Though the principal achievement of the Uruguay Round was to introduce farming into the trade debate, on equal footing with industry and services, the new round will see the new challenge of the European approaches to the sector, which include preservation of the rural landscape and the social welfare of farm families.

Known as ômulti-functionalityö, this policy – which allows European farmers access to sizeable subsidies – defends the right of citizens to maintain the rural environment and advocates for preserving the quality of life of farming families, even when they are not economically efficient.

De las Carreras, advisor to Argentina’s Chamber of Exporters, maintains that the launching of a new round of talks is a positive step. Following the fiasco of the Third Ministerial Conference of the WTO in the U.S. city of Seattle in late 1999, ôthe failure to convene a new round was a fatal woundö for the organisation, he said.

But in spite of the convocation of the talks, the EU agenda and the terms of the fast-track authority the U.S. Congress granted President George W. Bush to negotiate trade accords have left negotiators with their hands tightly bound, added the expert.

Fast-track authority, already approved by the U.S. House of Representatives, applies to the debate on the Free Trade Area of the Americas (FTAA), which is to be wrapped up by 2005 according to what was agreed at the Summit of the Americas held last April in Quebec City, Canada.

Under fast-track, the legislative branch gives up its right to modify the content of treaties negotiated by the president and may only approve or reject the accord in full. But the U.S. lawmakers excluded 282 agricultural products from the list of tariff reductions to be agreed in the FTAA process.

The inclusion of those products in the negotiations may only take place with the approval of four congressional committees.

The nations of Mercosur (Southern Common Market) – Argentina, Brazil, Uruguay and Paraguay, all members of the Cairns Group – have already spoken out against the much-expected congressional approval for speeding up the FTAA talks, saying it keeps the restrictions on farm trade in place.

ôThe progress made in the Uruguay Round was limited, advances were mediocre and one could say that the only important achievement was that agriculture was included as one more chapter in the talks,ö said De las Carreras.

The advisor pointed out that the commitments to reduce subsidies, promises that led to the Uruguay Round in the first place, date back to 1986. Since then, with the conclusion of that round of negotiations, a failed ministerial conference and another round to begin only highlight how difficult it is to achieve important results.

Nevertheless, civilised discussion among countries that buy and sell farm products is essential, even when the results are long term and the costs of participating are extremely high, especially for the poorest countries.

ôIf we didn’t have the WTO and if we gave up on another round of talks, global farm trade would become something like the wild west’ (lawlessness in 19th-century U.S. western states) – and we are not going to allow that to happen,ö stated De las Carreras.