EconomicsTHIRD WORLD

TRENdS & ANAlySiS

Published by the Third World Network KDN: PP 6946/07/2013(032707) ISSN: 0128-4134 Issue No 560 1 – 15 January 2014

WTO conference adopts

The ninth of the WTO, which took place in Bali, , on 3-7 December, approved a set of decisions, including on the contentious issues of food security and . While it has been touted as a success for the WTO as a negotiating forum, the “Bali package” is seen as a modest accord and one that is also imbalanced in its distribution of benefits.

l WTO conference closes after adopting Bali package – p2 l WTO makes a small deal – p4 l The uncertain gains from trade facilitation – p10 l Bali food security deal a first step towards WTO rule reform? – p12

No 560 Third World Economics 1 – 15 January 2014 1 CURRENT REPORTS WTO THIRD WORLD Economics WTO conference closes after Trends & Analysis adopting Bali package 131 Jalan Macalister 10400 Penang, Malaysia Tel: (60-4) 2266728/2266159 The WTO’s ninth Ministerial Conference, held in Bali on 3-7 December, Fax: (60-4) 2264505 Email: [email protected] approved a set of outcomes that included texts on trade facilitation and Website: www.twn.my public food stocks. Kanaga Raja reports. Contents GENEVA: The ninth session of the Min- given the floor. isterial Conference of the World Trade The Chair then proceeded to take CURRENT REPORTS Organization (WTO) came to a close on action on a revised draft Ministerial Dec- 2 WTO conference closes after 7 December morning after adopting a laration (which had been circulated on 7 adopting Bali package Ministerial Declaration, the entire Bali December morning), the five draft Min- package of 10 texts, and five other Min- isterial decisions, and the Bali package 4 WTO makes a small deal isterial decisions. of 10 texts. All were duly adopted to a The conference, which was sched- standing ovation. 4 Differences emerge, MC9 fate uled to end on 6 December, spilled over The revised Bali Ministerial Decla- hangs in balance into the following day when a very small ration had added the following para- 7 Minister Sharma explains India’s group of countries, citing some concerns, graph under the trade facilitation sub- position on food security had refused to join the consensus on the heading: “In this regard, we reaffirm that draft Bali package at an earlier informal the non-discrimination principle of Ar- ANALYSIS heads-of-delegation (HOD) meeting. ticle V of GATT 1994 remains valid.” 10 The uncertain gains from trade The proposed Bali package was pre- According to trade officials, this para- facilitation sented to WTO member state delegations graph was included to address the con- at an informal HOD meeting at around cerns voiced by Cuba. 12 Bali food security deal a first step 8 pm on 6 December. Another informal The five Ministerial decisions were towards WTO rule reform? HOD meeting was held at around 1 am on TRIPS non-violation and situation on 7 December. complaints, work programme on elec- However, at this informal meeting, tronic commerce, work programme on according to trade diplomats, Cuba, small economies, aid for trade, and trade THIRD WORLD ECONOMICS , Venezuela and Bolivia said and transfer of technology. is published fortnightly by the Third World Network, a grouping of organisations and that they could not go along with the The 10 texts comprising the Bali individuals involved in Third World and texts. package were the agreement on trade development issues. Trade diplomats said that two issues facilitation; general services; public Publisher: S.M. Mohamed Idris; Editor: were raised, one being a point of proce- stockholding for food security purposes; Chakravarthi Raghavan; Editorial Assistants: Lean Ka-Min, T. Rajamoorthy; Contributing Edi- dure (when Cuba was denied the floor understanding on rate quota ad- tors: Roberto Bissio, Charles Abugre; Staff: Linda Ooi (Administration), Susila Vangar (Design), at an earlier HOD meeting) and the other ministration; export competition; cotton; Evelyne Hong & Lim Jee Yuan (Advisors). being the issue of transit under trade fa- preferential rules of origin for least de- l Annual subscription rates: Third World coun- cilitation when the text relating to trans- veloped countries; operationalization of tries US$75 (airmail) or US$55 (surface mail); In- parency and non-discrimination (the US the waiver concerning preferential treat- dia Rs900 (airmail) or Rs500 (surface mail); Ma- laysia RM110; Others US$95 (airmail) or US$75 trade embargo against Cuba) had been ment to services and service suppliers of (surface mail). deleted. least developed countries; duty-free and l Subscribers in India: Payments and enquiries (According to a trade diplomat, at quota-free market access for least devel- can be sent to: The Other India Bookstore, Above the informal HOD meeting at around 8 oped countries; and monitoring mecha- Mapusa Clinic, Mapusa 403 507, Goa, India. pm when the draft Bali package was pre- nism on special and differential treat- l Subscribers in Malaysia: Please pay by credit card/crossed cheque/postal order. sented to members, Cuba, which had ment. wanted to speak, was denied the floor. l Orders from Australia, Brunei, Indonesia, Phil- Decision on public food ippines, Singapore, Thailand, UK, USA: Please Cuba then said that it would not join the pay by credit card/cheque/bank draft/interna- consensus in relation to the texts, accord- stockholding tional money order in own currency, US$ or euro. If paying in own currency or euro, please calcu- ing to the trade diplomat.) late equivalent of US$ rate. If paying in US$, please An informal HOD meeting that was On the critical issue of food security, ensure that the agent bank is located in the USA. later scheduled for 4.30 am on 7 Decem- paragraph one of the Ministerial Deci- l Rest of the world: Please pay by credit card/ cheque/bank draft/international money order in ber was postponed to 10 am the same sion on public stockholding for food se- US$ or euro. If paying in euro, please calculate day, and this was followed quickly by curity purposes states: “Members agree equivalent of US$ rate. If paying in US$, please ensure that the agent bank is located in the USA. the closing plenary session. to put in place an interim mechanism as At the closing plenary, the Confer- set out below, and to negotiate on an Visit our web site at http://www.twn.my. ence Chair, Indonesian Trade Minister agreement for a permanent solution, for Printed by Jutaprint, No. 2, Solok Sungei Pinang Gita Wirjawan, paid tribute to the late the issue of public stockholding for food 3, Sungai Pinang, 11600 Penang, Malaysia. Nelson Mandela, and South African security purposes for adoption by the © Third World Network Trade Minister Rob Davies was also 11th Ministerial Conference.”

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A footnote to this paragraph states graph 2 shall ensure that stocks procured port quotas in developed countries. The that the permanent solution will be ap- under such programmes do not distort agreement on trade facilitation will plicable to all developing members. trade or adversely affect the food secu- streamline customs procedures by re- The second paragraph of the deci- rity of other Members. ducing unnecessary fees, paperwork and sion states: “In the interim, until a per- “5. This Decision shall not be used practices, said Gita. manent solution is found, and provided in a manner that results in an increase of “This week has been about high that the conditions set out below are met, the support subject to the Member’s level diplomacy, long nights and consid- Members shall refrain from challenging Bound Total AMS or the de minimis lim- erable drama. But it has also been about through the WTO Dispute Settlement its provided under programmes other ensuring that the gains of the multilat- Mechanism, compliance of a developing than those notified under paragraph eral trading system reach our small busi- Member with its obligations under Ar- 3.a.” nesses and our most vulnerable econo- ticles 6.3 and 7.2 (b) of the Agreement on As to the work programme, the de- mies. It is moreover an international Agriculture (AoA) in relation to support cision states: agreement that will have local impact.” provided for traditional staple food crops “8. Members agree to establish a Speaking at the same press confer- in pursuance of public stockholding work programme to be undertaken in the ence, WTO Director-General Roberto programmes for food security purposes Committee on Agriculture to pursue this Azevedo said that in recent weeks the existing as of the date of this Decision, issue with the aim of making recommen- WTO had come alive, and “we have seen, that are consistent with the criteria of dations for a permanent solution. This I think, the organization the way it paragraph 3, footnote 5, and footnote work programme shall take into account should be. Negotiating, dynamic, work- 5&6 of Annex 2 to the AoA when the Members’ existing and future submis- ing hard to get an agreement. And in re- developing Member complies with the sions. cent weeks we really lived up to our terms of this Decision.” “9. In the context of the broader name.” A footnote to this paragraph states: post-Bali agenda, Members commit to “Instead of small groups of countries the work programme mentioned in the negotiating in closed rooms, the entire “This Decision does not preclude devel- previous paragraph with the aim of con- membership came together to negotiate. oping Members from introducing cluding it no later than the 11th Ministe- And this is why all members have own- programmes of public stockholding for rial Conference. ership of the outcomes. And this is why food security purposes in accordance “10. The General Council shall re- they all fought for it. And we have put with the relevant provisions of the port to the 10th Ministerial Conference the world back into the World on Agriculture.” for an evaluation of the operation of this Organization.” On notification and transparency, Decision, particularly on the progress “We prepared a set of texts which the decision states: made on the work programme.” was championed by members from all “3. A developing Member benefit- over the world, of all stages of develop- ing from this Decision must: “A real stimulus” ment, and so I am delighted to say that “a. have notified the Committee on for the first time in history, the WTO has Agriculture that it is exceeding or is at At a subsequent closing press con- delivered. We’re back in business,” he risk of exceeding either or both of its ference, Minister Gita said that what was said. Aggregate Measurement of Support accomplished represented a historic “With these measures on trade fa- (AMS) limits (the Member’s Bound To- achievement – the Bali package. “These cilitation, agriculture and development, tal AMS or the de minimis level) as result agreements will provide a real stimulus we have achieved something very sig- of its programmes mentioned above; to the global economy at a time when nificant. People all around the world will “b. have fulfilled and continue to many countries are experiencing slug- benefit from the package that the WTO fulfil its domestic support notification re- gish growth and high unemployment. members have delivered today, espe- quirements under the AoA in accordance These benefits are real and they will be cially the unemployed, the poor and the with document G/AG/2 of 30 June 1995, durable. Just as importantly, we have vulnerable,” said the Director-General. as specified in the Annex; proved that the multilateral trading sys- In his assessment of the overall Bali “c. have provided, and continue to tem and the WTO can deliver.” package, one trade diplomat told the provide on an annual basis, additional “The deal that we have struck will South-North Development Monitor (SUNS) information by completing the template benefit all WTO Members. It will provide that he could not say it was balanced, contained in the Annex, for each public new opportunities for business in our adding that trade facilitation was the stockholding programme that it main- poorest members, the LDCs [least devel- highest denominator. tains for food security purposes; and oped countries]. Provides governments According to the trade diplomat, “d. provide any additional relevant with assurance that they can implement there remained some unfinished work statistical information described in the food security programmes without fear that needed to be sorted out in Geneva. Statistical Appendix to the Annex as or facing dispute action in the WTO. But What was more worrying, said the soon as possible after it becomes avail- it also offers a safeguard that such trade diplomat, was the time period for able, as well as any information updat- programmes will not be used in a man- the post-Bali work programme (within ing or correcting any information earlier ner which distorts trade and adversely the next 12 months, as set forth in the submitted.” affects farmers in other countries,” he Ministerial Declaration). If no urgency With respect to anti-circumvention/ said. was put into that, the rest of the Doha safeguards, the decision states: Developing-country farmers will Development Agenda risked going into “4. Any developing Member seek- have enhanced market access through an oblivion, the diplomat cautioned. ing coverage of programmes under para- improved system of administering im- (SUNS7713)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp

