G20 mutes its demand at the cost of its farmers

Afsar Jafri

22/12/2009

Opinión

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The G20, an alliance of 23 WTO member countries on agriculture led by mainly India and Brazil, representing 51% of the world population and 63% of the world’s farmers, reflected their great helplessness and inertia to take on US protectionist practices and sought an easy route to deal with it by calling for an “urgent” conclusion of Doha Round even though their fundamental demands are not addressed in the current negotiating text. The communique issued after the G20 Ministerial meeting in Geneva on 29 November, says that “concluding the Doha Development Round would result in a triple win: (i) strengthening of the confidence in the multilateral trading system; (ii) guarding against the rise of protectionism; and (iii) contributing to boost the global economy while reducing its asymmetries.” It further says that “the Ministers of the G20 called for urgent action on the Doha Round...there is urgent need to translate political statements into concrete engagement in Geneva in order to accomplish the shared objective of concluding the Round in 2010...the only way to achieve this objective is to seek convergence on the basis of the draft modalities texts of December 2008.”

This is a big shift in the G20 position since its formation in 2003, just before the 5th WTO Ministerial in Cancun. This is the first G20 communique in last six years which is quite hushed in its basic demand for “effective” reduction of subsidies in developed countries, mainly the US and European Union (EU). Ironically, the G20 communique does not make any of its fundamental demands regarding Special & Differential Treatment, especially Special Products (SP) and Special Safeguard Mechanisms (SSM), which the G20 has been associated with. SPs and SSMs are ostensibly intended to protect the interests of the vast masses of poor peasantry in developing countries, but it seems that the G20 is willing to accept the watered down, inadequate and ineffective SP and SSM provisions outlined in the Chair’s text in December 2008.

The G20 Ministerial meeting on 20 July 2008 in Geneva had stated that “the developed countries are accountable for the main distortions and restrictions in agriculture trade and policies” and called for “achieving ‘effective’ cuts in the Overall Trade-Distorting Domestic Support (OTDS)”. They also “underscored the importance of making Special and Differential (S&D) treatment operative and integral to the negotiations in the three pillars... and emphasised the vital role of SPs, in addressing the food security, rural development and livelihood concerns of developing countries, and of the SSM.” However what they accepted under the December 2008 text is a complete turn around.

The December 2008 text provides for a 70% reduction in allowable subsidies in the US which would bring down, if the US agrees to this, subsides to $14.5 billion from the present allowable level of $48.7 billion under the Agreement on Agriculture (AoA). But the actual current level of such subsidies was only around $8 billion in 2007, thus allowing the US to double their subsidies from the actual level of subsides. The worst is that all this “reduction” will not at all affect the burgeoning subsidies under the so-called “green box” (estimated currently at $50 billion and constitute around 80% of the total subsidy bill of USA) which is not subject to any reduction commitment.

Even the safeguard provisions on the SPs are quite watered-down from the G20's original demand for 20% of the tariff lines to be self designated as Special Products. The current negotiating draft provides for only 12% of tariff lines being eligible to be treated as Special Products and of these, only 40%, i.e. only 5% of the tariff lines, to be subject to no tariff cut and remaining 60 % i.e. 7% of tariff lines to be subject to an average of 19 % cut. In the Indian context, out of the approximately 700 tariff lines in agriculture, only 35 lines would be subject to no tariff cuts and 49 lines subject to a tariff cut of 19 %. Commenting on this provision of December text, Mr. SP Shukla of the Indian Peoples Campaign against WTO said “considering vast multiplicity of India’s agricultural product range and the crucial importance of these products for livelihood, the range of protection available is too narrow and too weak.”

Moreover, the conditionalities for the use of ‘price based’ and ‘volume based’ SSM as protection mechanisms are designed in such a way that it makes them ineffective in case of import surges. Instead of being flexible and practical for developing countries, the December text puts several conditions which would make it impossible for the importing countries to impose any extra tariffs if they feel that the cheap imports would affect their domestic farm sectors and impact livelihoods, rural development and food security of the people. Some of these conditions are quite problematic, for example, the volume based SSMs can be used only for two consecutive periods; the application of SSMs will only be on Most Favoured Nation (MFN) tariff level only; the volume and price based SSMs cannot be used for en route shipments; the volume based SSMs will be applicable only when the domestic price crashes down; the maximum period of volume based SSM is 4-8 months only; the maximum number of tariff lines which can avail the SSM provisions is just 2.5 %; and the uppermost limit for the price based SSM remedy are the tariffs which countries bound during Uruguay Round. These conditions makes the SSM a extremely weak “safety net” for the millions of low income and resource poor rural households in the developing countries who have very little ability to absorb price fluctuations and a flood of subsidised imports of agricultural products. Further, these condition-ridden provisions do not respond to the original demand of the G33 which asked for an “effective, flexible, practical and operable” special safeguard mechanisms. On the other hand the developed countries have crafted a more flexible and practical special safeguard provisions (SSG) for themselves which is mainly “price based” and does not have any such cumbersome conditions for its effective operation.

The farmers and civil society groups present in Geneva are quite upset with the positions of G20 and G33 member countries on the December 2008 text. They placed their trust in the proposed instrumentalities of Special Products and Special Safeguard Mechanism but what is on the table is inadequate to provide any protection to the poor farmers in developing countries who are affected by cheap subsidised imports from developed countries. Their major concern is that the recent Delhi Ministerial in September 2009 took a decision to negotiate only that part of the December 2008 text which has not yet been agreed to and are still under brackets. Unfortunately a very small part of the SSM text in bracketed which means that most provisions and conditionalities on the SSM have been agreed and will not be opened up for any further discussion during the Doha Round negotiations. For example the price based SSM provisions are not bracketed at all and hence there will be no further discussion on that, even though countries like Philippines are trying hard to open up the discussion.

Farmers and civil society groups are also concerned that the developing countries have made their commitment to cut their agriculture tariff by 36 % but there is no final commitment from the developed countries on the elimination or even substantial reduction of their agricultural subsidies. And if the Doha Round is concluded, and the possibility is that this will be whenever US decides to move, with the truncated and ineffective provisions on SP and SSM, the developing countries will have no bargaining chip to demand for any further reduction in any kind of subsidies of the developed countries. This will be suicidal for the agriculture and agriculture based economies of the South and the fundamental imbalances among WTO members will persist for ever.

- Afsar Jafri is a research associate with Focus on the Global South and he can be reached at a.jafri(at)focusweb.org. The G20 is a group of 46 developing countries in the WTO.

Source: Focus On Trade, Number 148, 3 December 2009.

https://www.alainet.org/es/node/138574