N. Gunasekaran

Corporate Agribiz Muscles Out Third-World Farmers

The US-EU coalition is all set to marginalize the developing countries in the forthcoming WTO Ministerial Conference in Hong Kong. The European and American proposals on the three pillars of agriculture negotiations -- domestic support, export competition and market access -- indicate this trend.

Without the meaningful offers from the US and the EU on market access involving tariff cuts and tariff rate quotas, the agriculture negotiations, held before the Hong Kong meet, have failed. As characterized by the chair of WTO agriculture negotiations, talks are now "on life support." The big powers, not being focused on the real concerns of poor farmers in the developing countries, were interested only in achieving their ambition of corporate agribusiness-driven agriculture. Hence, the groups of developing countries G-20 and G-33 that represent the interests of small farmers, find it hard to achieve deep cuts in the US and EU farm subsidies and tariffs.

The massive farm subsidies of the US and EU, including export subsidies for products such as rice, cotton or sugar, are distorting the international trade. This results in overproduction, depriving the export markets for the poor countries. Till now no reasonable criteria for tightening up the subsidies are discussed.

Certain ceilings were agreed in the earlier Doha round reforms. Much euphoria was created over the EU's agreement to eliminate export subsidies on all agricultural products by "a credible end date" -- later specified as a five-year period. But the offer became meaningless since the ruling elites of many developing countries opened up their market access through severe reduction in tariffs. They opened up their agriculture sector to the corporate capital, propagating that large-scale corporate agricultural development is panacea for all agrarian crises.

The US proposed a 60% cut in its Amber box (export subsidies for agricultural products such as rice, cotton or sugar), certain reductions of its tariffs and an end to export subsidies by 2010. By these proposals, the US does its usual maneuvering. There is always room for putting former Amber Box subsidies into other permissible categories of Blue and Green Boxes, and the trade-distorting subsidies would continue, encouraging overproduction and thereby ending up on export market, creating a competitive, disadvantageous climate for poor countries. Thus, these proposals don't make any difference for the poor farmers facing stiff US competition in many agriculture sectors such as rice, cotton, corn, etc.

The European Union, while announcing its proposal on agriculture, laid some conditions for developing countries, seeking large concessions in their services and nonagricultural market access as a quid pro quo. Asking poor countries to reduce their tariffs to very low or nonexistent levels is in violation of the declared principle that the developing countries must be given special and differential treatment. Actually, the developed countries attained the high level of growth in industries and agriculture through high tariffs. Till the 1930s, 40% to 50% of industrial tariffs were in the US.

During the 1990s, as a result of tariff cuts and import liberalization measures in the developing countries, their average trade deficit rose by 3% of the GDP and the growth rate decreased by 2%, according to UNCTAD's 1999 report. One serious consequence of these measures was that their customs revenues dropped significantly, resulting in the drastic cuts for social spending on education, health, etc. Even now, custom revenues of many developing countries constitute 30% or more of government revenue. Further cutbacks on this revenue would lead to deprivation of minimum social sector opportunities available now for the poor.

But the US is so influential on the ruling political elites of many developing countries that it could not only dilute their demands but also succeed in negotiating the further liberalizing and opening up of their markets for multinational agribusiness corporations. In India, the US agenda on agriculture was now imposed through the India-US Agreement on Agriculture, signed in July 2005.

In the developing world, problems such as lack of employment opportunities and decreasing per capita availability of food grains for the rural poor are acute. Even the condition of relatively better off sections of farmers is deteriorating due to the volatile world agriculture market, the sharp rise in the cost of inputs, the decreasing availability of credit and the declining state procurement of the products at remunerative prices. Increasing numbers of farmers committing suicides is the result of these crises.

So, since the poor need food security, the developing countries are entitled to provide subsidies outside the scope of their reduction commitments, for food products for domestic consumption and for protecting their farmers to ensure minimum livelihood for them. But will the WTO negotiations go along these lines?

The Ministerial Meetings at Seattle and Cancun failed partly because of the heavy-handed manner with which the WTO's secretariat tried to impose its positions, largely similar to those of the US and EU, on the developing countries. What makes the present WTO redundant is its lack of democratic decision-making with any humanitarian concern for the poor in the developing world.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, Dec. 15, 2005

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