Indonesia has declined to sign on to a Cairns Group position paper (6 September) on market access in agriculture that calls for drastic tariff cuts.
The Cairns Group, led by Australia, comprises 18 exporting developed and developing countries pushing for an ambitious trade liberalisation agenda in agriculture. Indonesia is currently a member.
The Cairns Group paper calls for deep cuts in bound tariffs for both developed and developing countries in the current round of negotiations. The group’s paper wants developing countries with tariffs in agriculture between 0-50per cent to be cut to a maximum of 25per cent and tariffs between 50per cent and 250per cent to be reduced by 50per cent. Such huge tariff reductions will further devastate the livelihoods of small farmers in Indonesia.
In the talks, Indonesia said that it could consider the Cairns Group proposal, but only if four staple crops are excluded from any further bound tariff reduction commitments – rice, sugar, soya and corn.
This was rejected by the Cairns Group.
The average bound tariff rate in agricultural products for Indonesia is already low, at 47per cent, with the exception of several staple crops.
CAIRNS GROUP TURNS ON THE PRESSURE
When Indonesia indicated that it would not go along with the Cairns Group proposal, various forms of pressures were put on officials in Jakarta and in Geneva, by the leading developed countries of the Cairns Group. These countries did not want Indonesia to distance itself from the grouping.
In Jakarta, ambassadors have been visiting their Indonesian counterparts and other cabinet ministers. Lower level officials have likewise been lobbying Indonesian bureaucrats.
WHY AUSTRALIA AND NEW ZEALAND WANT INDONESIA IN THE GROUPING
Australia and New Zealand do not want Indonesia to distance itself from the Cairns Group primarily because Indonesia is a key regional market for the two big agricultural exporters.
There are bilateral agreements between Australia and Indonesia on investment and on aid and technical assistance provided by Australia. In general, such forms of bilateral assistance can often have the effect of influencing recipient countries into accepting the demands of the country providing such assistance.
INDONESIA’S FOOD SECURITY HANGS IN BALANCE
There is little compassion in the world of WTO negotiations. It is riddled with political games, and pressures by the big countries representing their corporations to gain markets in other countries. For countries like Indonesia, pressures by the bigger countries are not easy to stand up to given their vulnerabilities (e.g. IMF loans etc), unless they are counter-balanced by pressures from the ground at home.
There are already many signs of disquiet in the country. This is not surprising given the silent crisis of hunger. Seventy per cent of Indonesian children under 5 years are malnourished in a country where a quarter of the people (over 50 million) live below the poverty line.
The agricultural liberalisation that Indonesia has undertaken in recent years, due to IMF and WTO commitments, has led to the explosion of food imports in staple crops. Indonesia is now one of the world’s top rice importers, importing at least ten per cent of its rice. Between 1995 – 2001, sugar imports have increased by 45 per cent and soya imports by 40 per cent.
Overnight, the livelihoods of farmers have been destroyed. This is serious, in a country where over 100 million people live in the rural areas and the majority live on subsistence farming. Indonesian officials are fearful that policies which further aggravate the crisis will plunge the country into political instability.
US AND THE EU: DUMPING ON A MASSIVE SCALE
The obvious question is why should Indonesia liberalise when the biggest exporting countries are slapping increasing amounts of protectionist subsidies on their farmers and selling their products at below the cost of production in Indonesia?
The US and the EU are the prime perpetrators of protectionism. The US exports corn at prices 20per cent lower than the cost of production and wheat at 46per cent below cost. Supports for soya in 1998-2000 total 20per cent of the value of production. In May this year, the Bush Administration adopted a Farm Bill promising to raise spending by an additional $ 73.5 billion over the next decade, in addition to the existing supports.
Three of the four crops that Indonesia has asked for exemptions in tariff reductions are targeted to be given additional subsidies through the US Farm Bill – rice, soya and corn.
As if this is not enough of a slap in the face to its trading partners like Indonesia, the US Senate on 10 September voted an additional $6 billion in aid for corn and wheat farmers hurt by drought!
The European Union also subsidises its farmers heavily, with subsidies hitting 45 billion euros a year, nearly half of its 98 billion euro budget. The EU is a net exporter of sugar, yet subsidises sugar to the tune of over 50per cent of the value of production. With enlargement creeping up on the EU, by 2004, total spending on agriculture will no doubt significantly increase.
THE POSITION OF CIVIL SOCIETY GROUPS ON AGRICULTURAL NEGOTIATIONS
The Indonesian government position – calling for the protection of rice, corn, sugar and soya – does not meet all the demands of farmers’ groups within Indonesia. Food security cannot be narrowed down to four crops if small subsistence farmers’ livelihoods based on biodiversity are to be protected.
Small farmers in Indonesia and internationally are calling for the total exclusion of WTO rules from agriculture – a position supported by Focus on the Global South — and Indonesian NGOs are also calling for Jakarta to get out of the Cairns Group.
Whether or not life improves for the malnourished Indonesian children depends eventually on whether the Indonesian government heeds the food sovereignty position taken by those it purports to represent. Nevertheless, Jakarta’s brave attempt to stand up to the big bullies in the negotiations must be supported as one step in the right direction.
* Aileen Kwa is a research associate with Focus on the Global South based in Geneva.