The Hindu Business Line : Re-write the farm trade rules

While food is the most basic need, and farming the livelihood for three-quarters of humanity, the future of food and farming is being shaped by inequitable agreements imposed on the people of the world. It is time to go beyond texts dictated by rich countries, and rewrite the rules to ensure food sovereignty, sustainability, farmers' welfare and protection of the environment, says Vandana Shiva.

THE collapse of the Cancun WTO Ministerial was to a large extent due to the unfairness of the rules of the Agreement on Agriculture which is killing farmers, endangering biodiversity, impairing fair distribution and threatening food security and safety.

The Agreement appears designed to invade domestic markets by dismantling rural livelihoods and food security, and removing all safeguards to prevent dumping of cheap agricultural products on Third World markets backed by subsidies of $400 billion.

New rules are urgently needed. But the rewriting of trade rules for agriculture is also driven by the same forces and interests that brought agriculture into the Uruguay Round of GATT, with its disastrous impact on peasants and the poor.

December 15 is the deadline for restarting negotiations in Geneva. Before that, G-21 that countered the US-EU proposals on agriculture with their own proposals in Cancun will meet in Brasilia to evolve their negotiating stand for the follow-up to Cancun.

Meanwhile, a group of 33 countries says that the WTO is ignoring their demands to safeguard food security and rural livelihoods through the Special Products and Special Safeguard Mechanism.

Need for people's text on farm trade

While food is the most basic need of people, and farming is the livelihood for three quarters of humanity, the future of food and farming is being shaped by agreements imposed on the people and governments of the world.

The post-Cancun negotiations are being straitjacketed by the Derbez text, drafted by Chairperson Luis Ernesto Derbez, the Mexican Foreign Minister. The text reproduces the US-EU biases and avoids the key issues raised by the South that led to the collapse of the negotiations. These include:

Food sovereignty;

Agribusiness monopolies;

Export subsidies and dumping; and

Special products, special safeguard mechanism and quantitative restrictions (QRs) to protect domestic producers from unfair dumping.

It is time to go beyond texts dictated by rich countries and powerful corporations. It is time to rewrite the trade rules in agriculture on the basis of principles of food sovereignty, sustainability, farmers' welfare, and protection of the environment and public health.

The process to reform the WTO rules is, in any case, a mandatory part of the review of the AoA (Article 20), which the developing world had demanded to be addressed in Doha as part of the implementation agenda. This included assessing the impact of trade liberalisation on food security and farmers livelihoods, and changing the rules of the AoA accordingly. The demand at Doha for evaluating the impact of free trade was ignored and the "Doha Round" achieved only the reverse — pushing trade liberalisation further and faster on poor countries.

This one-sided globalisation, with rich countries forcing the poor to remove import restrictions and lower tariffs progressively, while increasing their own subsidies and, hence, the level of dumping, which is hurting the livelihoods of peasants, was the core reason for the breakdown of the Cancun Ministerial.

The Derbez text totally ignores the call for flexibility for developing countries to designate Special Products, which can be exempted from tariff reductions, and special safeguard mechanisms to protect themselves against dumping.

This is why an alliance of 33 countries on agriculture has told the WTO General Council Chairman, Mr Carlos Perez del Castillo, that it is deeply concerned that the concepts of Special Products (SP) and Special Safeguard Mechanism (SSM) have not been given due attention during the consultations he has held on agriculture after the Cancun Ministerial.

The Indian movement has been demanding a reintroduction of QRs given the unfair global market in agriculture, which is costing Indian farmers over $26 billion in terms of reduced incomes and, hence, increased poverty.

More than 25,000 peasants have committed suicide under the impact of unfair prices and markets. The Korean farmer Lee Kyoung-Hae's suicide in Cancun to highlight the fact that "WTO kills farmers" was not just symbolic. It reflected a tragic reality. Rewriting the WTO rules on Agriculture is, therefore, imperative to reflect the human right of peasants to survival. It is also necessary to rewrite the rules to transcend the false polarity between the position on food sovereignty — "WTO out of Agriculture" and the position that multilateral rules are needed to prevent the weak from the powerful, and the Third World peasants from the threat of dumping.

The proposed agenda for reform achieves both — retaining food sovereignty by deleting WTO disciplines on domestic support for domestic production and consumption, while strengthening the capacity of countries to protect themselves from dumping.

New paradigm needed for farm trade rules

Food is not just a tradable commodity, like cars and computers. Food is a vital need, a fundamental right, an embodiment of culture and nature.

Agriculture is a multifunctional activity — involving conservation of soil, water and biodiversity, providing livelihood to rural communities, the foundation of culture and cultural diversity, and the source of a vital and essential need.

Rules for trade in agriculture cannot be based on the paradigm of trade liberalisation if rural livelihoods, the environment, public health and cultural diversity are to be protected. The WTO is supposed to ensure fairness in international trade. However, the AoA goes beyond the WTO's trade jurisdiction and interferes in domestic policy through clauses on domestic support.

Not only does this threaten and undermine farmers' livelihoods, it undermines the distribution of power at local, provincial and national levels.

Through rules on domestic support in agriculture, the WTO is blocking the sustainable agriculture and food security objectives, and is in violation of national constitutions under which agriculture is a sub-national subject.

The decision-making powers of local and regional governments are being usurped, thus subverting democracy.

The legitimate role and function of the WTO is to prevent unfair trading practices such as dumping and monopoly control over markets. However, the current WTO rules have facilitated increase in export subsidies, leading to enhanced rates of dumping.

According to a recent report from the International Agriculture and Trade Policy Institute, in four major US commodities, the level of dumping has increased since 1995, when the WTO came into force, though the proclaimed aim of WTO is to "reduce distortions in trade".

While the full cost of US wheat in 2001 was $6.24/bushel, its export price is $3.5/bushel. In the case of soybean, the cost was $6.98/bushel (export price $4.93). The cost of production of rice was $18.66/bushel and it was sold internationally at $14.55/bushel.

From 1995 to 2001, dumping jumped from 23 per cent to 44 per cent for wheat, 9 per cent to 29 per cent for soya bean, 11 per cent to 33 per cent for maize, and 17 per cent to 57 per cent for cotton.

While the WTO AoA claimed to achieve reduction of rich country subsidies, the $248.6-billion farm bill of 2002 has increased farm subsidies by $83 billion.

According to the World Bank, low cotton prices in the US, resulting from high subsidies, are costing African countries $250 million each year.

The call of movements for food sovereignty as the framework and context for production and trade in agriculture demands that the rules on domestic support for domestic production in the current WTO AoA be deleted. This gives effect to the call for "WTO out of agriculture".

The call of the G-22 for removing export subsidies demands that the rules on dumping be strengthened and, in cases where countries continue to subsidise exports and artificially lower prices, other members have a right to restrict imports to protect themselves from dumping. This implies that QRs have to be brought back to deal with dumping.

QRs are also the only reliable means to protect "Special Products" and have Special Safeguard Mechanism (SSM), on which the majority of agricultural producers depend and which the group of poorer countries is demanding.

QRs are a necessary instrument of equity in a world dominated by unfairness of agribusiness monopolies and oligopolies.

The WTO rules on agriculture need to be changed to correct both flaws — the flaw of inappropriate invasion into sovereign domestic space by imposing disciplines for agricultural production which interfere with the objectives of sustainability and food security, and the flaw of failing to prevent unfair trade practices based on unjust and false prices, leading to dumping.

(The author is Director, Navdanya, New Delhi.)

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