No 560 Third World Economics 1 – 15 January 2014 3 CURRENT REPORTS WTO

WTO makes a small deal importers can be expected to see their imports rising faster than their exports, The Bali outcome is one that is not only modest but also lacking in with adverse effects on their trade bal- ance, a concern raised by some develop- balance, writes Martin Khor. ing countries. Developing countries are able to The Ministerial Conference of the World that may make it not worthwhile to use designate which specific obligations they Trade Organization in Bali ended with a the . need more time to implement, and there small deal, hailed by many for reviving What is more important is that seri- is also promise of technical assistance for the WTO as a viable venue for trade talks. ous work be done to find a permanent them, but there is only a more vague and The results are however very modest, solution. less explicit commitment to provide and there are also imbalances in gains On another agriculture issue, the them with “financial assistance”. and losses. WTO failed to live up to the deadline set The Bali meeting also approved de- The conference was mainly con- by the 2005 Ministerial Conference to cisions to assist least developed countries ducted behind closed doors, with the eliminate export subsidies by 2013. In- on market access, rules of origin, cotton WTO Director-General Roberto Azevedo stead the weak Bali decision on export and services. However, the decisions are holding meetings issue by issue with a competition regretted the missed dead- not binding and thus have little practi- few countries. Participants were given line and undertook to maintain progress. cal benefit. These LDC decisions should the final draft only a few hours before a Trade facilitation pact be seen as a starting rather than an end final plenary meeting. point, with further negotiations for fu- Most of the week was spent on the ture decisions that are more useful. “food security” issue, with the Director- With the food issue cleared, the Bali Overall the Bali deal lacks balance, General being the go-between between conference was able to adopt a trade fa- as the trade facilitation treaty advo- the United States and India. cilitation treaty which obliges all coun- cated by developed countries is binding India was the most prominent tries to streamline their customs proce- (with those not fulfilling their obliga- among the developing countries that dures and upgrade their technology and tions facing WTO legal cases) while the wanted to change the present WTO rules infrastructure so that imported goods decisions on LDC issues and export on agricultural subsidies that hinder the can be cleared faster and more easily. subsidies favoured by developing coun- ability of governments to purchase and The new obligations can be easily stock staple foods from farmers. met by developed countries that already tries are not binding in nature, while on It was agreed that a permanent so- have the measures and technology, but food security only an interim measure lution involving changes to the rules are onerous on poorer countries that (peace clause) with limited value was ob- ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp would take more time, so Bali discussed don’t have the capacity. tained. an interim measure – a “peace clause” The trade facilitation agreement will Martin Khor is Executive Director of the South whereby WTO legal cases will not be be of greater benefit to those countries Centre, an intergovernmental policy think-tank of taken against countries having a public which are net exporters as their goods developing countries, and former Director of the food stockholding programme. will clear faster in other countries. Net Third World Network. The issue was how long this peace clause would last. India, backed by many developing countries, wanted it to last Differences emerge, MC9 fate hangs in till the permanent solution is found. The US and others wanted the peace clause balance to expire in four years. The final agreement was that the Uncertainty had hovered over the Bali Ministerial Conference as to WTO would negotiate a permanent so- whether the meeting would yield an accord, with calls for striking a deal lution within four years, and countries countered by complaints that the texts on the table were imbalanced. The will refrain from taking cases until that following article, written on 5 December, sets out the state of affairs solution is found. prevailing then. Thus the “food security” developing countries won the battle of duration, but in reality the peace clause is of limited by Kanaga Raja value. First, it applies only to the WTO’s BALI: The fate of the WTO’s ninth Min- meeting with a “package”, a more som- Agriculture Agreement; countries can isterial Conference (MC9) in Bali hung bre picture – one very far from that still sue under another agreement on in the balance on 5 December as mem- painted in the mainstream media and subsidies. ber states set out at an informal plenary some of the posts on the WTO website Second, the peace clause applies meeting of heads of delegation (HOD) since the end of the General Council only to “existing programmes.” Thus differing views on whether to conclude meeting on 26 November – emerged here countries that have no programme and a “package deal” in the final days of from information from other sources. want to start one will not be covered. MC9, or be ready to pass the unfinished The information, provided non- Third, there are cumbersome condi- work over to trade diplomats in Geneva. attributively by delegations that had par- tions, including the country providing a While normal media briefings sug- ticipated in the meeting and from repre- lot of information and notifying that it gested a large majority backed the WTO sentatives of non-governmental organi- has reached its allowed subsidy limit, Director-General’s efforts to end the zations with access to their country del-

4 Third World Economics 1 – 15 January 2014 No 560 CURRENT REPORTS WTO egations and their meetings, brought out the outcomes met their expectations but maturity and thus not ready to be har- in clearer focus some key points made they accepted to go forward in Bali. Food vested. India had been given to under- by some of the countries at the HOD security was a concern of the poor and stand “there would be no negotiations” meeting. there was a need to find a positive out- in Bali, but that the DG could continue According to these sources, both the come. On LDC aspects of the trade fa- consultations among delegations that Chair of MC9, Indonesian Trade Minis- cilitation text, it was a result of consulta- raised concerns. However, further draft ter Gita Wirjawan, and WTO Director- tion among LDCs, the European Union texts should first fully meet the concerns General Roberto Azevedo called on min- and the United States. The LDCs were and only then could they be isters to close the gaps in remaining ar- fully committed to finalizing the entire multilateralized. They should also agree eas and adopt a package in Bali. Many package. on the post-Bali issues and these should countries that spoke echoed this view, Nigeria said they were close to a be concluded in a time-bound manner. and some asked the DG to hold consul- package. It wanted export competition Singapore said a vast majority tations and make proposals on issues to be binding, and would push for it wanted a deal concluded in Bali, but it where differences still existed. There was post-Bali. On public stockholding, it was recognized that some issues were politi- however no consensus on this course. still possible to link this issue to a per- cally sensitive. However, the DG could Several other countries at the HOD manent solution but with a definite strike the right balance and was best meeting made clear their view that the timeframe. Nigeria was ready and will- placed to be “the broker” to help cross proposed texts on the three main issues ing to support a positive outcome on a the finish line. were “imbalanced”. They complained single package. suggested that those that the text on trade facilitation was Egypt wanted a deal in Bali. The with specific problems should try to couched in legally binding language stumbling block was in agriculture, as solve it or ask for the DG’s assistance. whereas the texts in areas of interest to the current text did not fully take into Chinese Taipei supported a positive developing countries only had “best en- account the food security concerns of Bali package as a stepping stone for the deavour” terms or a temporary lifespan developing countries. The Ministerial post-Bali agenda. (the food security “peace clause”). Conference should address this issue Uganda said it was important to Some members were also reluctant and concentrate discussions on it and send a strong message to address the or opposed to giving a mandate to the work around the text to reach a compro- outstanding issues within a realistic DG to come up with “clean” texts for mise, while all technical issues could be timeframe over the post-Bali process, adoption by the Ministerial Conference. included in a post-Bali agenda. including the conclusion of a permanent At the end of the HOD session, Brazil was determined to get a bal- solution on food security, elimination of Azevedo said it was not time to give up, anced package. The Bali package was an all forms of export subsidies and finan- and he would intensify his consultations, essential step, it said. The negotiators cial assistance for trade facilitation. hoping to find “landing zones”. He should be mandated to prepare a post- Chile said there was no point going asked delegations to be ready to convene Bali work programme to continue the back to Geneva without a substantive at any time between now and the clos- Doha Round. Brazil counted on the wis- decision in Bali. It expected the DG to ing ceremony. dom of the Indonesian Minister and DG hold consultations. If they failed, there Conference Chair Gita called on to get the Ministerial Conference there. would be a high price to pay. ministers to build on the progress and believed the Ministerial Con- Pakistan said members should re- close the remaining issues, urging them ference should fully understand the con- frain from taking extreme positions. Pa- to work with the Geneva texts. cerns of members on food security, and kistan was constructively engaged on the would encourage the concerns of “small stockholding text and ready to consider “Extremely close” members” to be addressed. China sup- balanced text, with production distor- ported a package in Bali. tions allowed for very short periods. Participants at the HOD meeting Saying “almost” every member said a deal had to be final- said Azevedo, in “briefing” them, laid strongly supported a deal in Bali, Aus- ized here. If they left Bali with no agree- out his views on the documents and state tralia supported the DG preparing a text ment, the package would be lost and the of play on the three issues: agriculture, to reflect the landing zones. implications for the multilateral trading trade facilitation and development/ Mexico wanted to conclude an system in the long run would be serious. LDCs. agreement in Bali, as it was not useful to Rwanda said the package at hand While none of the texts could be said take the text to Geneva. may not be fully balanced, particularly to be cleared, he suggested “we are ex- India called for “horizontal balance” on development issues. It recognized the tremely close.” The overall message in in the texts. In Section I of the draft trade modest result, but the package reflected Bali, according to him, “is a call for de- facilitation agreement, “there are areas a strong commitment by all to reactivate livering the package.” The type of politi- of concern to us and other Members, the dialogue. Food security was a global cal calls needed for this could not be namely penalty disciplines, release of priority, but it could not understand how made in Geneva. goods, expedited shipments”. Until a global priority could be delaying the Jamaica said it was ready to work these were resolved there could be no process of the Doha Development on resolving the remaining gaps and meaningful resolution of the trade facili- Agenda. Food security was being threat- urged the DG to intensify consultations tation agreement. ened by subsidized food from a number on the issues with those members “at- Public stockholding of food was a of countries. There should be a deadline tached” to those issues with a view to central issue, and finding a permanent for an end to subsidization of agriculture finding landing zones. solution was important. At present there in developed countries. Nepal said the LDCs had never said were various texts at various stages of Cuba did not agree with the DG’s

