May 17, 1991


COPENHAGEN, MAY 15 (TWN) – Despite their public statements, the United States and the European Community are likely to reach a deal on agriculture with very adverse trade and food security implications for the Third World countries, a British NGO expert warned here last week.

Speaking at a seminar on trade, environment and development, Kevin Watkins of the Catholic Institute of International Relations, London, and author of a forthcoming publication: "The World Agriculture Trade Crisis and the Uruguay Round: Implications for the South", said that despite their public statements "the divergences on agriculture between the U.S. and EC had been 'widely exaggerated', as negotiators on both sides privately acknowledged".

"Whatever their rhetoric, neither side is likely to sacrifice the framework agreements already in place in areas such as services TRIPs and TRIMs - all of enormous national and corporate significance in the U.S., EC and Japan - over an area of such marginal, and declining economic importance as farming", he said.

The seminar was organised by SIMU (Samarbejdet om Internalt Miljo og Udvikling) an umbrella Organisation grouping over thirty Danish environmental and development NGOs including the World Wildlife Fund-Denmark and attended by aver a hundred participants.

Michael Gormsen, a Danish foreign official, speaking in his personal capacity though, told the seminar that one of the alternatives was to drop agriculture from the Uruguay Round agenda.

Chakravarthi Raghavan Chief Editor of SUNS and Geneva representative of the Third World Network warned about the contradictory trends and processes at work in world polity.

There was the U.S.-led drive in the Uruguay Round for a Transnational World Order and Bush's New World Order proclaimed after the Gulf War but which was really the old colonial order.

Both, he said, were contrary to the processes for an "Environment and Sustainable Development", but were trying to coopt and subvert this latter process to create Environmental Colonialism "which would put an end to environment and sustainable development and all orders in global disorder".Charles Arden-Clarke of the World Wildlife Fund International said GATT rules and disciplines and the Uruguay Round processes, by penalising Third World countries from value-added activities based on their natural resources and forcing them to export low-value raw materials and penalising countries that would like to externalise the environment costs of production, were endangering environment and sustainable development.

GATT's "non-transparent" ways of functioning made it very difficult for others - consumers, environmental groups, etc. - to influence the process. The major thrust of NGOs should be to end GATT's non-transparent ways of functioning and force public discussions and debate before agreements are concluded.

GATT itself, he said, would need to be amended and reformed to enable environment and sustainable development considerations to be reflected in trade.

Gormsen said that whether or not the Uruguay Round would continue depended on the U.S. administration winning its fast-track authority. If the Congress denied this authority, no one would be prepared to negotiate with the U.S..

If the fast-track authority was granted and negotiations started in earnest, success would be possible only if other trading partners of the EC "moderated" their demands and ambitions in agriculture and were ready to reach a compromise based on the EC "offer" of a 30% reduction in support.

The other alternative, he suggested, would be to drop agriculture out of the Uruguay Round agenda, while awaiting the internal reform processes in the EC, U.S. and other Industrial Nations.

Earlier, Knud Vilby of Mellenfolkeligt Samvirke (a SIMU constituent) said protectionism and Common Agricultural Policy (CAP) in the EC were built on arguments for food security and need to support farmers and farm employment.

The result, until recently, was an unlimited growth-oriented non-ecological farm model and dumping of surpluses at prices below production costs, and damage to the environment from extreme inputs of chemicals, fertilisers, energy, etc

.A CAP for Africa, he said, would make it possible to raise food production and production of cash crops and limit ecological degradation. Non-affordable by Africans, it showed that Third World farmers could produce more in a more sustainable way if economic conditions differed.

The net result was low prices for food products for internal consumption, no guaranteed prices for farmers, cheap imports from the U.S. and EC competing with local products, and IMF pressures on these African countries for further liberalisation.

Third World countries, under any agricultural trade regime, should be able to protect their domestic markets, Vilby argued. If the U.S. and EC could justify their own protection, why should it not be justified for the Third World where food security was a matter of life and death.Vilby also warned of the consequences to agriculture and farmers as a result of the proposals for expanding the intellectual property protection.

Raghavan said in the final analysis trade, environment and sustainable development were not technical issues but political issues. Nationally and internationally they involved questions about governance of man and society and, in these days of democratisation, decisions had to be taken democratically.

In all his professional experience of reporting on international negotiations, he said, the GATT process was one with the least transparency and openness to public. This method of functioning enabled the secretariat and others to manipulate information and enable agreements to be reached against public interest but in favour of major corporations and enterprises.

There were three broad trends and forces, some contradictory, at work in the world polity and it was their interplay that would determine the future.

There was the U.S.-led drive in the Uruguay Round of so-called trade negotiations which were really efforts at restructuring the world into a global economy, through the instrumentality of the Transnational Corporations, and into a single Transnational system of production, distribution, trade, consumption and culture - a Transnational World Order (TWO) which would reverse the post-war decolonisation process and push the Third World economies back into a colonial era system.

In the aftermath of the Gulf War and "Operation Desert Storm" was the Bush-proclaimed New World Order (NWO), a Pax Americana. It would be an order based on the economic muscle and sinews of other Industrial Nations like Germany and Japan and dependent on them (and the Gulf sheikhdoms) for financial largess and on the former for technological inputs, and seek to ensure for the U.S. and the North continued high consumption and resource use patterns.

Vis-à-vis the South these two, NWO and TWO were compatible, the U.S. Section 301 unilateralism and threat of trade sanctions being buttressed by likelihood of unabashed and disproportionate use of force to enforce the North's will on the South.

