TWN Info Service on WTO and Trade Issues (Nov13/10)
25 November 2013
Third World Network  

CSOs call for permanent solution on food security
Published in SUNS #7702 dated 22 November 2013
 
Geneva, 21 Nov (Kanaga Raja) -- Rejecting a temporary ‘peace clause' over food security, over 270 civil society organisations and global union federations have called instead for a permanent solution over the G-33 proposal on public stockholding for food security purposes.
 
This call came in a letter sent on Wednesday to the Director-General of the World Trade Organisation (WTO), Mr Roberto Azevedo, as well as WTO Member States.
 
In their letter, the groups urged the global community, including the WTO Director-General and the Member States, to address this issue and make changes in the Agreement on Agriculture (AoA) that allow developing countries to use such subsidies for public programmes on food to support poor farmers and consumers.
 
"We demand that you do not make a mockery of the hunger of millions round the world by accepting a peace clause that is unusable and damaging for long term solutions. We urge you to ensure that the international trade rules work for the people across the globe and not against them," the groups said.
 
Separately, also on Wednesday, several Pakistani civil society organisations sent a letter to their capital-based officials as well as their country's negotiators in Geneva, in which they demanded that their government reject a short-term peace clause (see below).
 
Last week, a letter was sent by Indian farmers to Prime Minister Dr Manmohan Singh, in which they had called on the Indian government to also reject the proposed ‘peace clause' text (see SUNS #7698 dated 18 November 2013.)
 
[Meanwhile, an informal Heads of Delegation (HOD) meeting on agriculture was held at the WTO on Wednesday, at which several countries (Pakistan, Paraguay, Thailand, Ecuador, Uruguay, and Mexico) had voiced objections to the proposed draft text on the ‘due restraint' (or ‘peace clause'). According to a trade source, concerns were voiced over the number of traditional staple food crops, the duration of the ‘due restraint', and the safeguard provision. (More below).
 
[Meanwhile, French agronomist and civil society activist, Jacques Berthelot, in three recent posts at the Solidarite website, has questioned the facts claimed in a letter of the US farm lobby to the USTR and Senators over puported ‘subsidisation' of food procurement and exports by India, Pakistan's claims about Indian rice exports in attempting to mobilise support from Thailand, Vietnam and a few others against the ‘peace clause', and other agriculture subsidy issues. Berthelot has said that in fact the US and EU are in violation of the Agreement on Agriculture, by wrongly placing their subsidies in the green box, that Indian exports of high quality Basmati Rice is by local procurement at prices higher than international market prices, and no subsidy is involved. SUNS.]
 
Among the international and regional organisations and networks that signed onto the letter sent to the Director-General and Member States are ACP Civil Society Forum, Action Aid International, Africa Trade Network (ATN), IBON International, International Trade Union Confederation (ITUC), LDC Watch, Oxfam, Peoples' Health Movement, Pesticide Action Network (Asia Pacific, and Africa), Public Services International (PSI), Social Watch, and Third World Network (TWN).
 
A host of national organisations and individuals also signed onto the CSO letter.
 
"Unfortunately the G-33 proposal has found stiff opposition from the developed countries, notably the USA and the EU. Developed countries [are] using WTO rules to neutralize peoples' right to food," said Ranja Sengupta of the Third World Network, one of the signatories to the letter.
 
"The opposition of developed countries are unjustifiable in the light of existing asymmetries between developed and developing countries. For instance, in 2010, the poor in India received on average of only 58 kg per person, 3.1 times less than the 182 kg per person of the 80 million beneficiaries of cereals food aid in the USA. This is also 4.2 times less than the 241 kg for each of the 46.6 million beneficiaries of the Supplemental Nutrition Assistance Program (SNAP) or food stamp programme in the USA," said Jacques Berthelot of the French NGO Solidarite.
 
The CSO letter urged the Director-General and Member States "to take the issue of food security in developing countries as a matter of serious and immediate concern, and not to render the G-33 proposal on public food stockholding a travesty by asking developing countries to agree to the current text on the peace clause."
 