No 560 Third World Economics 1 – 15 January 2014 5 CURRENT REPORTS WTO assessment,Eurozone crisis and could was spill surprised over into by his Bolivia said it could not agree with ing was needed and it encouraged do- commentdeveloping that world only a few issues were left the DG’s assessment for the following nor partners to assist LDCs to take part to be resolved. The documents produced reasons: The situation had not changed in the overall trading system. inThe Geneva industrial were countries’ the result economic of complex woes since Geneva, except for some progress Russia believed a package could be negotiationsmay end up also and hurting they had the comedeveloping to Bali on the LDC aspect of trade facilitation, concluded in the next 48 hours. It re- withworld, a economists number of caution.issues of vital impor- and there were pending bracketed texts quested the DG to hold consultations tance that were yet to be resolved. Cuba (indicating lack of consensus) in Sections with interested parties and remove by Thalif Deen noted in Bali there were to be no nego- I and II of the draft trade facilitation brackets from the trade facilitation text. tiations but the DG claimed to present agreement. While the trade facilitation Ecuador said Bali must not become NEW YORK: When the global economy wasdocuments hit by a severe that had recession been inresolved. 2008-09, agreement would be binding, on the food “a negotiating forum”. There were un- theMembers negative were fallout called impacted to have heavily a result on security and agriculture issues there balanced results in the texts. On trade theunder world’s pressure, developing as a “take-it-or-leave-it” nations, hindering were no legally binding provisions. This facilitation, it was impossible to under- thepackage. United The Nations’ Bali package key development as it stood was was like a “free lunch” for developed take commitments under expedited ship- goals,a serious including threat plans to the to WTO’shalve extreme credibil- countries. Bolivia would not be “an ac- ments. It must be made a priority to work povertyity. The and Ministerial hunger worldwide Conference by was2015. not complice” in such an unfair package. on completion of the Doha agenda as the the framework that allowed for adoption Bolivia could only adopt a package for only item on the post-Bali agenda. ofThe a currentpackage sovereign and they debt must crisis, continue LDCs. Any consultation in Bali should workspreading in Geneva. mostly acrossAt the samethe eurozone time Cuba be, as in Geneva, in full inclusiveness. No surprises could(EZ) and accept threatening the Ministerial the economies Conference of said although it was im- adoptingseveral Western the documents nations, including on the LDC is- portant to reach a multilateral agreement Venezuela said its understanding sues., Ireland, Greece and possibly on trade issues, such an agreement was that Bali would not be a negotiating SpainBenin and ,said willBali sooner must orhave later an out- should be fair. There was a need for a Ministerial. The proposed package was comeundermine and askedthe developing countries world, to make warn com- strong political decision to turn the agri- unbalanced. It satisfied developed coun- promises.economic analysts and academics. culture part of the package into a bind- tries that had no mandatory obligations. ing decision. If this happened, they Venezuela did not want surprises at the Shrinking markets and potential cuts in Imbalanced package would be able to have a far more bal- conference and insisted on negotiating development aid, which followed the anced agreement and that would make after Bali on Doha issues and only Doha 2008 crisis, could repeat themselves. said the role of the Min- it possible for Argentina to support it. In issues. It considered inappropriate the Mauroisterial Guillen,Conference director was of fundamentally the Lauder to trade facilitation, there were some red proposal to draft text at the last minute. Instituteprovide atpolitical the Wharton input Schooland guidance of in- lines it could not accept, such as Any decision should be taken by consen- Businesscluding for at theresolution University of ofthe Pennsylva- text issue, consularization and expedited ship- sus and solely by consensus. But it sup- nia,and toldalso Inter on thePress nature Service of (IPS)the post-Bali the EZ ments, as they ran counter to the Argen- ported the proposal on the LDC pack- crisiswork would programme. affect developing The package countries was in tine legislation. age. severalimbalanced, ways. with a legally binding trade Japan said texts should not be urged more flexibility facilitation agreement but with other is- opened up. wanted a pack- to finalize the Bali package. First,sues likehe pointed agriculture out, the and EZ LDCs is a huge having age agreed in Bali, saying political will Kenya said the WTO was about bal- market,only “best so endeavouranybody exporting language”; manufac- further was what mattered. The US said the next ance and inclusion and members should turedwork goodswas required or commodities after Bali. would The suffer. bal- few days would be challenging but could all negotiate, taking national realities into ance must involve firm and binding com- succeed. The US was prepared to ask the account. On food security, Kenya called “Themitments EZ is withalso a a big clear investor. time frameIf Euro- that DG to find landing zones. for linking the peace clause to a perma- peanwould companies prioritize feelthe issuesless confident, of agriculture they The EU said a solution could be nent solution. More should be done on couldand LDCs. delay investments,”On public stockholding, he said. the achieved only if they were pragmatic; export competition. Kenya truly feared balance that was struck should give con- among all issues to be solved, the most for the future of the WTO. And, finally, a structural/existential crisis fidence to millions of poor farmers. sensitive obstacle was food security. The Colombia thought this might be the in the EZ would provoke turmoil in global South Africa was committed to working EU could live with the text of Geneva, last opportunity for the Doha Round. financial markets, which would hurt to restore the developmental balance in but if needed it was willing to give cer- Malaysia trusted the DG’s role to deliver developing countries as well, said the Bali package in Bali. Gambia also Guillen,the package. a management professor and an tain concessions. The EU could not ac- internationalCosta Rica expert said on there global was economic a balanced cept an interim solution of an indefinite supported the efforts of the DG to reach affairs.package of benefit for all members of period and said it should be with final common ground in Bali. WTO, and it trusted the DG to identify dates allowing for negotiating a perma- Nicaragua said developing coun- Thethe landingcurrent crisis,zones. according to econo- nent solution. The DG should be en- tries were taking binding commitments mists,Namibia is focused joined not onthose consumer with the debt posi- trusted to take initiatives. and they wanted developed countries to buttion on that government the balance debt. in trade facilitation Zimbabwe said the texts remained do the same, as they were committed to was not as desired and rendered the very unbalanced and needed further a fair result. The“trade-offs” most drastic unequal. measure It had would worries be to on work. The gaps remaining, particularly Thailand said it was still possible to forcethe agriculture countries suchand food as Portugal security and propos- in trade facilitation, could not be closed achieve the Bali package as the finish line Greeceals. Food to securityvoluntarily and leave agriculture the EZ to link- in Bali and it agreed with those who was very close. Uruguay believed the avoidage needed a major to calamity be underpinned to the common in this emphasized the need to come up with a agreement should be balanced; it had Europeanagreement. currency, The “peace the euro. clause” The dideuro not is time-bound post-Bali programme. It also concerns over gaps on export competi- usedlive up by to over its expectation332 million peopleand needed in 17 fur-of proposed that the meeting adopt an LDC tion, and with regard to food security, a thether 27 work. member The countriespost-Bali ofprocess the European should package. peace clause should be limited in time. Unionfocus on(EU). bringing about the desired out- The Solomon Islands said failure in did not feel that the three ele- come between and within the various Bali would have ramifications for all. A ments of the package (i.e., agriculture, Withpillars. the exception of , most successful conclusion to the Bali meet- trade facilitation and development/

