Revised WTO draft for farm talks will not solve food crisis

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: The revised WTO draft for farm negotiations will not be able to solve the current food crisis, but will rather accentuate it, contrary to the claims made by the director-general, Pascal Lamy.

The draft released by the chair of the agriculture negotiating committee, Crawford Falconer on May 19, fell short of addressing the food crisis, both on short-term and long-term basis. Distribution problem is one of the short-term measures that could have been addressed if the draft could have cared to ensure free and fair trade.

On the contrary, the draft has attempted to protect the high subsidy and tariff regime in the developed world, not calling for the desirable level of cuts. It doesn’t provide for conversion of all the complex and specific tariffs in the developed countries into their ad valorem equivalent, which is necessary for transparency and effecting realistic reduction. Rather the draft has sought to weaken the defence of the developing countries in agriculture in relation to their demand for special products (SPs) and special safeguard mechanism (SSM).

Although it has recognised the developing countries’ right to self-designate their special products based on food and livelihood security and rural development, it has outlined the minimum limit of 8% of the tariff lines. A maximum limit of 20% of the tariff lines has been proposed, implying the need for future negotiations.

Capping SPs at a percentage of tariff lines may help some countries that grow few crops to protect their agriculture, but not many tropical countries, which grow multi-crops. Therefore, invocation SSM can be a solution for preventing any possible import surge. But the draft has weakened the SSM for developing countries by saying that it can be triggered only when the prices fall below 30% and that it cannot be invoked for more than three to eight products a year. The conditions for invoking SSM on volume-based triggers is so stringent that it becomes almost ineffective.

While the developing countries use of SSM is weakened, the developed countries continue to enjoy their protection through SSG accorded to them. However, there is a political ambition in both the NAMA and agriculture drafts to divide the unity of the developing countries. The sensitive products of the developed countries have been carefully streamlined to enable developing countries like Brazil, Argentina and Uruguay apart from Australia and New Zealand to export beef, pork, poultry, dairy, rice, sugar, fruits and vegetable to EU, US, Japan, Canada and Switzerland.

The NAMA draft has given extra flexibilities to some developing countries like South Africa, Venezuela and countries in the customs unions like SADC and Mercosur, while in respect of the majority of developing countries, it has ignored the Doha mandate of less than full reciprocity in tariff reduction and has linked the tariff reduction coefficients with the flexibilities for developing countries.

If the Doha mandate is to be followed then the issue of flexibilities for developing countries should be treated separately and not in the way the NAMA chair Don Stephenson has put. The developing countries should, therefore, be careful in dealing with the attempts to disrupt their unity.

The WTO farm draft has ignored the genuine concerns of the developing countries who are the major producers of food. It has done nothing to address the current food crisis. If the draft is implemented in its present form it would increase the volatility of food prices with no benefits to the farmers in the Third World. It would strengthen the hold of a few multinational food companies to manipulate global prices. The world’s dominant grain traders like Cargill, Archer Daniel Midlands, Bunge have recorded huge profit margins in this period of food crisis. The farm draft has no provision to regulate these dominant food companies.

The WTO has no provision to regulate speculations in the commodity exchanges even though FAO and Unctad in their reports have identified high level of financial investment in commodity markets as a major cause for the increase in volatility in food prices. The meltdown in the global equity market and the subprime crisis in the developed world have caused the investors to shift their investments to commodity markets.