The agricultural agenda of the FTAA

Agriculture will prove to be one of the most sensitive and contentious issues on the FTAA agenda. If the experience of NAFTA is a precedent, the liberalisation of this crucial sector will deal a dramatic blow to the rural economy and food security in Latin America.

by Eduardo Gudynas 

A MEETING of trade ministers from the Western Hemisphere held in Buenos Aires in April launched an ambitious negotiating agenda for the creation of the Free Trade Area of the Americas (FTAA), despite the continued dispute involving the United States and Canada, which have not given up protectionism, and the Latin American countries, which demand trade liberalisation. One of the most conflictive points is agricultural products. 

In the FTAA negotiations, one of the most controversial issues is that of farm and livestock products. Latin America is a major agricultural producer, as much for internal consumption as for export. The sector holds a lot of weight in the national economies: the Gross Agricultural Product accounts for around 10% of the total, but rises to 25% if all agro-industrial phases are included. In addition, 40% of all exports are farm-produced food products. 

These indicators make it clear that any modification in the region's agricultural trade will have a great impact on the national economies. This relevance rises further still when social and environmental aspects are taken into account. In many countries the peasant farming economy continues to be the principal source of food in rural and urban areas alike, providing sustenance to millions of people. 

Latin American exports face threats on several fronts and many could be dramatically affected by the FTAA. Prices for farm products remain stagnant or have fallen, numerous Latin American countries are competing with each other in selling the same products, and nearly all suffer the consequences of subsidies and protectionism in the developed countries. 

Within this complicated context, the agricultural negotiations of the FTAA are unfolding. And there have been disputes from the outset, arising from the fact that the United States and Canada are the very countries that continue to implement subsidies and protectionism. The United States spends as much as $30 billion on these measures annually. 

Pursuing 'parallelism'

At the Buenos Aires ministerial meeting, several countries continued their efforts in pursuit of 'parallelism', in which the tariff concessions they grant are reciprocated with the lifting of farm protectionism in the North. Though this tension remains, it is no small matter that  the  ministers  once again confirmed that they would respect a 'single undertaking', in which agreement on all  issues  is  indispensable for getting the free trade zone underway. This could serve as insurance for the countries of the South in their bid to dismantle the much-questioned measures upheld by the industrialised countries. 

In spite of these problems, the region's governments agreed to a specific agenda for the Agricultural Negotiating Group that is not only very ambitious, but also disproportionate to the time available for discussions. This group is to recommend negotiating methods and conditions and establish the scope and procedures for eliminating export subsidies, how practices that distort farm trade should be handled, and formulas to prevent health and sanitary measures from turning into unjustified obstacles. The Group must also identify non-tariff trade-obstructing measures and draw up a timeline for their reduction or modification. All of these recommendations, and many others, are supposed to be ready by 1 April 2002, in order to be evaluated one month later. 

Groundwork for negotiations

In other words, negotiators have one year to establish their recommendations. Though nothing stands in the way of adding new items later, the basic agenda is critical for laying the groundwork for the discussions. Here there is the risk that, whether due to lack of time or human resources, many questions will not be subject to close scrutiny, or agreements will not be reached with other countries to successfully propose matters before the Group, thus losing opportunities for advantageous reforms. 

The Quebec Summit of the Americas, which took place two weeks after the Buenos Aires meeting, did not produce any substantial changes. In the Plan of Action agreed by the presidents, there is a modest chapter on agricultural management and rural development in which repeated calls are made for the participation or creation of markets based on the sustainable use of natural resources. 

Given this situation, the ministerial meeting in Buenos Aires takes on added importance in that it set the basis for the new negotiations on trade liberalisation in the hemisphere. Critical matters such as practices that distort agricultural trade, including measures that have impacts equivalent to export subsidies, will be the focus of a good part of the debates, especially since there is no real limit to their scope.  In this way, Mercosur (the Southern Common Market, which comprises Brazil, Argentina, Paraguay and Uruguay, with Bolivia and Chile as associates) will be able to force debate on certain methods of farm support practised by the United States and Canada. To do so will require adequate preparation, including an improved analysis of the domestic situation of farmers in the two northern countries, many of whom are experiencing a crisis analogous to that of the Southern Cone of South America. In addition, Latin American governments should listen closely to the producers and the exporters, who have first-hand knowledge of the trade barriers. 

Distinguishing legitimate support from the bogus

Considering the plurality of actors involved, the arguments advanced in the negotiations should be carefully studied. It must be determined which support measures are legitimate - in the sense of curbing price distortions, ensuring product quality, and protecting consumers and the environment - and which are bogus, such as altering prices and reducing product quality. 

It is no small matter that the United States and Canada continue to modify their farm support practices, abandoning obvious protectionist measures - such as export subsidies - and adopting diversified forms of assistance instead. Many of these measures are in the 'green box' category and are authorised by the World Trade Organisation (WTO). Several of those instruments are surely legitimate - such as support in the case of natural disasters or for technological reconversion - and are similar to those applied by some countries of the South that still have remnants of state programmes (Brazil, for example). But many others are merely covert barriers, which especially favour big business and imply negative impacts for farmers, whether in the South or the North. 

The United States believes that many of these questions should not be covered by rules generated under the FTAA itself but should instead be addressed within the WTO, where agricultural negotiations are gaining new relevance. Beyond that, it is resisting revision of any of its agricultural measures. The situation in the US Congress is no better. Tom Daschle, of South Dakota, the new Senate majority leader, is known as a 'rural populist' for his support of farm subsidies and would surely oppose any concession to the Latin American countries. 

These agricultural matters are complemented by negotiations in other groups, notably those involving investment and anti-dumping. A large portion of US agricultural policy has been widely denounced for resorting to dumping practices, against which the companies or governments of the South have little chance of competing. 

All agricultural matters in the FTAA require greater attention, given the negative precedents of trade liberalisation in this area. In effect,  Mexico, as member of the North American Free Trade Agreement (NAFTA), has experienced an invasion of subsidised food products from the United States - with the treaty's own safeguards being ignored - and a dramatic blow to the rural economy and food sovereignty. To the extent that the FTAA appears to be an expansion of NAFTA towards the south, these same dangers loom over many Latin American countries.