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LDCs) were balanced. There were bind- rial Conference on 4 December approved gotiated agreement which allays the ap- ing obligations on trade facilitation and the accession of Yemen as the 160th prehensions of the developing countries it wished the other two elements were member of the WTO. and the poor countries particularly with of such nature or else the landing zone Meanwhile, the conference’s most regard to their vulnerability to archaic could not be found. quotable quote came from an observer rules or dated rules,” he said. New Zealand said there was a need delegation at the plenary, from Arch- to finish the work here and supported bishop Silvano M. Tomasi, Apostolic Non-negotiable right the DG’s efforts to resolve issues. Nuncio and Permanent Observer of the The DG said he detected strong sup- Holy See to the United Nations and As India had maintained through- port for trying to do the deal here. He Other International Organizations in out, the right to food security was non- would intensify his consultations and see Geneva. negotiable, Sharma stressed. This was a where they led. He asked delegations to In his speech, Archbishop Tomasi right which the United Nations recog- be ready to convene in this form at any echoed the recent 84-page apostolic ex- nized, and that was why the UN had a time between now and the closing cer- hortation of Pope Francis and said the Special Rapporteur on hunger and food emony, saying they would be informed apostles of the markets were expound- security (Olivier de Schutter), and re- formally or informally. ing at the WTO ideologies of “absolute ports on hunger and food security issues Following the HOD meeting, some autonomy” of the marketplace and of fi- were regularly presented to the UN. delegates said they expected the DG to nancial speculation, and, consequently, “We also have a commitment to the produce “clean texts” by 5 December an outright rejection of the right of states Millennium Development Goals evening or 6 December morning. How- to exercise any form of control. (MDGs). The countries which are repre- ever, others believed that while this was “A new tyranny is thus born,” Arch- sented in the WTO are also signatories possible for some aspects of trade facili- bishop Tomasi said, “invisible and often [and] have also made commitments to tation, the food security issue was not virtual, which unilaterally and relent- the MDGs, as well as to the right to food. one of text but of fundamental differ- lessly imposes its own laws and rules. Therefore, any decision which we make ences. If these differences could not be An even worse development is that such while putting in place the agreements, bridged, then it would be difficult or policies are sometimes locked in through particularly in agriculture, on food se- impossible to paper over the differences trade rules negotiated at the WTO or in curity [has] to be in harmony with the with some language. bilateral or regional FTAs [free trade MDGs and the right to food security, In other actions at Bali, the Ministe- agreements].” (SUNS7712)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp [and] cannot and must not be in conflict with these noble goals of the global com- munity as a whole.” Minister Sharma explains India’s This was a principled position for position on food security India and it should not be misinterpreted as India entering into a dispute. “We During the Bali meeting, the Indian trade minister had underscored the have urged with respect all members to consider this aspect so that the decisions importance of public food procurement schemes, stressing the need to that we make resonate in the poor and uphold the right to food security and reform the “inherently flawed and developing countries where people are unfairly balanced” WTO farm trade rules. genuinely concerned as to what will emerge out of Bali.” by Kanaga Raja In India, there was a food security programme, and the public stockhold- BALI: Indian Commerce and Industry Asia, in Africa, in South America and the ing for food security was the proposal Minister Anand Sharma on 5 December Caribbean.” which was under discussion. reiterated his country’s position on the “It is a fact that those engaged in Sharma underlined that out of the issue of food security. agriculture in these countries happen to 10 draft texts that were negotiated in At a media briefing in a packed be resource-poor and subsistence farm- Geneva, India had endorsed eight. “This room, Sharma said that India had been ers,” he said. is just to underscore that India is as much engaged in the ongoing negotiations for In agriculture, technologies in many committed as any other nation to have a many months in Geneva with all sincer- of the poor countries – not in India – may successful outcome in Bali.” But at the ity and in the most constructive manner. not be as are available for farming in same time there were issues on trade fa- India had made an acknowledged many of the developed countries. When cilitation where some countries like In- contribution in taking forward not only talking about a country like India, “we dia may be required to change their do- the agenda for this meeting in Geneva talk on behalf of similarly placed coun- mestic laws, and countries found it dif- but also on all the three pillars on which tries whom I will refer to as our partners ficult to make those commitments. negotiations were going on to arrive at a in this coalition of countries which are The crunch was the issue of public solution which was acceptable (and) developing countries which have a chal- stockholding for food security, he said. which embraced all, he added. lenge of food security; countries which He then went on to explain the man- “We live in a world where countries have the issues concerning the subsis- ner in which the issue of food security have different levels of development and tence farmers.” was addressed under the WTO rules. He their challenges differ from nation to “This is one issue which we thought said that countries were allowed to have nation and continent to continent but the should be and needs to be addressed so public stockholding and public procure- vast majority of the world lives in poor that past distortions can be corrected by ment but there was a threshold called the countries, in developing countries, in putting in place through consensus a ne- de minimis. This was linked to the past

No 560 Third World Economics 1 – 15 January 2014 7 CURRENT REPORTS WTO

Uruguay Round agreement, and for the It had had a number of negotiations with Indian election, Sharma said he thought calculation of de minimis, the reference the EU, the US and also with the African that this again was a “misperception”. prices used were of 1986-88. So, in 2013, and ACP (African, Caribbean and Pa- Democracies did have elections, but they all countries had to calculate the de mini- cific) groups and the LDCs. also had principles and convictions. mis for the eligible procurement based He noted that in the past when there He said that the proposal on food on 1986-88 prices! had been a shared concern over the stale- security emanated from the WTO’s Hong “We have been pleading that these mate in the Doha Round of negotiations, Kong Ministerial Conference of 2005. prices need to be updated,” he said, add- it was India which took the initiative and India had not suddenly remembered that ing that the last agreement (Uruguay he had the honour of hosting ministers there were going to be elections and Round) was a flawed agreement – it had and leaders in New Delhi in September “pulled a rabbit out of the hat”. This was an inherent imbalance loaded against the 2009 with an effort and objective to re- an eight-year-old proposal which had developing and poor countries. energize the stalled talks and it did help been discussed, rediscussed, negotiated Pointing out that most countries had as the negotiators returned to Geneva. and renegotiated many times. The G33 seen an escalation of prices in 2013, “India is for the strengthening of the had shown flexibility and lowered the Sharma said: “If anybody says that the multilateral trading system. India stands ambition just to ensure there was a con- food prices have not changed in the last for the strengthening of the WTO. We are sensus. It was the unbracketed portion, three decades, I most respectfully would for a rule-based multilateral trade sys- the consensus position, in the 2008 re- strongly disagree with that.” tem which corrects historical distortions, vised fourth draft on agriculture – this He explained that what India pro- which is fair, which is just, which is eq- meant that it was the settled part of the cured was from the subsistence farmers. uitable.” AoA as on December 2008. “And people It was only a limited percentage of the must respect what was accepted after food grain that was produced by the Stacked against the poor negotiations in the year 2008.” farmers or the different staple foods In response to a question about the which were procured to feed the poor. It Responding to a question, Sharma texts on the table, Sharma asked that, was procured at a Minimum Support said that the when out of 10 texts, India had endorsed Price (MSP), which was not the income (AoA) reached in the eight and was willing even to negotiate support or market support that devel- was “inherently flawed and unfairly bal- the outstanding issues on trade facilita- oped countries had been practising for anced” against the poor in developing tion, “can we barter away or compromise decades. countries, hence “the ongoing negotia- when it comes to a fundamental right to And what was procured was distrib- tions, that’s why we want this calcula- food security?” uted as part of food security – until re- tion to be not dated but updated and to “I would like to make this absolutely cently it was through the public distri- be brought to the 21st century.” clear that we have not come here as peti- bution system – where subsidized food Sharma was also asked whether In- tioners to beg for a peace clause ... That grain was made available to the poor so dia would be worse off if there was no it is binding on us to accept 1986 to 1988 that they did not go to bed hungry. deal in Bali as it risked being challenged prices and make ourselves vulnerable to The Indian parliament had enacted at the WTO. To this, he responded, “Why disputes and calculations? The answer a food security act. It was a legal entitle- are we having any negotiations then? is a firm ‘NO’. This is a fundamental is- ment given to citizens – over 700 million The same would apply then also to trade sue, we will never compromise.” Indian citizens were poor and legally facilitation. Why do we have a multilat- He said he found it very amusing entitled – and the government was eral trading organization and should we that a country which was standing up obliged to ensure that the prescribed have decisions frozen in time?” for a right acknowledged by the UN and notified quantity of food per month was “We’re negotiating because the food the MDGs, “should be blamed for speak- made available as per their entitlement. prices have gone up ... We’re negotiat- ing for the right to food security for hun- “We cannot possibly be expected to ing because [of] the legal entitlement to dreds of millions, or rather billions, of negotiate something which is in direct food security. This is primarily a sover- poor people on this planet. We are not conflict with our food security,” the In- eign right and a sovereign space. But as in conflict. We are urging not for a com- dian minister stressed. a responsible nation, as a rule-based and promise but for a consensus on this fun- India was not the only country rule-governed democracy, we are dis- damental issue.” which gave MSP to its farmers. A large cussing this G33 proposal [on public To another question, the Indian Min- number of countries had similar stockholding for food security] so that ister said that there would not be a col- programmes. At least 15-odd countries, the rules as such and the agreements of lapse and that the WTO would survive. if not more, had notified schemes for the multilateral trade organization are There had been past meetings without food security and public procurement. connected with the realities on the any result. “We did not come here to “We have been discussing a num- ground of the 21st century.” collapse any meeting. India is commit- ber of possible options so that we come, Unlike rich countries, he said, “our ted to a positive outcome in Bali. India while negotiating these things, to the agriculture is primarily rain-fed” and is committed, but also to a balanced and second decade of the 21st century and agricultural holdings of Indian farmers fair outcome.” not be held hostage to the 1980s.” were on average of 1.2 acres of land in a On public stockholding for food se- Sharma further said that India had nation of 1.25 billion people. curity, Sharma said there had to be a fair been talking to various groups, its coali- Asked if, politically speaking, his and balanced agreement. “It is better to tion partners and various stakeholders. position was related to the upcoming have no agreement than a bad agree-

