Oct 27, 1989

NET FOOD IMPORTERS DEMAND OFFSETTING MEASURES.

GENEVA, OCTOBER 25 (BY CHAKRAVARTHI RAGHAVAN)ó A group of five net food importing countries have put forward proposals in the Uruguay Round negotiating group on agriculture for special offsetting measures to take care of their problems of increased food import costs as a result of liberalisation of agricultural trade.

Under the mid-term accord in agriculture the Ministers agreed that ways should be developed to take into account the possible negative effects of the reform process on the net food importing developing countries.

The proposals were put forward in the negotiating group by Peruís Amb. Oswaldo de Rivero on behalf of Egypt, Jamaica, Mexico, Morocco and Peru. According to the paper, based on FAO statistics, the net food import bill of the third world countries was 27.5 billion of which the five alone accounted for 4.2 billion dollars.

The "liberalisation" of agriculture in the OECD countries would result in import price increases for the five ranging from 8 percent for oil-seeds, fats and oils to 49 percent for dairy products and eggs. Prices of cereals and preparations would go up by 36 percent, while that for meat and meat preparations by 16 percent.

For the five, food import prices in U.S. dollars would go up by 29 percent for Egypt, 30 percent for Jamaica, 24 percent for Mexico, 28 percent for Morocco and 33 percent for Peru. For the five the annual food import costs would go up by 1.437 billion dollars.

To alleviate this burden, the purchasing capacity of the importing countries should be enhanced through concessional sales including increased availability of low-cost export credits and grants. Their export earning capacity should be increased through improved market access conditions for agricultural exports by immediate tariff and para-tariff reductions and phasing out or elimination of non-tariff measures. There should also be increased food aid through a flexible approach to the usual marketing requirements and triangular arrangements, which safeguard and promote production and exports of third world countries. There should be provision of financial resources and technical assistance, bilaterally and multilaterally, for enhancing the purchasing capacity as well as increasing agricultural productivity, production, infrastructure and research.

Since the rise in import prices would exacerbate debt servicing problems, international financial organisations should take the increase in import prices into account in negotiating structural adjustment programmes, and make them more flexible.

To implement such measures, the paper of the five has called for a funding arrangement or facility derived by contributions from the industrialised countries who would, as a result of the negotiations, be saving money by reducing expenditure on subsidies.

The funding facility should be multilateral, transitional rather than permanent, and with its administration entrusted to an existing international financial or developmental organisation.