Will food security get trampled as the elephants fight over agriculture?

by Aileen Kwa*

Food security is THE most important issue at stake for millions living in the global south in the new millenium round of trade negotiations, yet most developing country governments are reticent about the issue. It has become too much of a hot potato in many countries. Developing country governments are being pressured by strong local agricultural corporations to embrace the agricultural liberalisation agenda yet governments of some of the lower income countries are conscious of the basic needs of their people and realise that the trade-led solution to food security may be a good theory but a recipe for disaster and food insecurity for their rural poor.

Unfortunately, very few are daring to raise the food security flag at the WTO. The most vocal and ardent supporter of food security is India and most other developing countries are choosing to leave it to India, and at most, are looking at raising food security as an 'S and D' (Special and Differential Treatment) consideration in the coming negotiations.

On the other hand, the giants, especially the EU and the Cairns Group are separately proclaiming politically correct food security language in order to win friends and to strengthen their own negotiating positions in the next round. However, whether their brands of food security will in fact respond to the needs of small and subsistence farmers in the developing world is highly questionable.

Food security and the livelihoods of small farmers in the developing south looks as if it is on the verge of being trampled as the elephants fight, particularly as so few developing countries are raising the issue from a development and livelihood perspective.

India's Position on Food Security

According to India's trade negotiator for agriculture, ensuring that food security is protected is India's top priority in this next round of agriculture negotiations. Indeed, India is one of the few WTO members brave enough to uphold the view that food security must mean at least some level of national food self- sufficiency. India's main concern is that the 700 million Indians who are dependent on agriculture as the main source of their livelihood will not be able to find alternative employment if India's markets are forced to open, and that their food security needs would be put in jeopardy. In informal discussions, India has expressed the view that agricultural liberalisation must be accompanied by infrastructure and appropriate government policies. In predominantly agrarian economies, liberalisation -- if it takes place -- must take place very gradually.

In that light, India would like to see the following put in place:

1) Maintenance of border measures in terms of high tariff rates for its most important staple crops, such as rice, wheat and maize.

2) The introduction of special safeguard mechanisms that can effectively be used (unlike those presently available in the AoA) in times of import surges or drastic price drops. However, this should only be available to developing countries, which have predominantly agrarian populations.

3) More flexibility for developing countries to allow food security to be addressed through various internal measures. For example, providing developing countries with more flexibility on their levels of domestic supports then is presently allowed. This could possibly take the form of a 'development box' which allows developing countries the freedom to provide supports to their agricultural producers.

India would also like to see the high levels of domestic supports by the developed countries reduced and a differentiation made between domestic supports used to create a niche in the international markets and domestic support for goods sold on the domestic market.

4) The elimination of export subsidies since these amount to dumping and are clearly trade distorting and damaging to producers of importing countries.

5) Reduction of tariffs of products of interest to developing countries. India would therefore be prepared to go along with a formula cut in tariffs, although again, with some safeguard mechanism in place. In this respect, it is therefore supporting the Cairns Group of exporting countries which are asking for larger tariff cuts.

Splits within ASEAN on the extent agriculture should be liberalised

There are definitely stark differences between the ASEAN countries, which is why to date ASEAN as a grouping has kept a fairly low profile in the Committee on Agriculture's AIE discussions. The ASEAN countries instead have been active participants of the Cairns Group. The 'softer' Cairns group ASEAN members, such as the Philippines, has said that its participation has brought a developing country perspective to the Cairns Group discussions, thereby softening the Cairns Group position.

Thailand

Of all the ASEAN countries, Thailand aligns itself most comfortably alongside the 'hard' Cairns group members, such as Australia. It prides itself to be the largest agricultural exporter in ASEAN and sees food security as an issue relevant to 'other' developing countries. Similar to the public stand taken by the Cairns Group, it takes the following position:

1. Market access: i) deep cuts in tariffs for agricultural products, elimination of tariff peaks and escalations ii) the expansion of tariff quotas for most countries, especially the developed countries. iii) more transparency and predictability in tariff quota administration.