8 Third World Economics 1 – 15 January 2014 No 560 CURRENT REPORTS WTO ment.” The Importance of International Trade Reform in In response to a question, Sharma said that India had a public procurement Making Agriculture Truly Sustainable of food grains using public funds for stockholding for distribution among the Lim Li Ching and Martin Khor people entitled for food security. The Reforms of the international trade regime stocks procured using this public money require a significant reduction or removal of could not be given to trade for export harmful subsidies currently provided mainly purposes. by developed countries, while at the same time Replying to another question, he allowing special treatment and safeguard said that both Pakistan and India ex- mechanisms for developing countries in order to promote their smallholder farmers’ ported rice. But for basmati rice (that In- livelihoods. Such reforms, coupled with dia exports), there was no public pro- policies in support of sustainable small-scale curement. That was high-quality rice agriculture in developing countries, would which was never procured for food se- improve local production for enhancing food curity or public distribution in a subsi- security. There is also a need for regulatory measures dized manner. aimed at reorganizing the prevailing market Asked if India was alone, Sharma structure of the agricultural value chain, which said that the countries that had stood up is dominated by a few multinational Environment & Development Series no. 18 and spoken were all big countries with corporations and marginalizes smallholder ISBN: 978-967-5412-91-2 48 pp huge populations, and in that context, it farmers and sustainable production systems. Policies that increase the choices of may be more than 75% of the world’s smallholders to sell their products on local or resilience to shocks, such as climate population who stood by India on this global markets at a decent price would change, and reducing the adverse issue. complement efforts to rectify the imbalances. impacts of conventional Asked about the interim arrange- In addition, a shift to more sustainable and agricultural practices on the ment and it being linked to a permanent ecological agricultural practices would benefit environment and health. The trade smallholder farmers by increasing policy framework should therefore solution, he said that India never sought productivity while strengthening their support such a shift. a “peace clause”. It was being errone- ously referred to as one. On the interim Price Postage solution, he said that his understanding Malaysia RM7.00 RM1.00 of the English language was that “in- Third World countries US$4.00 US$2.00 (air); US$1.00 (sea) Other foreign countries US$6.00 US$3.00 (air); US$1.00 (sea) terim” was meant for the present, for the intervening period until the permanent Orders from Malaysia – please pay by credit card/crossed cheque or postal order. was put in place. There was no dictio- Orders from Australia, Brunei, Indonesia, , Singapore, Thailand, nary meaning which described “interim” UK, USA – please pay by credit card/cheque/bank draft/international money order as “temporary”. Interim was interim in own currency, US$ or Euro.If paying in own currency or Euro, please calculate until the permanent was put in place. equivalent of US$ rate. If paying in US$, please ensure that the agent bank is located The WTO Director-General’s draft in the USA. made it clear that the parties would com- mit to engage in negotiations for a per- Rest of the world – please pay by credit card/cheque/bank draft/international money order in US$ or Euro. If paying in Euro, please calculate equivalent of US$ rate. If manent solution. But all that India and paying in US$, please ensure that the agent bank is located in the USA. other countries were saying was that this was a must-have for them. All payments should be made in favour of: THIRD WORLD NETWORK BHD., “We’re only saying how can there 131 Jalan Macalister, 10400 Penang, Malaysia. Tel: 60-4-2266728/2266159; Fax: be a ‘sunset clause’ when you have bind- 60-4-2264505; Email: [email protected]; Website: www.twn.my ing commitments in trade facilitation I would like to order ...... copy/copies of The Importance of International Trade and ‘interim’ is described as four years Reform in Making Agriculture Truly Sustainable. ... I cannot accept this as a new dictio- nary meaning of the word ‘interim’,” I enclose the amount of ...... by cheque/bank draft/IMO. said Sharma. Please charge the amount of US$/Euro/RM ...... to my credit card: Policy space for food security American Express Visa Mastercard

Meanwhile, in a letter sent to Indo- A/c No.: Expiry date: nesian Trade Minister Gita Wirjawan on Signature: 3 December, the Our World Is Not For Sale (OWINFS) global network of civil Name: society groups called upon him to pay urgent attention to the matter of food Address:

(continued on page 16)

No 560 Third World Economics 1 – 15 January 2014 9 Analysis The uncertain gains from trade facilitation

Proponents of a WTO agreement on trade facilitation, which has since been adopted at the Bali Ministerial Conference, claimed that such a deal would raise global income by $1 trillion and create 18 million jobs in developing countries. Jeronim Capaldo examines the veracity of these headline-grabbing figures.

On the eve of the ninth WTO Ministerial Conference the In- It is hard to see how uncertain gains and unequal distri- ternational Chamber of Commerce reiterated its claim that bution of costs can justify diverting resources to trade facilita- trade facilitation would add $1 trillion to the world’s income.1 tion from badly needed policies such as the strengthening of The estimate is based on a study published by the ICC, which social safety nets. also claims that trade facilitation can create 18 million jobs in developing countries.2 ICC estimates of export, income and employment gains Unfortunately, these figures depend on too many unjus- tifiable assumptions to be relied on. Inaccuracy accumulates The ICC estimates are summarized in Table 1. Export gains in several stages of the estimation process: in estimating the are obtained estimating a gravity equation that relates trade gains from trade facilitation for a sample of countries, in scal- flows to measures of different dimensions of trade facilitation. ing up the gains to the global level and in estimating the em- Both GDP and employment impacts are based on these esti- ployment gains. The resulting figures are too uncertain to mates. underpin any policy decisions. Increases in GDP are calculated as a fixed proportion of Furthermore, the estimates only refer to gross gains ex- two-way trade (46% for all countries), which is in turn ob- cluding the costs – in terms of both investment and employ- tained by doubling the estimates of export gains. The fixed ment – associated with implementing trade facilitation. Yet, proportion chosen is the average of the proportions estimated under a current proposal, developing countries are required in different studies, ranging from 11% to 109%, and mostly to sustain the entire implementation cost without financial based on Computable General Equilibrium models. This is old participation by developed countries. wine in new barrels, as CGE estimates are notoriously not ro-

Table 1: ICC estimates of gains from trade facilitation AB C DE F G H Export Two- Trade GDP Employment Jobs Jobs Employment gain way multiplier gain intensity of created destroyed gain/loss (F- trade (BxC) GDP (AxE) G) gain (Ax2) $billion $billion $billion Employees/$bn ’000 ’000 ’000 of value added in industry East Asia 267 534 0.46 246 41,500 11,081 ? ? East 101 202 0.46 93 20,500 2,172 ? ? Europe and Central Asia Latin 151 301 0.46 138 20,000 2,935 ? ? America and Caribbean Middle East 15 30 0.46 14 12,500 188 ? ? and North Africa South Asia 5 10 0.46 5 122,500 613 ? ? Sub- 30 60 0.46 28 34,500 1,035 ? ? Saharan Africa Developing- 569 1,137 0.46 523 31,673 18,022 ? ? country total Developed 475 949 0.46 437 5,500 2,610 ? ? countries World total 1,043 2,086 0.46 960 19,781 20,632 ? ?

10 Third World Economics 1 – 15 January 2014 No 560 Analysis bust to changes in elasticities.3 come from these to workers in exporting industries may lead Increases in employment are calculated for each country to lower economic activity. In this context job destruction is by multiplying its estimated export gains by the average likely to outweigh job creation. labour-output ratio of its industrial sector. The ICC acknowledges these effects6 but its estimates of All estimates obtained in this way are obviously very sen- employment creation only refer to jobs “supported” or, using sitive to changes in the parameter values, making the estima- a common term, jobs “created”. Unfortunately, there is no rea- tion of the latter a critical matter. son to expect that these will outnumber the jobs destroyed as developing economies become more open to international Estimating the gains from trade facilitation trade.

The first source of inaccuracy in estimating the gains from Uncertain export, income and employment gains trade facilitation is the measurement of trade facilitation it- self. Differently than exports, imports or production costs, Implementing trade facilitation reforms is a costly pro- trade facilitation is comprised of a variety of dimensions, such cess, likely requiring teams of specialized personnel and, in as availability of information on the Internet or homogeneity many countries, large international consultancy fees. This re- of documentation, that are typically measured on an arbitrary quires diverting resources from other services such as scale. Such indices of trade facilitation may be useful for un- healthcare and education. derstanding broad patterns but they hardly contain the infor- Although it is reasonable to expect that trade facilitation mation necessary to establish accurate correlations with other would lead to higher trade flows, there is no indication of large variables. net benefits. The $1 trillion increase in global income estimated Further inaccuracy in the estimation comes from the data by the ICC is based on too many unjustified assumptions to used in the calculations. Widely cited empirical studies of trade determine any policy changes. The same is true for the esti- facilitation4 go back to pre-crisis years, when growth of GDP mate of 18 million jobs in developing countries. On the other and commodities trade were significantly different than to- hand, developing countries would be required to bear the en- day. Even when not included directly in the estimation, growth tire cost of trade facilitation without participation by devel- and commodity prices may influence merchandise trade and oped countries. In this context, it is hard to see why trade fa- relevant elasticities strongly. cilitation should become anyone’s policy priority.ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp

Scaling up and aggregating results Jeronim Capaldo is Senior Researcher in the Globalization programme at the Global Development And Environment Institute (GDAE) at Tufts Uni- versity in the US. His research focuses on a wide range of macroeconomic Additional inaccuracy derives from scaling up to the glo- issues, including fiscal austerity, financial crises and international trade bal level the results obtained for a sample of countries. In par- agreements. The above first appeared as a GDAE Policy Brief (No. 13-02, ticular, the ICC study makes the following two assumptions: December 2013). (a) The ratio of developed countries’ export gains to de- veloping countries’ gains is assumed constant. Relying on find- Notes ings that gains for developed countries are about 84% of those for developing economies, the $1,137 billion estimated gains 1. See ICC statement at: http://www.iccwbo.org/News/Articles/ 2013/Business-gives-last-push-to-seal-Bali-deal-and-salvage-Doha for these countries are readily transformed into $949 billion -Round/, accessed on 2 December 2013. for developed countries. Such invariance assumption strongly affects the estimates but has no justification. 2. See Hufbauer and Schott (2013). (b) Once the gains are so calculated for each country bloc of the sample, they are brought up to the global scale by ap- 3. See Taylor and von Arnim (2006). plying a proportion. 4. Two widely cited studies are Wilson, Mann and Otsuki (2004) Clearly, both assumptions further widen the interval en- and Hufbauer, Schott and Wong (2010). compassed by the estimates, compromising their meaningful- ness. 5. See Taylor and von Arnim (2006) and Ackerman and Gallagher (2008). Employment impact 6. In the words of the authors (p. 55): “two-way trade expansion will realign the labor force between sectors [emphasis added]”. The ICC study estimates a positive employment impact from trade facilitation in the order of 20 million jobs, 90% of References which will be in developing countries. Unfortunately, these estimates suffer from flaws that make them hardly relevant to Ackerman, Frank, and Kevin P. Gallagher, 2008, “The Shrinking the trade policy debate. Gains from Global Trade Liberalization in Computable General Fundamental flaws affecting many official estimates of the Equilibrium Models”, International Journal of Political Economy, Vol. gains from trade have been clearly highlighted in the last round 37, No. 1, Spring, pp. 50-77. of debate on liberalizations.5 In that context, it became evident that liberalization may lead to higher unemployment by tilt- Hufbauer, Gary Clyde, Jeffrey J. Schott, and Woan Foong Wong, ing income distribution in favour of workers in the exporting Hufbauer, Gary Clyde, and Jeffrey Schott, 2013, “Payoff from the sectors. In economies where aggregate demand comes mostly World Trade Agenda 2013”, Peterson Institute for International from workers producing non-traded goods, redistributing in- Economics.

No 560 Third World Economics 1 – 15 January 2014 11 Analysis

2010, “Figuring Out the Doha Round”, Policy Analysis in of Trade Liberalization”, Oxfam International. International Economics, 91, Peterson Institute for International Wilson, John S., Catherine L. Mann and Tsunehiro Otsuki, 2004, Economics. “Assessing the Potential Benefit of Trade Facilitation: A Global Perspective”, World Bank Policy Research Working Paper 3224, Taylor, Lance, and Rudiger von Arnim, 2006, “Modeling the Impact February.

Bali food security deal a first step towards WTO rule reform?

Despite its limitations, the Bali decision on public food stockholdings can create an opening to overhaul the WTO’s inequitable rules on agricultural trade, contends Jacques Berthelot.

The agricultural issues in the ninth WTO Ministerial Confer- importer)1 from 1986 to 1988, base period for the calculation ence focused essentially on changing the current rules on pub- of reduction commitments of the Uruguay Round – multiplied lic stockholding for food security purposes and, secondarily, by the quantity likely to benefit from the purchase price of on export competition. We will show that, despite an unsatis- food security stocks which are then distributed at subsidized factory result on the public stockholding rules, it is neverthe- prices to poor consumers. India proposed deleting “the dif- less a first step to changing totally the unfair rules for devel- ference between the acquisition price and the external refer- oping countries (DCs) under the WTO Agreement on Agri- ence price is accounted for in the AMS”. culture (AoA), provided that they change their mindset to As the revised draft modalities of 6 December 2008 al- adopt an offensive stance against the developed countries in ready reached an agreement on this issue, including by the the working group which will pursue the issue within the WTO US and the EU, its definitive adoption in Bali should have Committee on Agriculture. For this to happen, the civil soci- been a mere formality. But the US, followed by the EU and ety of North and South should intensify their concrete sup- other developed countries, are not prepared to make conces- port to the WTO developing-country members. sions to DCs on some AoA rules, fearing that this would open all the rules to question and reduce their room for manoeuvre An unsatisfactory result but a first step to changing to impose an opening of DCs’ domestic markets to US and EU the Agreement on Agriculture exports of non-agricultural products and services. This is the ambiguity of the WTO negotiating rounds where all WTO India, on behalf of the G33 – a group of 46 DCs formed members must accept all texts – the “single undertaking” prin- shortly before the WTO Ministerial Conference of September ciple with adoption of all texts by consensus, which camou- 2003 in Cancun and prioritizing the protection of their domestic flages the huge pressures from developed countries on DCs – agricultural markets – proposed in the informal meeting of where each member is supposed to lose on some issues and the Special Session of the WTO Committee on Agriculture of gain on others. In fact, however, the developed countries are 14 November 2012 that the provisions on public stockholding always winners and DCs are almost always losers, especially for food security purposes, already included in the revised LDCs. draft modalities of 6 December 2008, be taken up for a formal But the US and the EU found in front of them the Indian decision by the Ministerial Conference in Bali in December Minister of Commerce, Anand Sharma, who showed an ex- 2013. treme firmness in his statement to the Bali Ministerial Confer- India asked for modification of the last sentence of foot- ence: “For India food security is non-negotiable. Governments note 5 of paragraph 3 of the AoA Annex 2 as follows: “Acqui- of all developing nations have a legitimate obligation and sition of stocks of foodstuffs by developing country Members moral commitment towards food and livelihood security of with the objective of supporting low-income or resource-poor hundreds of millions of their hungry and poor. Public pro- producers shall not be required to be accounted for in the curement at administered prices is often the only method of AMS.” The AMS is the Aggregate Measurement of Support or supporting farmers and building stocks for food security in “Amber Box” of domestic agricultural supports regarded as developing countries. Need of public stockholding of food trade-distorting and subject to a reduction of 20% from 1995 grains to ensure food security must be respected.”2 This firm- to 2000 for developed countries and of 13.3% from 1995 to 2004 ness is due to several factors: the implementation in India since for DCs other than the least developed countries (LDCs), which 12 September 2013 of the National Food Security Act which are not bound to any reduction because they have very little expands to 820 million Indians heavily subsidized food aid of means to subsidize their farmers, the more so as they repre- 60 kg of rice or wheat per year; strong political pressures due sent the majority of their active population. More precisely to legislative elections in May 2014; and the large mobiliza- what is considered a trade-distorting subsidy here is the dif- tion of civil society in India and of international civil society ference between “the acquisition price and the external refer- present in Bali, both within and outside the conference centre. ence price” – the average border price (the FOB price if the However, as India’s firm stance in Bali was only supported country was a net exporter and the CIF price if it was a net by a score of other DCs, and this only softly and rarely pub-

