On tenterhooks in Geneva

By Ravleen Kaur
Published: Friday 15 August 2008

Developing countries push for markets at WTO mini-ministerial

Farmers' associations all over India were holding protests demanding exclusion of agriculture as an agenda in the World Trade Organization (wto) talks, even as the organization's mini-ministerial debated ways to secure "meaningful market access in agriculture, manufacturing and services". At the time this magazine went to press, farmers' groups were apprehensive that the Union minister for commerce might sign a deal at this meet in Geneva allowing the entry of cheap agricultural products from the developed world. "That would be the last nail in the coffin of small farming in India," said Sheelu Francis of the Tamil Nadu Women's Collective, an organization representing over a lakh agriculture workers in the state.

The draft for negotiations for the Geneva ministerial--the third draft on the matter--did not accede to most demands of developing countries, the principal one being substantial cuts in subsidies offered to farmers in the us and European Union. These subsidies end up lowering prices of agricultural products in the developed countries below the production cost of farmers in developing countries, giving the former unfair market advantage.

At the time this magazine went to press, the us had made an offer to reduce its permissible subsidies to us $ 15 billion--it had offered 16.4 billion last year. Washington is currently allowed to distribute more than us $48 billion in subsidies under wto's agreement on agriculture, yes, us $48 billion. But the actual subsidies given to farmers in the us are only about us $7 billion. So the subsidy proposed at Geneva actually gives us the leeway to increase its actual subsidies--not an unlikely possibility given the recent hike in food prices.

There were more strings. The developing countries have to facilitate non-agricultural product market access. Union commerce minister Kamal Nath is not totally averse to the idea. But he also added, "I hope the proposed subsidy cut is only their opening gambit and not their bottom-line. The subsidy cut really makes no substantial impact."

"The Prime Minister thinks we should close this issue but unless India's interests are met, we should not move forward," Nath said on July 17 before leaving for Geneva. This statement has made farmers' movements apprehensive that India might end up signing the agreement on agriculture at the mini-ministerial without any major changes. "The minister seems keen to sign the Doha agreement of the wto when he says that it should be finalized soon. This when the Indian government knows that the us Farms' Bill, 2008, promises up to us $ 307 billion in subsidies to farmers over the next five years," says Yudhveer Singh of the Indian Coordination Committee of Farmers' Movement, New Delhi.

The Geneva meet is the latest in the Doha Round of wto negotiations--named after the venue of its first meet. The talks, which began in the Qatari capital in 2001, aim to slash subsidies and other barriers to trade "to help reduce poverty and spur economic growth in developing countries".

According to wto's categories, there are three kinds of subsidies of which only one is considered to distort production and trade, the Amber Box. With developing countries pressuring the developed countries to cut down on Amber Box subsidies, many subsidies have been move to the Green Box category--deemed as not trade distorting--and the Blue Box--trade distorting but permitted with certain conditions. Over 80 per cent subsidies are in the green and the blue box.

Singh put the reclassification in perspective. "I asked farmers in Switzerland, if subsidies were cut down there. I was told that the same subsidy that was being given in the name of agriculture yesterday, comes in the name of environment now," he said. Bhaskar Goswami of the Delhi-based collective of scientists, policy makers and farmers, Forum for Biotechnology and Food Security offered further explanation. "Countries are allowed to dole out subsidies to their farmers for food security. This is a Green Box subsidy. The us and the eu give out subsidies for cereals, oilseeds and pulses in the name of food security. But 60 per cent of all this is fed to dairy animals. So a subsidy given in the name of food security becomes trade distorting," he said.The latest text talks about disciplining such Green Box subsidies. "But there are no specifics as to how they will be disciplined. So this seems to be hogwash," Goswami said.

In fact, if the draft for the Geneva ministerial is an indicator, some pro-developing country mechanisms of the wto could be on their way out. Amongst them is Special Safeguards Mechanism (ssms), which allows developing countries to protect their producers from losing out to imported products. Whenever a developing country faces a sudden surge in imports or a depression in domestic price beyond a given threshold, it can invoke ssms and slap additional import duties to protect its market. The new text, however, mentions that the tariff allowed under ssm cannot exceed the pre-Doha round level--they were very low then. Even Nath expressed disappointment at the new ssm rules in Geneva. "Are we expected to stand by, see a surge in imports and do nothing?" he asked in his speech on July 23. Negotiations were on when this magazine went to press.

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