After a â€˜truly historicâ€™ agreement, it is now an embarrassing wake-up call for the developing countries. The big boys have done it again. This time, they have successfully managed to apply the dope trick on the developing countries â€“ putting them in a hall of shame for letting the rich and industrialized countries not only walk away with all the trade-distorting farm subsidies but also allowing them to throw a still protective ring around agriculture.
It is now official. The
The July 31 WTO framework agreement, agreed upon by 147- members after a five day grueling exercise in Geneva has drawn a structure that needs to be implemented for furthering the Doha Development Agenda. The WTO director general had therefore hailed the framework agreement as â€˜historicâ€™ and the developing countries â€“ G-20 and G-33 (and the least developing countries under the banner of G-90) had returned back claiming â€˜victoryâ€™. No sooner the details began to be analysed, it became clear that the developing countries had not only been duped but robbed in the daylight.
â€œThe new global trade agreement protects
Zoellickâ€™s colleague, and the chief
The chairman of the US Senate Finance Committee, Mr Charles Grassley, has reassured American farmers saying that the framework agreement entails only shifting of subsidies of the â€˜amber boxâ€™ of trade-distorting supports to the â€˜blue boxâ€™ of subsidies that are decoupled from production and are considered less trade-distorting. No wonder, the WTO framework has been welcomed by 53 American groups and companies, including Monsanto. US President George Bush as a result does not face any political embarrassment from the powerful farmers lobby in the run up for the presidential election slated for November.
While the framework provides a cushion to the US/EU to raise farm subsidies from the existing level it has for the first time turned the tables shrewdly against the developing countries. Except for supporting the resource-poor farmers, developing countries too will have to reduce their subsidies. Interestingly, developing countries are being asked to cut domestic support for agriculture at a time when a majority of the 3 billion farmers in the majority world earn less than half of what a European or American cow gets as subsidy â€“ US $ 3 a day. It is also widely accepted that developing countries do not have the means to provide direct farm support to farmers. It is therefore not only amazing but shocking beyond belief to see the way the developing country negotiators goofed up.
If you read the draft carefully, it becomes obvious that the first installment of a cut in subsidies by 20 per cent is not based on the present level of subsidies but on a much higher level that has been now authorized based on the three components -- the final bound total AMS, plus permitted de minimis, plus the Blue Box. For the EU, this should come to Euro 101.6 billion and after applying the first cut, the subsidies that can be retained will be Euro 81.3 billion. I had earlier worked out the actual reduction that the EU will have to bring about, which in essence means it gets a leverage to further increase the subsidies.[i]
The sigh of relief being expressed over the elimination of export subsidies is also likely to be brief. Export subsidies have always been considered to be trade-distorting and except for the talk for reducing these, no definite time schedule had ever been spelled out. The July 31 framework also reiterates the same old position without making any definite commitment. French Agriculture Minister, Herve Gaymard, has made this abundantly clear when he informed the media that it would not be before 2015 or 2017 when export subsidies are completely eliminated. By the time these subsidies are actually removed, developing countries would have become an open dump for the cheap and highly subsidies agricultural imports thereby destroying millions of livelihoods and further marginalizing the farming communities.
The framework also provides more protection measures for the rich and industrialized countries. Special and differential treatment, special safeguard measures and on top of it the provision for designating some of the key products under the category of â€˜sensitiveâ€™ products makes the domestic market security more solid. Jim Grueff, assistant deputy administrator for trade policy in the US Department of Agriculture, has already assured the American Sugar Alliance that the
For the developing countries, the blame would rest mainly with the big two â€“
(Devinder Sharma is a New Delhi-based food and trade policy analyst. Responses can be emailed at email@example.com)
[i] Devinder Sharma: â€œWTO: Faulty Frame, Rude Resultsâ€ Hindu Business Line, Chennai/New Delhi and several other places in