2. Domestic Support: i) The Blue Box (subsidies provided by production limiting programmes) should be eliminated. ii) review the Green Box (WTO-legal subsidy programmes). There should be more transparency when countries use the Green Box, and also criteria should be developed about what is allowed and what cannot be allowed under the Green Box. At present, it is too loosely formulated so that developed countries too easily justify their supports under the Green Box. iii) some flexibility to address the food security needs of developing countries.

3. Export Subsidies: i) Elimination of all export subsidies and disciplines on export credits. (The EU is presently the main provider of export subsidies and the US provides export credits). Export credits should be used only in times of emergencies.

4. Special Treatment Clause (also known as the 'Rice Clause') i) The elimination of this clause which presently allows a handful of countries to postpone tariffication on their staple products till 2000 for developed countries and 2004 for developing countries. At present this clause is only used by Philippines and South Korea for rice, and Israel for sheep and goat meet, cheese and milk powder.

Philippines

In contrast, the position of the Philippines and Indonesia are much less driven in the direction of rapid liberalisation. The Philippine stand is that the objective of the review should be to bring about a fair market. Only when there is fairness (and a rebalancing of the current imbalances of the AoA) should there be further liberalisation.

The Philippine position is as follows:

1. Market access: Further market access opening should mean more access opportunities for developing countries' exports, rather than more opportunities access for developed countries (as has been the experience following the AoA).

2. Domestic Supports: There should be effective disciplines on the present use of domestic supports by the developed countries. The current concept of the Aggregate Measure of Support (AMS) should be reviewed. The AMS measures trade distorting domestic supports that have to be reduced. There are too many loopholes in the concept and calculation of the AMS which benefits the developed countries. Developed countries have not had to reduce their AMS significantly to meet their AoA commitments.

Like Thailand, Philippines also wants more transparency in developed countries' use of domestic supports. More flexibility should be given to developing countries in the use of domestic supports.

3. Special Treatment Clause: The extension and even expansion of the Special Treatment or Rice Clause for developing countries to protect their staples.

4. Export Subsidies: Elimination of export subsidies.

Indonesia

Of all the ASEAN countries, Indonesia is most concerned about food security issues and their stand on the issue has similarities to that of India. They have said that it is too simplistic to assume that liberalisation would help countries achieve food security. Indonesia has 200 million people. The volume of rice traded on the international market a year amounts to 30 million tones. Indonesia alone consumes 20 million tones. It would therefore be impossible for Indonesia to rely on the global market for its food.

Indonesia's position, therefore, is that the AoA must allow their government sufficient flexibility to develop the domestic agricultural sector. It is also a livelihood issue, as over 50% of the population are small farmers.

As a member of the Cairns group, Indonesia is backing the Cairns position of lowering market access barriers and particularly in products exported by developing countries. In turn, Indonesia is counting on the Cairns group promise to include food security concerns as an S and D (special and differential treatment) consideration.

However, Indonesia's hands are tied, having accepted IMF conditionalities. No matter what their food security concerns may be, Indonesia's position is that they will carry on with the trade liberalisation agenda. An example is the change of policy now on the import of rice. Rice was once only imported by Indonesia's state trade enterprise, BULOG. Now private companies with import licenses are allowed to import rice.

From the Indonesian government's perspective, the contradiction between their food security concerns and their commitment to blaze ahead on the trail of liberalisation seems to be resolved in the knowledge that they have the 4th largest population in the world. With a domestic market of 200 million people, the government seems almost overly confident that their domestic market will be able to cope with imports as a result of liberalisation.

But even so, an Indonesian official has informally commented that if the country becomes too dependent on imports, 'we have to pay for imports with foreign exchange that has to be created by our production of manufactured goods. Do you think it would be wise for our government to produce foreign exchange just to be able to import food? We need to be self-reliant because we are basically agricultural. That is our endowment. We have plenty of land which is fertile'.

The question here is: to what extent the Indonesian government will bend to protect the livelihoods of their farmers, when pressure is put on them to liberalise in the near future?

Cairns Group's New Food Security Language

In the past few months, the Cairns Group has in fact changed its tune slightly. Where before, food security did not feature in their position, they have recently began to speak of taking into consideration the food security concerns of developing countries, as perhaps an 'S and D' consideration (special and differential treatment) in the AoA.