12 Third World Economics 1 – 15 January 2014 No 560 Analysis licly, Sharma eventually yielded to intense pressures from provides: “(2) Notwithstanding anything contained in this developed countries – a powerful US agribusiness delegation Ordinance, the State Government may continue with or for- lobbied US Trade Representative Michael Froman – accepting mulate food or nutrition based plans or schemes providing concessions in the final text of the agreement, which remains for benefits higher than the benefits provided under this Or- ambiguous on several points, including the following: dinance, from its own resources.” l Will the “peace clause” – during which WTO mem- l Another constraint: “Any developing Member seeking bers commit themselves not to sue at the WTO over the subsi- coverage of programmes under paragraph 2 shall ensure that dies related to public procurement of food commodities in DCs stocks procured under such programmes do not distort trade at administered prices higher than domestic prices – only last or adversely affect the food security of other Members.” This for four years? This is the dominant interpretation of media is mainly because Pakistan had lobbied against the G33 re- but also of many civil society activists advocating the closing quest, claiming that India is dumping its public stocks of rice, down of the WTO or at least taking agriculture out of the WTO outcompeting its own exports, which is highly questionable.3 remit. But this interpretation is disputed by India and other Finally, if the agreement on export competition adopted delegations, including France. in Bali did not change anything with regard to the statement Indeed, the text adopted in Bali says: “Members agree to already made at the Hong Kong Ministerial Conference of put in place an interim mechanism as set out below, and to December 2005, it is appropriate to remember that the WTO negotiate on an agreement for a permanent solution … for condemned Canadian dairy exports in 2001 adoption by the 11th Ministerial Conference … In the interim, and 2002, US cotton exports in 2005 and EU sugar exports in until a permanent solution is found…” If really the intent was 2005 on the basis that domestic subsidies have a dumping ef- to limit the interim period to four years, this last phrase would fect as well as explicit export subsidies. have read “In the interim, up to at most four years”. If a per- Some excerpts of the Appellate Body’s rulings: manent solution is not found before the 11th Ministerial Con- l “The distinction between the domestic support and ex- ference in 2017 – these conferences are held every two years – port subsidies disciplines in the Agreement on Agriculture the interim period will continue. Anand Sharma said during would also be eroded if a WTO Member were entitled to use his press conference: “My English is not very good but my domestic support, without limit, to provide support for ex- English teacher was good and he told me that ‘interim’ means ports of agricultural products ... If domestic support could be not temporary but something that lasts until a permanent so- used, without limit, to provide support for exports, it would lution is found.” The four years before the 11th Ministerial undermine the benefits intended to accrue through a WTO Conference must therefore be understood as the period dur- Member’s export subsidy commitments.”4 ing which the working group to be set up within the Commit- l “Article 9.1(c) addresses this possibility by bringing, tee on Agriculture will seek a permanent solution satisfying in some circumstances, governmental action in the domestic the G33 and in particular India. However, it is doubtful that it market within the scope of the ‘export subsidies’ disciplines will succeed, let alone in four years, without radically ques- of Article 3.3.”5 tioning the main AoA rules, including the definition of the l “Upholds the Panel’s finding, in paragraphs 7.1416 and different types of subsidies according to their alleged level of 8.1(g)(i) of the Panel Report, that the effect of the marketing trade distortion. loan programme payments, Step 2 payments, market loss as- l The peace clause will apply only to “public stockhold- sistance payments, and counter-cyclical payments (the ‘price- ing programmes for food security purposes existing as of the contingent subsidies’) is significant price suppression within date of this Decision”. Hence the DCs which do not run such the meaning of Article 6.3(c) of the SCM [Subsidies and programmes presently will not be able to implement them Countervailing Measures] Agreement.”6 “until a permanent solution is found”, and those which run l “The effect of the mandatory price-contingent United some, like India, cannot extend them to products other than States subsidy measures – marketing loan programme pay- “primary agricultural products that are predominant staples ments, user marketing (Step 2) payments, MLA payments and in the traditional diet” of the population. CCP payments – is significant price suppression in the same For Indian civil society, including the Right to Food Cam- world market within the meaning of Article 6.3(c) of the SCM paign, the text excludes pulses and oilseeds but this is ques- Agreement constituting serious prejudice to the interests of tionable because the concept of “predominant staples” is not Brazil within the meaning of Article 5(c) of the SCM Agree- defined and pulses (such as beans and lentils) are clearly ment.”7 staples complementing cereals in the daily diet of the poor. l “d) Upholds the Panel’s finding, in paragraph 7.334 of But it is true that these products are not subject to public pro- the Panel Reports, that the production of C sugar receives a curement for stockholding in India, except at a small scale in ‘payment on the export financed by virtue of governmental some states like Chhattisgarh. action’, within the meaning of Article 9.1(c) of the Agreement And the fact that the Bali agreement requires publication on Agriculture, in the form of transfers of financial resources of very detailed statistics for the last three years of each public through cross-subsidization resulting from the operation of stockholding programme for food security purposes is a real the European Communities’ sugar regime.”8 threat to the possible expansion of products eligible for cover- However, if these precedents have not yet been used by age under the peace clause. If there were not this requirement DCs, they could do so after Bali. of statistics over the last three years, the text does not say ex- plicitly “programmes already implemented”, so that one could Negotiations will begin, allowing challenge to the extend them to all the provisions, including for the future, of AoA’s unfair rules the National Food Security Act – which is a “programme ex- isting as of the date of this Decision” – which, in Chapter 13, Despite all these constraints and limitations, the Bali decision

No 560 Third World Economics 1 – 15 January 2014 13 Analysis on public food stockholding constitutes a first step: DCs have and to oblige private traders to pay higher market prices, in put a foot in the door of the AoA rules and they now have to developed countries they are minimum prices, fixed below the open it completely in the post-Bali programme to rebuild all prevailing market prices in order to reduce their level. But – the rules. Every cloud has a silver lining: it is owing to this here lies the fundamental difference – these lower adminis- very ambiguous and incomplete agreement on food security tered prices were accepted by Western farmers only because stocks that a working group will be set up within the WTO they were offset by domestic subsidies, including by the al- Committee on Agriculture to find a permanent solution to the leged decoupled fixed direct payments in the EU and US plus G33 request. coupled subsidies, such as the US’ various types of marketing No doubt the US and the EU will put many hurdles in the loan benefits, countercyclical payments and insurance subsi- work of the group so as not to jeopardize the other AoA rules dies.10 In developed countries administered prices are always which these two accomplices had concocted face to face dur- triggering subsidies, apart from the other means necessary to ing the Uruguay Round and which are very unfair to DCs. render them effective: import duties, export subsidies and re- DCs must now take the offensive against the US and the EU, strictions, land set aside, production quotas, etc. Indeed the which have everything to lose because it is easy to show that US Farm Bills and EU Common Agricultural Policy (CAP) they did not comply with the AoA rules to a huge extent, and reforms since the 1990s have consisted in lowering by steps this will encourage DCs, starting with India, to sue them at their administered prices to increase their domestic and exter- the WTO so as to force them to rebuild these rules on food nal competitiveness – importing less and exporting more – sovereignty. through massive compensatory alleged non-trade-distorting All the forces of civil society, including those such as Via subsidies under the Blue and Green Boxes.11 Campesina which have campaigned to take agriculture out of So a balanced comparison between the US (EU) and In- the WTO or to put an end altogether to the WTO, should now dian administered prices should be made by internalizing in become more realistic by joining all those which, particularly the US low administered prices the subsidies triggered by within the Our World Is Not For Sale network, support all them. It is what the OECD has done in a 2011 report where the DCs struggling within the WTO to change the rules in the di- concept of domestic prices is defined as “producer prices plus rection of food sovereignty. payments linked to the production of a specific commodity”12 The first rules to change are related to administered prices. – a concept that we propose to define as the “comprehensive Paragraph 9 of the AoA Annex 3 states: “The fixed external domestic farm price”. However interesting this approach reference price shall be based on the years 1986 to 1988.” In- might be, it is still too restrictive and biased because it does deed, the very low world prices of wheat and rice – the two not take into account the decoupled subsidies that have sub- cereals of the Indian food grain programme – in 1986-88 were stituted for more and more coupled subsidies since 1998 in due to massive US dumping of rice and wheat and EU dump- the US and 2005 in the EU. ing of wheat, with US dumping rates of 137% on rice and 89% Similarly, an October 2013 report by the Food and Agri- on wheat and the EU dumping rate of 134% on wheat. As the cultural Policy Research Institute (FAPRI, a US research cen- US is a price maker worldwide for wheat and strongly influ- tre dependent on the US government) assessing the two Farm ences the global price of rice, and as the US and EU accounted Bills adopted in 2013 by the House of Representatives and the for 53.2% of global wheat exports in that period, to consider Senate presents tables of the expected “average crop revenue as a trade-distorting subsidy the gap between the current ad- in dollars per acre” for several crops for the period 2014-18.13 ministered price paid to Indian small farmers and its CIF im- In these tables coupled aids are added to market sales, which, port prices of 1986-88 is economically absurd and politically divided by the yield per acre, gives the comprehensive price unjustifiable. Moreover, the low world prices in dollars of rice per crop, although FAPRI does not use this concept but that and wheat in that period were also due in large part to a 23% of “revenue per acre”. And FAPRI expects that they would dollar depreciation from late December 1985 to late December increase by 9% for rice and 6.6% for wheat over the period 1988, 30% of which was on the effective exchange rate for US 2014-18, compared to the expected price if the current Farm rice exports. Bill were not to change. One can also amend paragraph 4 of AoA Article 18 – The combination of the high rate of US and EU dumping “Members shall give due consideration to the influence of ex- on wheat and US dumping on rice in 1986-88 with the large cessive rates of inflation on the ability of any Member to abide dollar depreciation in that period justifies updating the 1986- by its domestic support commitments” – by deleting “exces- 88 CIF prices of India (and of other DCs) by multiplying their sive”, as recommended by the eminent Indian trade experts levels by the US and EU dumping rate, which again would Anwarul Huda and Ashok Gulati. As inflation in India was raise these updated CIF prices above the Indian minimum 8% on average over the past 25 years, updating the 1986-88 support prices for rice and wheat in 2012-13, thereby yielding border prices on the basis of this inflation rate would raise negative AMSs which would not prevent India from imple- these prices to levels exceeding by 94% and 74% respectively menting its National Food Security Act. the minimum support prices of rice and wheat in 2012-13, so Beyond these necessary adjustments of the AoA rules on that these highly negative AMS would not put at risk the imple- public procurement of food security stocks, DCs must above mentation of the new National Food Security Act.9 all join forces, in the working group on that issue within the But we must go beyond this by calling into question the WTO Committee on Agriculture as well as outside, to de- very concept of administered prices, which is not defined in nounce the huge violations of the AoA rules by the US and the WTO agreements and which works in opposite ways in the EU. Without going into too much detail, let us enumerate developed countries and DCs. Whereas in DCs the adminis- the main ones: tered prices are fixed above market prices to ensure remunera- 1. As the US fixed direct payments were ruled by the tive prices to small farmers, particularly just after the harvest, WTO Appellate Body in 2005 as not being decoupled, hence

