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Digesting Doha


What did the hungry get out of the WTO summit?

The Fourth Ministerial Meeting of the World Trade Organization that took place in Doha, Qatar in November could lead to a fairer global food market. And there was other good news -- on food security, price spikes and more. FAO helped it to happen.

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In Venezuela, trucks carry plantains to a packing station for export to the United States. (FAO/20417/G. Bizzarri)

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Will the wealthier countries reduce support to their farmers? Could they phase out export subsidies altogether? No promises --but they've agreed to talk.

That may mean farmers in developing countries could get fairer trading conditions, both at home and abroad. They will be able to invest more, and grow more. And because the poorest countries are usually those most dependent on agriculture, many of the world's 815 million hungry people could get more to eat.

Following Doha, WTO member countries can continue to negotiate for an open world trading system, including reductions in the support rich nations give to their own farmers.

FAO is not against a global market system for agriculture, but thinks the system must be fair. Support to farmers in the 30 wealthy countries that belong to the Organization for Economic Co-operation and Development (OECD) in 1999 exceeded the combined GDP of all the developing countries in sub-Saharan Africa. In fact, in 2000 total transfers to agriculture in the OECD amounted to US$327 billion.

"While each OECD farmer received US$ 11 000 of support, an agricultural farm worker in a developing country received a mere US$ 4.30 of ODA [in 1999]," FAO Director-General Jacques Diouf said recently. "Poor farmers in poor countries cannot compete with the treasuries of the world's richest countries." The point was made at Doha by FAO Assistant Director-General Hartwig de Haen. "Until agricultural protection and support have been substantially reduced in developed countries, developing countries should not be required to further reduce bound tariffs or domestic subsidies," he said.

The final Declaration adopted at Doha states: "Without prejudging the outcome of the negotiations we commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support."

"Some developed countries were very reluctant to agree to this," says Harmon Thomas, Chief of FAO's Commodity Policy and Projections Service. "They only agreed at all because the upcoming round of talks will cover a much bigger package, including international investment, electronic commerce, trade and the environment -- things the developing countries didn't want to discuss. The new round will also include trade-related intellectual property issues (TRIPS), which can affect farmers' rights over genetic material -- and sanitary and phytosanitary measures (SPS), which affect health and food safety issues in agricultural trade. It's difficult at this stage to predict exactly how these will be thrashed out, but the negotiations could be useful."

Moreover, the Declaration affirms an intention to negotiate on tariff reductions, and tariff escalation -- the practice of raising duty disproportionately on processed goods, including food products. This is especially unfair because it prevents exporting countries from getting added value from their agricultural produce. But agricultural tariffs are high even for unprocessed products. After Doha, tariff reform looks more likely, too.

Food security: Now it's part of the deal

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Ice is loaded onto a boat carrying shrimp to a processing plant in Bangladesh. The shrimp are frozen and exported, mainly to Europe. (FAO/19907/G. Grepin)

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Special provisions for developing countries are not new, and were written into the Uruguay Round Framework Agreement which was reached at Marrakesh in 1995. But the Doha Declaration recognizes food security and rural development as legitimate concerns for developing countries. At Marrakesh they were included in "non-trade concerns", and were not explicitly mentioned.

Also at Marrakesh, it had been decided that since some countries would be vulnerable to food-security pressures created by global agricultural reforms, four mechanisms should be put in place to ease the transition. They were food aid, favourable credit terms on agricultural export credits, technical and financial assistance to improve agricultural productivity -- and access to short-term financing so that governments in poorer countries could cushion their consumers against sudden spikes in food import prices.

But there was no effective implementation mechanism. So the richer WTO member states could argue that they were complying with the first three measures through bilateral assistance programmes with the poorer ones, and no one could prove that they were just implementing their usual bilateral aid packages. And the spikes loans just didn't happen.

But the Decision by Ministers at Doha accepted that an inter-agency panel of financial and commodity experts be established, involving FAO along with the World Bank, the International Monetary Fund (IMF), the International Grains Council and the UN Conference on Trade and Development (UNCTAD), to explore ways of getting less food-secure countries access to "multilateral programs and facilities" to deal with short-term spikes, including the possible establishment of a revolving fund. The agreement of the WTO member states to such a multilateral mechanism means that something might be done soon about spikes in food import bills.

"Several of FAO's efforts have borne fruit at Doha," says Dr Thomas. "FAO has argued for effective multilateral mechanisms to deal with the possible negative effects of the reform. Also, we've long argued for food security to be recognized explicitly, and said that richer countries should reduce trade-distorting subsidies to their farmers and give poorer exporters a chance."

The trouble with a Ministerial Declaration is that the poor cannot eat it. It will be necessary to see how much is translated into action. But some important principles have been accepted, and the multilateral spike mechanism could be established.

Doha was just one step in an ongoing process, and FAO is still digesting it. But so far, it does not taste bad.

26 November 2001

 

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