This could be due to the successful tempering of the softer Cairns group members such as Philippines, Indonesia, Malaysia, Columbia and Paraguay. More likely the real catalyst has been competition against the EU's 'agriculture as multifunctional' position. The Cairns Group have adjusted their position to make it more acceptable to the developing countries.

However, no work has actually been done so far on the exact details of how food security can be incorporated as an S and D consideration and this leaves one wondering if the S and D provisions on food security (after they survive negotiations) may be anything more than superficial.

The 'Agriculture as Multifunctional' grouping

The EU, Japan, South Korea and Norway have been the key proponent of the multifunctionality argument. They have repeatedly brought up the argument that agriculture is not only about food production, but serves many other purposes including non-trade concerns such as ensuring food security, environmental protection, protecting the cultural landscape etc.

Therefore, while the proponents of multifunctionality do emphasis food security, they have not managed to win over the developing countries. Developing countries as well as the US and the Cairns Group largely perceive the arguments for multifunctionality as only a pretext of for the continued large subsidies the EU and other European countries provide their agricultural sector. The fact remains that while these countries are sprouting politically correct food security language, in practice, they are still exporting their subsidised products overseas, destroying the small producers in developing countries.

Developing countries too are wary of the fact that food security under the auspices of 'multifunctionality' will get lost in myriad issues also covered under multifunctionality. Most if not all of these other issues, are really developed country concerns - environmental protection, cultural landscape etc. As only one of a basket of so many issues, and contentious ones to boot, developing countries would rather not risk trusting that food security concerns will be taken care of with the rest.

An Indian representation has informally said that they have abandoned the language even of 'multifunctionality' and 'non-trade concerns' and, at the WTO, are zooming to the point and bringing up food security as their critical issue that must not be trampled upon as a result of greater liberalisation.

With the exception of Mauritius and some Caribbean countries whose economies are closely tied with the EU's preferential economic arrangements, multifunctionality is becoming almost a bad word at the WTO.

Will the South be trampled upon as the elephants fight?

The Analaysis and Information Exchange (AIE) process which has allowed countries to submit papers for discussion at the Committee on Agriculture meetings will soon be concluded by late July. From then on, there will be much more intense negotiations on the positions that have been presented during the course of the AIE process.

A handful of developing countries have brought forth their own concerns. A paper on the lack of market access opportunities was jointly submitted by the Dominican Republic, Cuba, Honduras and Peru. This was followed by another paper, submitted by the same group of countries, critiquing the inadequate nature of the present S and D provisions in terms of 'leveling the playing field'.

However, the food security issue seems to have been left out on a limp. Developing countries are building some close alliances with the Cairns group but the alliance may just be too close for comfort. The Cairns Group has not developed any concrete proposal on how food security will be effectively protected in the context of fiercer liberalisation.

On the other hand, it is well known that right on top of the Cairns Group's/ US agenda is more substantial cuts in tariffs for better market access opportunities.

The real danger here as the powerful fight it out, the developing countries will end up cutting their tariffs substantially, hence giving yet more market access opportunities to the developed countries (and other larger developing countries), in return for very superficial S and D provisions on food security.

On this issue, they should take heed of comments by an old hand at the game, Ambassador Hill of Jamaica, who has commented that 'Countries will be mistaken, if they enter the negotiations thinking that their interests will be taken care of through special and differential treatment provisions'.

The present special and differential treatment provisions are superficial, sometimes bordering on irrelevant. There will never be a level playing field between the developed and developing countries and several provisions at the periphery are merely cosmetic. In fact, their existence is more dangerous than useful since it lends credibility to WTO agreements that remain heavily imbalanced against developing countries.

Aligning themselves too closely with either of the giants, and trusting that their interests, especially in food security will be taken care of will not serve the interests of developing countries. The WTO at present, remains an organisation which serves the powerful. Developing countries, however, are in fact giants of another breed. They are powerful in their numbers. It is up to them in this coming trade round, to choose to organise around their common interests, or to remain the grass that is trampled upon when the elephants fight.

* Aileen Kwa is a Research Associate of Focus on the Global South and the Southeast Asian Food Security and Fair Trade Council. She is currently based in Geneva.