Globalisation: food security and the agreement on agriculture Guyana the wider world by Dr Clive Thomas Stabroek News March 4, 2001 Last week we started the second phase of the series with an introduction to the topic, globalisation and food security. In that article we explored the meaning of food security as applied in the international literature, and set the stage for further discussion with some basic facts and figures. Basically it was noted that there was enough food produced globally to provide adequate nutrition for everyone. The imbalances between the demand and supply of food that exist, reflect the worldwide imbalances in the distribution of income, wealth, knowledge, and power. Most of global food deprivation, hunger, and want are located in the developing world. This poses some fundamental global dilemmas. Why do 800 million people, mostly in the developing world, go hungry if there is enough food to feed them all? Can anything be done about it? Or, is it ingrained in human nature to ignore the suffering of fellow humans on such a large scale? Will this situation lead to conflict or even war between the haves and the have-nots? In an age of remarkable technical advances, where does technology fit into this scenario? How does all this relate to globalisation? Agreement on agriculture Last week we hinted at three global transformations that are underway, which have a direct bearing on these matters. Today we examine the first of these, which is the WTO/Uruguay Round Agreement of 1995, along with its subsidiary Agreement on Agriculture (AOA). Together these provide the canopy or umbrella under which the liberalisation and globalisation of agricultural trade in general and food trade in particular is taking place. Within this framework there are seven mechanisms that have a major impact on trade in food. We look at each of these briefly. Agricultural export subsidies The first of these is the export subsidies provision of the AOA. This provision is that the quantity of agricultural exports subsidized should be reduced by 21 percent by 2000 for the industrialized countries. For the developing countries, the provision is for two-thirds of the amount or 14 percent by the later date, 2004. The provision also calls for budgetary spending on subsidized agricultural exports to be reduced by 36 per cent by 2000 based on average spending over the years 1986-90, for the industrialized countries. For the developing countries the provision is for two-thirds of that amount or 24 per cent by 2004. These apply on a product by product basis. Agricultural market access Second, the AOA has provisions for market access. It requires that all non-tariff barriers on agricultural trade be converted into their tariff equivalents. These barriers include import quotas, import-licensing, state trading and so on. The tariff equivalents are to be calculated on the basis of data for the period 1986-88. The tariffs arrived at are then "bound". Thereafter they are to be reduced by 36 percent by 2000 in the case of the industrialized countries. In the case of the developing countries the target is 24 percent by 2004. In practice most countries have set the tariff-equivalents at extremely high levels. This is known as "dirty tariffication". The effect of it is that, despite the percentage reductions, the absolute values of the tariffs remain very high. Partly to guard against this, countries have to provide a "minimum access" for agricultural imports. The minimum access commitment starts at 3 percent of market share and rises to 5 per cent by the end of the period. In the market access provisions, tariff-quotas are to replace ordinary quotas. This requirement, is designed to deal with existing trade agreements like Lome Convention/Cotonou Agreement, which are based on special agricultural quotas granted to particular developing economies (e.g., bananas). It should be noted that there is also a special "safeguard clause", which allows for the imposition of additional duties if perchance trade is seriously disrupted! Domestic subsidies The third provision relates to domestic support or subsidies for agriculture. The agreement calls for the sum of commodity specific and sector wide aggregate subsidies to agriculture in the industrialized countries to be reduced by 20 per cent by 2000. The calculation is based on the level of subsidies in the period 1986-88. For the developing countries the reduction is two-thirds of this or 13.3 per cent. Subsidies classified as non-trade distorting are exempted from this provision. Such agricultural subsidies are classed as "Green Box" subsidies where they have zero or minimal trade distorting effects on production and also offer no price support to agricultural producers. They are classed as "Blue Box" subsidies, when they relate to direct payments on production limiting programmes. Not surprisingly, the agricultural subsidies that are exempted from liberalization are precisely the ones prevalent in the industrialized countries. The subsidies that are prevalent in developing countries are input or investment subsidies. These are not, however, are not exempted! TRIPS, SPS, and TBs The fourth provision deals with Trade-Related Aspects of International Property Rights (TRIPS). It covers such issues as patent protection for micro-organisms and biological processes, including genetically-engineered animals and plants. The fifth provision covers the use of sanitary and phytosanitary measures (SPS) and technical barriers (TBs) to trade. In general such barriers to agricultural trade are only permitted where they are based on scientific findings. They should not be used as measures to protect domestic agriculture from competition. However, much controversy has centred on this. Special provisions The sixth provision covers the special and differential trading arrangements "afforded" the developing countries. In the case of the "least developed countries," they are exempted from all reduction commitments. We also saw that the other developing countries have longer time periods and smaller levels of reduction than the industrialized countries, when meeting the provisions of the Agreement. The "least developed countries" also have special provisions for food aid and technical assistance. The AOA also provides for food security stocks to use administered and not market prices. Finally, the Agreement has provisions directly related to food aid. Next week I shall present the two other transformations underway and begin the evaluation of all thre2. Follow the goings-on in Guyana in Guyana Today If you do not see the 'Guyana: Land of Six Peoples' drop-down menu on the left then please click here to enter through the front door which will give you additional options and information.