Focus
On The Global South:
Call On Governments To Reject Agriculture Text
Proposed Rules for Agriculture Will Increase
Imbalances: More Small Farmers Will be Decimated
The 13
September text on Agriculture does not redress the existing imbalances in the agriculture
agreement. There is NO attempt to reduce domestic supports and export
subsidies, as called for by the majority of developing countries (G21, as well
as the African Group, LDC, and ACP alliance). Also, NO attempt has been made to
address concerns of small farmers. In fact, it will increase these imbalances
since it very clearly allows developed countries to continue their subsidies
and dumping, even as developing countries are asked to take on drastic tariff
cuts!
The results
will be the decimation of small farmers. We call on governments to reject the
draft text.
US/EU PERPETUATE ALL CURRENT DOMESTIC SUPPORT
PROGRAMMES
Retaining the AMS
Whilst
Developing countries have called for the elimination of the AMS, the text shows
that the US/EU intend to maintain the AMS for their most important products since
the text says that ‘Product-specific AMS shall be capped at their respective
average levels during the period ….” With the Farm Bill, the US is already
hitting the ceiling of its 19.1 billion a year maximum AMS. Such supports will
be perpetuated.
Perpetuation of the Blue Box
Whist
developing countries have called for the elimination of the Blue Box (Article
6.5) supports, which again has been acknowledged to be trade distorting, the
text will essentially allow for a Blue Box, up to 5% of the total value of
agriculture production. (5% is a very significant amount since the EU’s total
production is very large). There is also no end date for when the Blue Box will
be eliminated.
Green Box: Major Loophole and Instrument of
Inequity Reinforced
The common
position of developing countries is that the Green Box should be capped and
reduced. The Green Box currently allows an unlimited amount of subsidies to be
provided. The US and EU are also increasingly shifting their subsidies to this
supposedly ‘non-trade distorting’ Green Box.
At present,
the Green Box is ALREDY described as having no, or at most minimal trade distorting
effects. The reality of course is that the Green Box, given in tens of billions
is very much trade distorting. The only line on the Green Box in the text,
“Green Box criteria shall be reviewed with a view to ensuring that Green Box
measures have no, or at most minimal trade-distorting effects or effects on
production” will only maintain the status quo.
Recommendation:
The Green
Box must be capped and reduced. The Amber and Blue box subsidies should be
eliminated. These provisions are as important as the elimination of export
subsidies, since they too contribute significantly to dumping.
If these
provisions are not agreed to by the US and EU, developing countries should not
agree to any reduction in tariffs.
Ridiculous S&D in Domestic Supports
Developing
countries are not big providers of domestic supports - providing only a small
fraction of the total domestic supports given by all Members. Asking developing
countries therefore to reduce their domestic supports (albeit with a longer
time frame) when their total levels are already very low compared to the
developed countries makes no sense and is penalizing developing countries, when
ironically dressed up as an ‘S&D’ measure.
Developing
countries should call for Developed countries’ domestic supports to be brought
down to their levels (a harmonized level) instead. That would constitute more
genuine S&D!
MARKET ACCESS: ANOTHER S&D FOR DEVELOPED
COUNTRIES
Developed Countries to Protect Domestic Markets
Through Tariff Peaks
Here again,
the developed countries have crafted the text in such as way as to provide
S&D for themselves, allowing tariff peaks in their most sensitive sectors
to continue - hence tightly protecting their own markets from the developing
countries.
In Para
2.2, it says that tariff lines exceeding a maximum of x percent will be reduced
to that maximum or “ensure effective additional market access in these or other
areas through a request-offer process”. That is, if these peaks are to be
brought down, developing countries will have to pay for this! This is
equivalent to allowing developed countries to enjoy “Special Products”
treatment, even as developing countries are told that their Special Products
must still undergo automatic tariff reductions (unless they are ‘very low’).
The Special Safeguard (SSG) Is Another Special
Treatment for Developed Countries That Should be Eliminated
The SSG is
only currently available to 38 countries
- 16 developed countries and 22 developing countries. The EU is able to
apply its SSG on 539 products, US on 189, Canada on 150 products Switzerland on
961.
Many developing
countries (particularly the Alliance on SP and SSM) have argued that this SSG
has been another S&D for developed countries since most developing
countries are unable to invoke any automatic safeguard, whilst most developed
countries are. They have called for its termination, and instead the
establishment of a Special Safeguard Mechanism (SSM) for all developing
countries.
The text
says that the SSG’s use and duration remain under negotiation. However, when it
comes to the SSM (para 2.9), it is clear in the language that only the most narrow
SSM will be agreed upon - ‘subject to conditions and for products to be
determined’. In the negotiations, developed countries and some developing
countries have already argued that the SSM will only be provided for products
where deep tariff cuts are undertaken in this round. Such linkage - most likely
to be pursued after Cancun would make null and void the value of any SSM.
Recommendation
The text
instead should make clear that there must be an SSM for all products. The
Safeguard is a normal trade tool recognized by the GATT, and is a temporary
measure to address price volatility and import surges. This is very important
for the majority of small farmers in developing countries.
Tariff Reduction Formula For Developing
Countries: A Disaster for Small Farmers
Most
developing countries have opposed a Swiss Formula (drastic tariff reduction) yet
it has been suggested in the text. Tariffs are their only defense mechanism
against the $360 billion dollar subsidies a day provided by the OECD, that has
led to dumping in their markets.
The formula
proposed clearly intends to open up developing countries’ markets. The
“Strategic products” criteria is of no value, since tariff cuts still have to
be taken, and since the number of SP products will be ridiculously small. Only
those products with already very low tariff bindings are exempted.
It even
calls for some tariffs to be brought down between 0-5%.
Article
2.8: ‘The applicability and/or extent of the provisions of paragraph 2.2 above
to developing countries remain under negotiations’ is another S&D for
developed countries. Whilst they enjoy the ability to protect high tariffs
under 2.2, allowing developing countries to do so is questionable!
Recommendations:
Developing
countries should not agree to this section. This is the most dangerous part in
the section on agriculture. Any agreement in this direction will wipe out small
farmers in developing countries, since it will only allow more imports to be
dumped.
Any
agreement in the area of tariff reductions should only be taken if there is
agreement to REAL and drastic domestic supports cuts (as opposed to ‘box
shifting’) and elimination of export subsidies.
EXPORT COMPETITION
The text is
unacceptable. It unravels what was promised in Doha. There is no commitment to
eliminate export subsidies, but in fact to perpetuate them.
Again, the
S&D section here is a laugh. Developing countries hardly provide any export
subsidies compared to the developed countries. It is therefore mind-boggling
that they are asked to reduce these, and it is considered an S&D!
PEACE CLAUSE
The peace
clause has given developed countries immunity in their subsidies. This should
not continue. The Peace Clause should expire in December 31 as agreed to in the
Agreement on Agriculture.
By Aileen Kwa, Focus on the Global South - in Cancun