The emergence of the Group of 20 (G-20)[1] as a vocal force at the WTO offers one more opportunity to redress the obvious inequities in the current international trade regime. Not surprisingly, since the inception of the G-20, its members have been under pressure to dilute their opposition to and accept one more version of the Agreement on Agriculture (AoA) that permits protection in the developed North and opens markets in the developing South. The G 20 must resist the pressure to agree to a new AoA and push for a resolution of global agricultural trade issues outside the framework of the AoA.
The AoA: A Questionable paradigm:
The AoA was essentially brought into being, on the one hand, to facilitate opening up of the protected markets of Japan, Korea, India and China for the agri-businesses of North America and the European Union (EU), and on the other, to bring about a semblance of order to the trans-Atlantic rivalry in the world agricultural export markets. The main goal of the AOA has always been to regulate monopolistic competition between the EU and the United States (US) for third country markets, now increasingly for agro-processed and genetically modified agricultural products.
The paradigm of the AoA as conceived in the Uruguay Round is not only alien to the kind of peasant farming that is typical of the South, barring a few temperate zone, middle- income agricultural exporting countries. Its effect is to disrupt this small-holder based family agriculture as it opens up developing country agricultural markets to the highly subsidized imports from the EU and the US.
If the experience of the last eight years is any indication, entrenched interests will prevent the regime of domestic supports and subsidies prevailing in the US and EU and sanctified by the AoA from undergoing any substantial and radical change. What modifications may take place will be marginal, stemming mainly from internal fiscal constraints.
Indeed, Brazil and many other Cairns group countries know this very well but seem to adopt the paradigm of the AoA, more as a means of sharpening their rhetoric of criticism of the trade majors, and less as a matter of conviction. Nonetheless, one must also recognize the relatively far greater importance to their economies of the question of access to the American and European markets for their agricultural exports. The problem is that, being hostage to the politics of subsidies for special interest groups, the AoA does not provide a stable and reliable framework for expanding their markets. As regards India, China and other developing countries within G-20, the paradigm of integration with the world agriculture market is itself questionable ab initio. Neither the safeguarding of the food security for food import dependent countries such as such as Nigeria and Egypt, nor the promotion of the interests of small farm producers in countries such as the Philippines, Zimbabwe and Indonesia is feasible within the paradigm of the AoA.
The paradigm of the AoA, if allowed to succeed, will only pauperize the peasantry of the South, undermine its food security and ultimately destabilize the polities in the third world.
It is unrealistic to think that countries such as Kenya, India and the Philippines will be allowed to maintain a "comfortable" level of tariffs on agricultural imports. It is even more unrealistic to expect that corporatization of the farming sector and increased opportunities for export will help bring about the long delayed agricultural transformation of these economies. The enormous displacement of peasantry that this would entail (without providing alternative avenues for employment) is fraught with the danger of destabilization of the democratic polity.
In short, the paradigm of the AoA does not provide a solution to the complex agrarian questions and developmental needs of all the different countries in the G-20. Hence there is an urgent need for the G-20 Members to selectively de-link themselves from the AoA.
The Road Ahead
Such de-linking from the oppressive AoA framework is feasible since there are already existing legitimate mechanisms in global trade that can be used to better serve the interests of the G-20 and the rest of the developing word. As they come together in July 2004 to discuss the future of the Doha Negotiating Agenda, we propose that the G-20 seriously consider the following: reclaiming the right to use Quantitative Restrictions (QRs) and implementing an expanded and reinforced Global System of Trade Preferences (GSTP).
The Right to use Quantitative Restrictions
It is of paramount importance for developing countries, to insist on the right to use Quantitative Restrictions (QRs) to selectively de-link their agrarian economies from the paradigm of AoA. This alone will provide such countries a space for exploring and working out appropriate strategies for national development that protect the interests of their agricultural producers. While claiming and justifying the right to use QRs, they can ill-afford to be prisoners of the neo-liberal, text-bookish dogma that QRs are inconsistent with the GATT/WTO approach and agreements.
A mere look at the Agreement on Textiles and Clothing which is very much an integral part of WTO, recalling the entire exercise of tariffication that preceded the AoA, and last but not the least, the extant provisions of Article XVIII of GATT – will show how entrenched the QRs are in the system.