Across the developing world, it noted, millions of people, most of them poor, still do not have basic and minimum access to food.
 
According to the FAO, 868 million were undernourished in 2011-12, of them 304 million in South Asia and 234 million in Sub Saharan Africa. Even more disturbing is the fact that nearly 3.1 million children under the age of 5 die each year because of poor nutrition (Hunger Statistics, World Food Program 2013).
 
At the same time, in a volatile global economy, millions of small farmers are engaged in precariously poised food production that provides them essential livelihoods and caters to their own as well as their country's food requirements. Eradication of global poverty and hunger would be impossible without addressing these concerns.
 
"It is clear that the global economy, with all its growth, has failed to take care of both poor farmers and food consumers across the vast majority of developing countries and least developed countries (LDCs). In sum, they still need support from their own governments, supported by the global community."
 
However, said the CSO letter, the rules of multilateral trading that have been institutionalised through the WTO make it impossible for developing country governments to provide this support. When GATT (WTO's predecessor) was negotiated, all, except 17, developing countries which were not giving any subsidy at that time were barred from increasing subsidies, and were to adhere to a limit of 10% of additional production that could be given out as subsidies.
 
In contrast, developed countries that gave massive subsidies to their agriculture sector were asked to reduce these trade distorting subsidies (OTDS) by only about 20%. Moreover, they were allowed to shift most of their subsidies to a "green box" which was marked as non-trade distorting.
 
"It is by now well established that both types of subsidies are very much trade distorting and have undercut prices, encouraged dumping of subsidized agricultural products in developing country markets and has threatened global market access for developing country farmers."
 
The CSO letter added: "This twisted legacy of the WTO has resulted in a gross imbalance in global agricultural production, distribution and trading system. This has prevented developing country governments from providing essential support to their numerous small producers, or to poor consumers through direct measures, price supported public food stockholding or other processes, even if financially they are now able to do so."
 
For example, India's recently passed Food Security Act, which aims to provide minimum food entitlements to the poor 67% of the population, will need an allotment of US$20 billion and will conflict directly with WTO's set limits. The WTO mandated obligations will constrain India from fully implementing its Food Security Act.
 
The letter noted that this peculiar juxtaposition in WTO's agricultural trade rules has led the G-33 group of developing countries to table a proposal on food security at the WTO that argues that public food programmes for supporting livelihoods of small farmers and food consumption of the poor should be considered part of the "green box" and allowed without limits by changing the existing Agreement on Agriculture (AoA).
 
Under the WTO rules, a subsidy through price support shall be calculated using the gap between the fixed external reference price and the applied administered price.
 
The reference price was fixed at average f. o. b. (free-on-board price from farm gate till its delivery on the ship) price notified by each country for 1986-1988. Since the "fixed external reference price" is much lower than the minimum support price levels (MSP), the subsidy tends to get much inflated in comparison to reality.
 
In addition, said the letter, the entire production "eligible" to receive the subsidy and not the "actual" production is to be the basis for subsidy calculation, thus inflating subsidies further. Obviously for large developing countries the total subsidy calculated under broad price support programmes tends to significantly overstate the actual financial support provided to farmers.
 
On the other hand, the total domestic support of the USA grew from US$61 billion to US$130 billion between 1995 and 2010. The EU's domestic support, which went down from 90 billion euro in 1995 to 75 billion euro in 2002, bloated again to 90 billion in 2006 and 79 billion in 2009. A broader measure of farm protection, known as total support estimate, shows the OECD countries' agriculture subsidies soared from US$350 billion in 1996 to US$406 billion in 2011.
 
Unfortunately, said the groups, the G-33 proposal has found stiff opposition from the developed countries, notably the USA and the EU.
 
This is despite the fact that in 2010, the poor in India received on average of only 58 kg per person, 3.1 times less than the 182 kg per person of the 80 million beneficiaries of cereals food aid in the USA. This is also 4.2 times less than the 241 kg for each of the 46.6 million beneficiaries of the Supplemental Nutrition Assistance Program (SNAP) or food stamp programme in the USA.
 
