As forecast the Sixth WTO Ministerial Conference being held in Hong Kong has generated massive public manifestations outside the conference site against the WTO and globalisation. Within the conference a highly-charged atmosphere prevails in which, at this point of time, the negotiations seem to be going nowhere; instead disagreements flourish everywhere.
Agriculture in the new trade regime
Although the range of issues to be covered in the negotiations is wide, varied and complex, again it has turned out to be the case that agriculture more than any other sector has come to symbolise the deep differences among WTO members over the way forward. To say that agriculture is the pivotal issue around which the negotiations would 'sink or swim,' should not be taken to mean that in terms of monetary value trade in agriculture is the most important. As we have noted last week trade in agricultural crops and food represent a relatively small proportion of international trade in goods and services. The importance of agriculture goes far beyond its value in global trade.
Readers should note that even in the most benign and uncontentious set of economic circumstances, it would be exceedingly difficult for the global community to bring agriculture under the regime of a highly liberalized trade regime in the same way it has done for manufactures. Historically, agriculture has been the most politicized sector in international trade. Government intervention in the sector is the rule rather than the exception. In every country, regardless of the social system, the production, distribution and marketing of agricultural products reflect the reality of massive governmental intervention. In the case of sugar with which readers are familiar, this crop has become notorious for being the most political product sold in international markets.
State farms (as in Guyana), private farm producers with political clout (as in Europe), and government subsidised producers (as in the USA) all produce, sell and trade sugar. As a consequence the sugar market is highly distorted. There is an array of administrative controls serving different purposes in the separate national jurisdictions of member states of the WTO. In a real sense the world market for sugar is a misnomer, as it is a residual or remainder market covering the sale of a product whose output and demand is densely regulated.
Agriculture: multifunctional
For reasons such as these and others, agriculture has been termed an activity that is 'multifunctional.' This status is recognised in the WTO, and special rules reflecting it now attach to agriculture. To label agriculture as 'multifunctional' is to recognise that the goal of agriculture production is not straightforward commercial gain or loss. Instead, other social, cultural, and even political objectives have to be satisfied through the activities of the sector. Thus some countries see agriculture as the cultural backbone of their society and a legacy of historical evolution from a peasant past.
Others see it as geo-strategic, serving food security needs so that at times of disaster, war or other national distress, the country is not made to suffer unduly. It is even the case that some countries view agriculture as having aesthetic appeal (the rural countryside) and others see it as an attractive and complementary sector to their tourism industry as with the sugar-cane fields in Barbados and St Kitts-Nevis.
The result of all this is that there is an enormous amount of hypocrisy in the way the rich countries deal with agriculture in the WTO. Invariably they preach the need for treating agriculture much like other commodities that are subject to the disciplines of the market-place. What they do in practice, however, is to blatantly pursue a course of double-standards.
Rich countries' subsidies and hypocrisy
In a recently published paper (November 2005) Oxfam presented some startling data arising from its efforts to track the level and extent of agricultural subsidies that are in place in rich countries. To begin with they found that although everyone focuses on highly publicised agricultural products like sugar and cotton, in fact, "the trade superpowers are illegally subsidising a slew of products, from butter to orange juice, from tobacco to tomatoes, and from corn to rice." These subsidies have been estimated to value US$13.5 billion. Of this amount 70 per cent is attributed to the USA (US$7.9 billion) and the remaining 30 per cent to the European Union, EU (US$4.2 billion). Oxfam cautioned that large as this estimate is it was not exhaustive as it did not cover all products.
In both the EU and the US the vast majority of their subsidies go to transnational corporations (TNCs) involved in agri-business, and to wealthy landowners. European and American small farmers do not benefit greatly from these arrangements, simply because agrarian change in the two regions has largely marginalized small farm cultivation in several agricultural commodities.
Oxfam is of the view that most of the subsidies they discovered are illegal and violate WTO rules. Because of this they encourage direct legal action to seek to have the situation redressed.
They have produced a list of the concerned products, identified the major users of subsidies in connection with them, and the potential plaintiffs to bring the case. Of note, one of the products is rice, and Guyana has been identified as a potential plaintiff along with Suriname and Haiti (Caricom members) as well as others in Latin America (for example Venezuela), Africa (Ghana and Zambia) and Asia (India).
Readers may find the list of other products useful as they include tomatoes, canned peaches and canned pears, citrus fruit juice, wines and spirits, tobacco, butter, skimmed milk and corn along with rice.
Such revelations have emboldened the developing countries to claim that the rich countries seem hell bent on seeking to derive benefits from the present Hong Kong negotiations 'for free.' That is, while on the one hand demanding concessionary access to the markets of poor countries, on the other they continue to subsidise their agriculture to the detriment of the poor countries.