14 Third World Economics 1 – 15 January 2014 No 560 Analysis not in the Green Box, it is clear that the EU’s allegedly Paysanne in France to participate directly in this fight, given decoupled payments – mainly the Single Payment Scheme that denouncing the non-compliance of the EU’s massive di- (SPS) – which reached 37.7 billion euros in 2012, would be rect payments with the AoA rules and the Appellate Body much more easily ruled not to be in the Green Box, as will be rulings is obviously not a comfortable situation for their farmer the case from 2014 on for the new Basic Payment Scheme (BPS). members. Facing the risk of a collapse in their incomes, the And although both Farm Bills of the House of Representa- EU farmers may react strongly by demanding that the EU au- tives and Senate have eliminated the fixed direct payments, thorities rebuild them on remunerative prices, on food sover- the House keeps direct payments on cotton for 2014 and 2015. eignty, as was the case up to 1992. But this would imply rais- 2. Contrary to the AoA Article 6.2 provision on input ing import protection and radically changing the AoA, com- subsidies for developed countries, the US and the EU did not ing back to the situation prevailing before the WTO, where notify in the AMS their huge direct payments to feedstuffs – the agriculture sector benefitted from exceptions to the GATT which reached 13.7 billion euros in 2009-10 in the EU27 – even rules, without any constraint regarding the level and types of though they are by far their main input subsidies which have import protection, the EU having used extensively variable conferred large AMSs to all their animal products (meats, dairy levies and the US import quotas. But this time the exception and eggs), especially in the EU where these subsidies are hid- allowing unlimited use of export subsidies should be totally den in the allegedly decoupled SPS. deleted.ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿp 3. The US and the EU did not notify in their AMS the huge input subsidies to cereals and oilseeds processed into Jacques Berthelot is a civil society activist based in Toulouse, France. He is agrofuels, ethanol and biodiesel, the first being explicitly an an agricultural economist and a former lecturer in economics at Ecole Nationale Superieure Agronomique De Toulouse (ENSAT), and a former agricultural product and the second an agricultural product Jean Monnet Chair in European economic integration at the National 14 by destination (AoA Annex 3 paragraph 7). Polytechnical Institute of Toulouse. 4. We have seen that the WTO Appellate Body has ruled four times that domestic subsidies to exported agricultural Notes products must be considered as export subsidies, so that prac- tically all EU exports can be sued at the WTO on dumping 1. FOB (free on board) price of the exported merchandise loaded grounds. on board, ready to leave; CIF (cost+insurance+freight) price of the 5. The WTO revised draft agricultural modalities of 6 imported merchandise still on board before paying port charges and December 2008, which are the base for pursuing the agricul- import duties. ture negotiations of the Doha Round, stated that the allowed 2. http://www.wto.org/english/thewto_e/minist_e/mc9_e/ 15 product-specific de minimis exemption was 5% of the value stat_e/ind.pdf of total production in developed countries (10% in DCs) when in fact the AoA Article 6.4 states that it is only 5% (10%) of the 3. “Pakistan is shooting itself in the foot when it follows suit the production value of each product having an AMS. This “cheat- developed countries’ fight against the G-33 proposal” and “Indian ing” has a large impact on the level of the allowed overall trade- food security stocks of rice and wheat do not distort trade”, Solidarité, 22 November 2013, http://www.solidarite.asso.fr/Papers- distorting domestic support (OTDS) in the base period 1995- 2013?debut_documents_joints=10#pagination_documents_joints 2000 for the domestic support reduction commitments during the Doha Round implementation period. The OTDS is a new 4. Paragraph 91, Dairy products of Canada, WT/DS113/AB/RW, indicator of all trade-distorting domestic support decided by 3 December 2001 the WTO in July 2004 as the sum of the final bound total AMS at end 2000, the average product-specific de minimis, the aver- 5. Paragraph 148, Dairy products of Canada, WT/DS103/AB/RW2, age non-product-specific de minimis and the Blue Box in the 20 December 2002 same 1995-2000 period. 6. US cotton case, WT/DS267/AB/R, 3 March 2005 6. The US is cheating each year since 2008 in its notifica- tions of market price support on dairy products as it has re- 7. US cotton case, paragraph 8.1(g)(i) of the panel report WT/ duced by $2.1 billion (or 42%) the level reported in previous DS267/R, 8 September 2004 years, after having decided in the 2008 Farm Bill not to notify any longer this dairy AMS on the basis of the whole milk pro- 8. EU sugar case, WT/DS265/AB/R, WT/DS266/AB/R, WT/ DS283/AB/R, 28 April 2005 duction value but only on the basis of the production value of skimmed milk powder, butter and cheddar cheese. This change 9. “Updating the Indian CIF prices of 1986-88 is fully justified”, is not permitted by the AoA Annex 3 paragraph 5: “The AMS http://www.solidarite.asso.fr/Papers- calculated as outlined below for the base period shall consti- 2013#pagination_documents_joints tute the base level for the implementation of the reduction commitment on domestic support.” 10. A subsidy is “coupled” when related to the production or price levels, and “decoupled” in the opposite case. Conclusion 11. The “Blue Box” corresponds to the EU fixed direct payments per hectare (cereals and oilseeds), cattle head (bovines and ovines), or To conclude, despite its limitations, the Bali decision on litre of milk decided by the CAP reforms of 1992, 1999 and 2004 to food security stocks paves the way for an overhaul of the AoA. offset the reduction of guaranteed (“intervention”) prices, but farm- But, for this to happen, it is necessary that civil society of North ers received them only if they produced the corresponding products. and South join forces around this extremely important issue. The “Green Box” covers two types of allegedly non-trade-distorting To be sure, it will be difficult for the European Coordination subsidies: 1) the traditional Green Box of in-kind aid to general agri- Via Campesina and its members such as the Confédération cultural services benefitting farmers collectively: agricultural infra-

No 560 Third World Economics 1 – 15 January 2014 15 Analysis structure, schools, research, agri-environment, calamities, 13. http://www.fapri.missouri.edu/outreach/publications/2013/ phytosanitary warnings, etc.; 2) the Green Box of decoupled income FAPRI_MU_Report_06_13.pdf support in place in the US since 1999 and in the EU since 2005 where farmers continue to receive the average amount of Blue Box direct 14. Jacques Berthelot, Réguler les prix agricoles, L’Harmattan, 2013. payments received in 2000-02 without being obliged to produce any- thing or being allowed to produce other products than those having 15. When the calculated AMS of a product is lower than 5% of its benefitted from the Blue Box payments. production value in developed countries (10% in DCs), the product is considered without product-specific AMS as lower than the de mini- 12. Jean-Pierre Butault, “Evolution of Agricultural Support in Real mis level. And when the non-product-specific AMS (e.g. interest on Terms in OECD Countries and Emerging Economies”, OECD, 2011, loans) is lower than 5% of the whole agricultural production value http://www.oecd-ilibrary.org/docserver/download (10% in DCs), it is not counted in the total AMS. But these product- 5kgkdgf25x20.pdf?expires=1385386110&id=id& specific and non-product-specific de minimis are counted in the over- accname=guest&checksum= 476FE82E1A92E7409C7AAE4E85F48958 all trade-distorting domestic support (OTDS).

(continued from page 9) million people on an average.” up in onerous conditions but would not However, they pointed out, the US be free from disputes. had made a mockery of this proposal by “Countries therefore should be free security across developing countries. refusing to discuss the permanent solu- to say ‘NO’ to such a worthless Peace They urged him to pursue, as the tion, nor did it allow discussion on the Clause. This does not mean that devel- leader of the G33, a permanent solution subsequent elements proposed by the oping countries are collapsing the talks, to the proposal on food security tabled G33, i.e., on reference price being shifted it is the refusal by developed countries by this group. to current market prices and adjustments such as the USA to address historical “As you know, billions in develop- for inflation. Talks therefore were inequities in subsidies that has brought ing countries across the world today face brought down to the peace clause that us to this situation.” poverty, hunger and malnutrition. It is offered a temporary reprieve from dis- “Therefore, we call upon you ur- important for governments to secure the putes initiated by other member states. gently to respond to the needs of the G33, necessary policy space to provide food “In this context, we believe that the and ensure that food security is not vio- to their needy population. For this, they Peace Clause which is on the table is lated across the developing and least must focus on strengthening both pro- grossly inadequate as it is time bound developed world. The only option for the duction and distribution of food, and in and does not ensure a permanent solu- WTO community is to allow a perma- a vast majority of cases, provide this sup- tion. It is also burdened with severe con- nent solution and a Peace Clause that port through the public stockholding of ditions and transparency commitments, automatically leads to this permanent food.” much above those that developed coun- solution can be the only choice,” said the The OWINFS groups noted that en- tries have to fulfill for the Green Box. NGO letter. abling farmers to earn their livelihoods Further it does not cover the Agreement The G33 needed to take a strong and through food production, especially on Subsidies and Countervailing Mea- united position upholding the demands small and marginal farmers, across de- sures (ASCM) and so, in effect does not by countries such as India. It was an is- veloping countries was a key ingredient give the users the protection it claims to sue for all countries, since by the ancient of this policy prescription. “Along with the direct goal of pov- provide. It extends only to a few crops rules of subsidy calculation based on erty reduction, this must form the core and cannot be extended.” 1986-88 reference prices, most countries development agenda of a developing Under these conditions, the groups would breach the allowed subsidy limit and least developed country.” believed strongly that such a peace very soon, if they were not breaching it However, the civil society groups clause would do the G33 countries more already, the OWINFS civil society ÿÿÿÿÿÿÿÿÿÿp said, the lopsided WTO rules did not al- harm than good as they would be bound groups added. (SUNS7711/7712) low developing countries to give such subsidies beyond a very meagre 10% of production, in sharp contrast to the huge Connect to Third World Network’s domestic subsidies given by developed countries. World Wide Website for the latest on “As you already know, the G33 un- ÿl l der Indonesia’s leadership tabled the International Relations Environment proposal on food security and asked that Agriculture l Science l Economics l Trade l such subsidies be allowed to be given Health l Education l Communications l without limit by placing these in the Green Box. Needless to say this limita- Development l Indigenous Peoples l tion on essential subsidies to producers Medicine l Forestry is a huge challenge for several LDCs and most G33 members, including Indone- sia which covers 15 million households www.twn.my in its food programme providing for 60

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