"A matter of urgent concern is that all elements of the G-33 proposal have now been rejected for consideration in Bali and a peace clause (or due restraint clause) on the G-33 proposal is currently the only element being discussed at the WTO. A peace clause means that the use of such subsidies is still illegal but WTO Members will not go to dispute settlement for this period."
 
The letter noted that the Director-General has suggested a "take it or leave it" text on the due restraint clause for Bali. However, this is to be effective only for 4 years and does not guarantee that a permanent solution will eventually materialise.
 
Further, the conditions sought to be imposed are severe, said the letter, noting for example that the Anti-Circumvention/Safeguard clause asks the member states to "ensure that stocks procured under such programs do not distort trade".
 
"This broad condition may make it virtually impossible for any developing country to use this provision. This will dilute the already weak peace clause rendering it totally ineffective and would sound the death knell for millions of poor in India and in other developing countries," said the groups.
 
"The time to act, therefore, is now. Before it is too late, before millions perish because the global leaders could not rise above their own myopic agendas. Before hundreds of thousands of children are not able to make it to school or play or laugh because they are too weak from hunger. Before millions go to sleep not knowing what they will give to their family for food the next day," the letter underscored.
 
"In the complex labyrinth of international norm setting, it is the poor and marginalised who are being denied their livelihoods and minimum access to food. Global rules are challenging public provision of essential goods and services across the developing world. It is important for the WTO to address these concerns in its forthcoming and crucial ninth ministerial conference at Bali," it concluded.
 
In the letter sent on Wednesday to their own government officials, several Pakistani civil society groups expressed serious concern over the recent development in the WTO negotiations with respect to the Peace Clause on the G-33 proposal.
 
"We demand a long-term solution to protect livelihoods and food security of our farmers and vulnerable communities of our country. As Pakistanis, it is the right of our farmers to have access and control over food production," said the letter.
 
In this respect, the groups demanded that their government reject a short-term Peace Clause.
 
Among the groups that signed onto the letter are Pakistan Kissan Mazdoor Tehreek, Roots for Equity, Job Creators Development Society, Human Unity Movement, United Rural Development Organisation, Young Writers Forum, and Social Alternatives for Community Empowerment.
 
In their letter, the groups were of the view that the proposed peace clause is in fact a threat to food security, further noting that Pakistan is among the top six countries at the Global Hunger Index, "which is a very alarming situation".
 
The proposed peace clause further contributes in intensifying the hunger since it has a negative trend towards the ability of developing country governments to procure food from their producers for public stock-holding and distribution to the poor.
 
The price being asked to be paid at Bali for this Peace Clause is very high, the groups said.
 
"For a very weak Clause that only lasts for four years, developing countries have been asked in return to agree to a Trade Facilitation Agreement. This Agreement will be very expensive to implement for lower income countries. In addition, it will increase imports for net-importing countries."
 
The letter argued that this will be an immense challenge for the domestic national industries, increase countries' trade deficits, and lead to countries diverting scarce resources from more deserving budget priorities at the national level towards putting in place very onerous and unnecessarily elaborate customs procedures geared towards clearing the goods of exporters quickly.
 
Meanwhile, an informal HOD meeting at the WTO on Wednesday saw several countries objecting to the proposed text on the ‘peace clause'.
 
According to a trade source, Pakistan told the meeting that it appreciated the hard work of the D-G, but that it had a ‘red line' on the issue of safeguards and the coverage (the number of staple food crops). It also had a commercial interest, saying that its farmers would also demand a similar programme. It said that it cannot accept the text in its present form.
 
According to the trade source, Thailand said that the interim solution would affect the rules, including exempting members from domestic support limits. Exporters must ensure that there is no harmful effects on them, it added.
 
Mexico had major concerns on its effects on international markets, said the trade source.
 
According to the trade source, the US said that it had listened carefully to all the concerns and that it shares these concerns. But it has come to the conclusion that this is the landing zone. It believed that the text is workable in relation to these concerns.
 
According to the trade source, India asked if there was no consensus so that it can report back to capital.