But simultaneously with these two trends were the forces in the North for environment and sustainable development, the Greens and other non-government movements, but which were being sought to be coopted and enmeshed into the NWO and TWO in order to enforce on the South a different life style and development model. This would be an inherently unstable situation that was bound to result in global disorder and unsustainable environment disaster.

A basic premise of environment and sustainable development was cooperation and consensus among and within nations and not coercion. Any effort by governmental and non-governmental groups that sought to use the coercive power of the NWO or TWO to enforce a particular development model and environment order on the South was bound to come to grief.

Citing several GATT articles and rules and proposals in the Uruguay Round, Arden-Clarke said many of these provisions came in the way of Third World countries efforts to conserve and preserve their natural resources. They also would penalise countries that sought to establish higher environment standards.

A major drawback of the GATT and the Uruguay Round processes was their secrecy and non-transparency and the best contribution that NGOs in the North could make would be to bring pressure to bear on their governments to force more openness and transparency and full public debate and discussion before agreements were concluded, Arden-Clarke said.

Other speakers underscored the importance of environment and development groups in the North involving themselves actively with the on-going preparations and processes for 1992 "Earth Summit", monitor the Uruguay Round negotiations, difficult though it was because of the total non-transparency of the processes, and keep up continuous pressures on their governments for public discussions and full debates before taking any decisions in the Round.

Watkins said that there was every prospect of the U.S. and EC arriving at a deal of their own on agriculture and forcing it down on other countries, forcing their governments to operate within policy parameters set by the GATT rules which would have the backing of international trade rules and sanctions for violation.

While retaining a multilateral facade, the agriculture trade negotiations in the Round had been essentially an U.S.-EC bilateral affair. And while a handful of Third World countries, notably those in the Cairns Group may be consulted, Third World influence on the shape of any settlement, like its power of veto, hovers between marginal and non-existent, he said.

"However, developing country agricultural and food security policies will have to adjust to the international trade regime which emerges from a ‘farm superpower’ deal, their special status in the GATT notwithstanding".

With the EC, unable to lick the U.S., and ready to join it in providing support to farmers through so-called "deficiency payment programmes" which would not be any less of a domestic support subsidy than price-supported programmes, the two major trading nations would set rules that would ensure for themselves open markets for their dumped and subsidised exports.

The MacSharry proposals for reform of EC agriculture, by confining support to small farms, had no chance of being approved, he said. The UK, Netherlands and Denmark with their big farm interests were opposed, and they had recently been joined by Germany (whose "smallest" state farms in the East would be bigger and thus denied of needed support) as well as in France.

The proposals of the Industrial Countries, the paper put forward by the chairman of the Agriculture Negotiating Group, Aart de Zheew and the Höllstrom paper providing at best for a time-bound derogation for Third World countries, and calling for domestic prices not to be over "free at frontier" prices (which were determined by subsidised and dumped sales of the U.S. and EC) would block agricultural and rural development in the Third World, Watkins pointed out.

The de Zheew paper on agriculture would mean that domestic production decisions in the Third World should reflect prices set by unrestrained imports. It would effectively establish deficiency payments as the only legitimate form of income support for agricultural producers in the South - an option which bore no relation to the budget constraints these countries faced.

Both, the de Zheew and Hellstrom texts, posed profound threats to the food security and policy sovereignty of Third World countries. By making import control measures a violation of international trade law, both the papers would in effect outlaw pursuit of food self-sufficiency.

Unlike in the North, agriculture on average accounted for 20% of GDP in most countries of the South (as against three percent in the North) and two-thirds of employment and for many for bulk of foreign exchange earnings.

"While the precise shape of a GATT deal (on agriculture) is yet to emerge from the negotiating fog", Watkins said, "the vista of one is clearly visible".

"It is a deal, negotiated by the U.S. and the EC to serve their own policy and corporate interests, which will force developing countries to open up their fragile food systems to cheap imports. And it is a deal which will do little, if anything, to end the cycle of over-production in the North. In short, the GATT agricultural regime will institutionalise food dumping by the U.S. and the EC and reinforce developing country food dependence".

Watkins cited the UK Agriculture minister as having said that any agreement that benefited the U.S. and EC would be in the interests of the international community.

A ban on exports subsidies (whether through the market as in the CAP or "offset programmes" in the U.S.) would require enormous policy adjustments in the EC and the U.S.. But how these were made was a matter of domestic policy concern and not for the GATT.

Watkins added: "Effective multilateral trade rules do not require a single world-wide agricultural regime, nor do they require the transfer of political sovereignty to unelected bodies in Geneva. What they do require are measures to bring industrialised country supply into line with domestic and unsubsidised foreign demand. Indeed, this is the logical extension of an effective antidumping provision".

"Finally, the negotiations should aim at giving some substance to the concept of special and differential treatment for developing countries. This should include commitments to the phasing out of the voluntary export restraints currently imposed on developing country suppliers; to expand market access and reduce tariff escalation on agricultural products of special interest to developing country suppliers; to improving market access for agricultural products under existing special trade arrangements (such as Lome convention); to insulating Third World suppliers from effects of farm policy adjustments within and without the Uruguay Round; and to ensuring that industrialised country suppliers bear the burden of any adjustments in agricultural markets resulting from reduced import demand".

"If ICs are to move towards lower input agricultural production and support systems geared to environmental objectives, government market intervention and import controls will be essential. It is therefore vital that GATT should not hinder this transition by imposing rules outlawing such policies", Watkins said.