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August 08, 2008

Safeguard demands for small scale farmers derailed WTO negotiations

Safeguards to protect small farmers’ livelihoods in African and other developing states, as opposed to subsidies for commercial agricultural interests in rich countries, remained an insurmountable obstacle in the World Trade Organisation (WTO) talks, leading the Doha Round to collapse last week.

The Doha Round crumpled unceremoniously on July 29, the ninth day of the mini-ministerial meeting. The straw that broke the camel’s back -- the special safeguard mechanism (SSM) – has to do with small farmers’ livelihoods in the developing world.

However, it should be noted that there were gaping differences on a whole host of other issues that were yet to be discussed in detail, such as the U.S.’s subsidies for its cotton farmers, as well as several issues in the industrial tariffs negotiations.

The difference in views on the SSM was not only between the U.S., on the one hand, and India and China, on the other. In fact, a hundred developing countries did not accept the figures which WTO Director General Pascal Lamy had produced on July 25 (the fifth day of the negotiations).

These countries -- the Group of 33 (which includes 46 countries); the African, Caribbean and Pacific (ACP) group; the Africa Group; and small and vulnerable economies (SVEs) -- produced an alternative set of numbers on Sunday July 27.

The wrangle between the U.S. and India and China was highlighted simply because the negotiations were taking place mainly among seven players: the U.S., the European Union (EU), Japan, Australia, India, Brazil and China (also known as the Group of Seven or G7).

The other selected ministers who had been invited to Geneva were excluded from those negotiations and were waiting in the corridors. Hence, it appeared that India and China were alone in disagreeing with the U.S..

The SSM is meant to address import surges in farm products. In order to protect its domestic agricultural sector from injury, the SSM would allow a country to implement an additional tariff to stem the import surge.

Among several problematic constraints in the Lamy figures that the hundred developing countries identified was the suggested trigger of 140 percent. This means a country should have a 40 percent increase in imports compared to a preceding three-year period before the SSM can be invoked.

Developing countries, in contrast, were asking for a five or, at most, 10 percent import increase. A 40 percent import increase before action can be taken is likely to be too late as the import surge could already have wiped out the country’s producers. However, the U.S. and a few other countries with agricultural exporting interests were immovable on this issue.

On the last two days of the talks, other possible options were proposed in the G7 which India accepted but the U.S. not. The U.S. wanted a weak SSM to ensure that the Doha Round would provide them access to developing countries’ agricultural markets.

The battle was thus between commercial interests in agricultural exporting countries, and the livelihoods of subsistence farmers in Africa, Asia and elsewhere.

What happened in the area of the SSM, however, was echoed in several other areas. Commercial interests were seen as more pressing than the measures developing countries wanted in order to minimise the threats of unemployment and de-industrialisation.

If talks had not collapsed over the SSM, there was a real chance they would have done so in the area of the non-agricultural market access (NAMA) negotiations, or the area of cotton, where consensus was not even on the horizon.

There was also the issue of preference erosion, which was not yet resolved. If markets all around were to be liberalised further, many African countries stood to lose, rather than gain, because of the carving away of existing trade preferences.

In sum, when African countries asked for their development concerns to be taken on board, their requests were frustrated at every turn. Conversely, the package on the table would have given the U.S. and EU special treatment.

The U.S. and EU would have been able to retain all of their agricultural subsidies, only shifting them to different subsidy categories. They would also have cut industrial tariffs by a smaller percentage -- about 30 percent -- while developing countries were expected to cut tariffs by about 58 percent.

*Analyst Aileen Kwa is the coordinator of the trade for development programme at the inter-governmental South Centre.


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