Agriculture major test of WTO credibility, says Ricupero

by Chakravarthi Raghavan

Geneva 23 Sep 99 -- The credibility of the WTO and the trading system, and whether it will survive or not as a credible system will depend on how agriculture is going to be treated at the wTO and in any new negotiations that may be launched, UNCTAD secretary-general Rubens Ricupero said today.

Ricupero also said that at a minimum all export subsidies on agricultural products should be ended in the WTO negotiations - and this should be done without developing countries paying any price for it.

He was speaking at a symposium organised by the FAO on options in agriculture negotiations at the WTO from the perspective of the developing countries.

Explaing why he felt that the credibility of the WTO rest on the treatment to agriculture, Ricupero said that if the WTO and the system was really based on theories of free trade, and if free trade would result in efficient allocation of resources, then how could one explain that for 50 years agriculture had been left out of the disciplines of the trading system.

Comparing the various transition periods in various WTO agreements, Ricupero remarked that in the case of agriculture, the transition period which began with the waiver to the US in 1950, and resulting subsequently in no rules and disciplines on agriculture trade, had now existed for 50 years. And even now full disciplines did not apply.

The Uruguay Round came to a useful decision in bringing the textiles and clothing trade (which had been outside GATT for over 40 years) and the agriculture into WTO disciplines. But, in textiles there was to be a phaseout at the end of 10 years, but after 5 years there was still no meaningful liberalisation, and he was not at all sure that the old MFA restrictions would be ended in 2005. And the situation in agriculture was worse, he said.

The first essential proposal on agriculture should be to end domestic support and improve market access to the exports of developing countries, Ricupero said, noting that at the beginning of the Uruguay Round, the US had come up with what it called zero option - zero domestic support, zero tariffs and zero subsidies for export.

But the final outcome in agriculture was an example of the total imbalance of the trading system and this imbalance had to be reversed.

Development should be at the centre of the next round of negotiations, and this included agriculture too. The objective should be to formulate proposals for a fair and equitable trading system that provides benefits to all.

This time, Ricupero said, there was active participatiion by developing countries.

He however that agriculture was going to be a difficult and complex problem.

On the multifunctionality plea, Ricupero recalled the Brazilian experience where by establishing in Manau state in the Amazonia region, a processing zone for imports without tariffs, setting up electronic production for supply to the domestic market, rural population that had been damaging the Amazon forests by cutting and setting fire to trees, had migrated to the city. "This showed the multifunctionality of industry," Ricupero said and asked why agriculture alone should be dealt with as "multifunctional"..

If developing countries could be asked to end subsidies for industrial products and their exports, and undertake obligations under TRIMS (against local content requirement) on the ground that this was a principle of free trade and they could not seek any compensaition or price, why should developing countries asked to pay a price for the industrial countries ending subsidised agricultural exports, asked Ricupero.

Ending agricultural export subsidies should not be a matter of bargaining, and developing countries should refuse to pay any price, Ricupero said. (SUNS4515)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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