What is more, to protect their own agricultural producers, the trade majors have provided for themselves a quota system, a version of QRs, in the AoA, in the name of Tariff Rate Quotas (TRQs), where a fixed volume of imports is allowed at a lower tariff rate and beyond that level, imports are allowed only at prohibitive tariffs.
If the protection of the decrepit textile industry in the developed countries, which admittedly formed a very minor part of their economies, could justify imposition of QRs for six decades; if QRs could be resorted to by agricultural giants almost throughout the life of the GATT and beyond; if safeguarding the external financial position of the developing countries could justify resort to QRs; then the paramount need to safeguard the livelihood of billions of peasants in the developing world should certainly provide an even more sound and compelling justification for resort to QRs.
We are aware that the use of QRs does not offer export-oriented countries within the G-20 the prospect of expanding markets for their agricultural exports in the industrialized West. But this requirement could be met by negotiating improved access to such exports under a calibrated regime of trade liberalization among developing countries, where the danger of unfair competition is practically non-existent and where proper safeguards could also be built in more easily to ensure a degree of freedom necessary to allow working out of appropriate national strategies for agrarian transformation. Similarly, in order to take on board the concerns of food-import dependent countries, multilateral, regional or bilateral food security measures, including direct trade measures such as long -term contracts at affordable prices, could be envisaged as an integral part of the inter-developing countries’ trade and economic cooperation.
Implementing the GSTP: Charting a South-South Trade Geography
When the Uruguay Round of negotiations was threatening to shift the paradigm of the multilateral trading system to their detriment, developing countries had taken a political initiative of far-reaching importance to counter the threat. India, Brazil, Yugoslavia and Egypt were at the forefront of this move.
Thus it was that the negotiations on the Global System of Trade Preferences among Developing Countries (popularly known as the GSTP) were launched by the Group of 77 at their Ministerial Meeting in New Delhi in July, 1985. This was followed by the Brasilia Ministerial Meeting in May, 1986, where the initiative was fleshed out further. And finally, at the Belgrade Ministerial Meeting in April, 1988, a full- fledged international legal treaty was concluded, which for the first time in their history, provided a comprehensive multilateral framework for developing countries to strengthen their mutual trade and economic co-operation.
The GSTP was a timely, strategic response on the part of developing countries and signaled collective resistance to the onslaught of the Uruguay Round. Unfortunately, in a short space of the two years that followed, the political will of the leading developing countries floundered in the wake of the pressures exercised by powerful industrialized countries, particularly the USA, and the international financial institutions, viz. the International Monetary Fund (IMF) and the World Bank.
It is worthwhile to recall this recent history in the current context. For one thing, it highlights the dangers that have always stalked the moves to initiate policies of collective self-reliance. But more importantly, it also underlines the fact that a parallel, if not alternative, multilateral framework for mutual co-operation among the developing countries is already available. Specific measures and modalities as envisaged above as part of the creative strategy accommodating the interests of all the tendencies in G-20 are consistent with the framework and the underlying approach of the GSTP. When the prevalent paradigm of the AoA is threatening the survival of the three billion strong peasantry in the developing world, the vision of collective self-reliance becomes all the more relevant. And leading member countries of the G-20 have a historic responsibility for restoring this vision and making it operative. The need of the hour is to strengthen the System further by including China as its integral part and make it operationally meaningful through new initiatives on trade in agriculture.
We welcome the June 2004 Sao Paolo Consensus Statement from UNCTAD-XI that underscores the importance and increased relevance of the GSTP framework to increase South-South trade in an equitable manner.
The current conjuncture offers the G-20 an historic opportunity to transform the global agricultural trading framework from the current AOA paradigm, the final outcome of which can only be the irreversible crisis of billions of developing country farmers, to one that promotes the survival and prosperity of their agrarian producers in the context of equitable international trade. We urge them to break with the past and choose the future.
S. P Shukla, India
Devinder Sharma, India
Walden Bello, Philippines
Yash Tandon, Zimbabwe
Alejandro Nadal, Mexico
Tahir Hasnain, Pakistan
Pasuk Phongpaichit, Thailand
Notes:
1. The current composition of the G-20 includes Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Africa, Thailand, Tanzania, Venezuela and Zimbabwe.
1. The current composition of the G-20 includes Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Africa, Thailand, Tanzania, Venezuela and Zimbabwe.
