Shoaib Aziz
shoaib@sdpi.org
Livelihood of about 70 percent of population in the developing countries is dependent on agriculture. Compared to this, only four percent of people in the developed countries are engaged in agriculture.
In the Uruguay round of world trade talks, agriculture, like other sectors, was also brought under the discipline of multilateral agreements. During and prior to that round, many studies projected that the Agreement on Agriculture (AoA) will be beneficial for developing countries, and their economies would receive a boost because of the agreement.
However, since the advent of the agreement most of the developing countries have witnessed an increase in agricultural imports, which have deteriorated their balance of payments.
The developed countries have managed to increase the subsidies they have been offering to their agriculture sector, while denying market access to the products from the developing countries.
According to the AoA, the developed and the developing countries were bound to reduce export and domestic subsidies and tariffs. Some subsidies, however, were exempted from reduction commitments as they were considered to create minimal trade distortions.
The North has managed to put its subsidies – which otherwise highly distort trade – in the less distorting permitted category. Meanwhile, the developing countries either under the pressure of international financial institutions or under the commitment of World Trade Organization started phasing out subsidies and reduced tariffs on agriculture imports.
The imbalance led to an uneven field for developing countries under the AoA. Heavily subsidized surplus agriculture products from the developed countries were dumped in the developing countries, which made producers in the developing countries uncompetitive, jeopardizing food security and livelihood of farmers, particularly the small ones.
During the Uruguay round, it was decided that the AoA would be revised after five years. The Doha round of trade negotiations, therefore, started to review the agreement.
But the negotiations on AoA became hostage to a possibility of an understanding between the US and EU on the issue of subsidies. This was one of the main reasons why the Group of 20 or G-20 (now G-21 with the inclusion of Uruguay) came into being as an effort to strengthen the developing countries' position in the negotiations.
Brazil, China, Egypt, South Africa, Indonesia, Pakistan, Malaysia, Mexico and Argentina are major players in G-20. These countries are where almost 60 percent people of the world live. The G-20 countries also house 70 percent of the total farmers in the world, and account for 26 percent of all international trade in agriculture.
Since its arrival on the scene, G-20 has seen many attempts to divide it by offering its members incentives, and sometimes by threatening and arm-twisting them.
The pressure and lobbying of the corporate groups to split the G-20 were so intense that they appalled civil society organizations from the US. At a press conference on September 13, 2003, these organizations revealed the tactics adopted by their governments. These included backroom coercion, calls from the White House, threats to terminate other trade benefits and stop ongoing negotiations.
Despite the intense pressure, the group remained intact during the Cancun ministerial meeting. After the meeting, however, some Latin American countries, which dominated the group, left it, though other countries like Tanzania and Zimbabwe joined it.
Within G-20, the differences were deep between Brazil and Argentina, and India and Pakistan, on the issues of subsidy cut and tariff reduction. But the group has so far managed to overcome these differences, recognizing the need for market access and rural development.
The group has established good relationships with other groups involved in WTO negotiations. Some members of the G-20 are also members of the Cairns Group. The two groups have common views on AoA. The only difference is that the Cairns Group focuses only on trade liberalization while the G-20 combines development with liberalization.
Initially, the G-20 proposal on AoA was rejected during the Cancun ministerial meeting because some other groups had insisted on tabling only the document produced by the chairperson of the meeting.
The chairperson's document, however, was already facing criticism from the developing countries.
In its proposal, the G-20 had asked for substantial reduction in domestic support, sustainable improvement in market access, elimination of export subsidies, and special and differential treatment. The proposal proved that the G-20 was formed not to block but to ensure true and balanced negotiations.
In Cancun, the G-20 emerged as a powerful group. Subsequently, it held consultation meetings first with the EU and then with the US, and later with all the parties involved in the negotiations in Cancun.
After Cancun, the G-20 met in Brasilia on December 11-12, 2003, to discuss and consolidate its position on agriculture and to devise a strategy for achieving progress in the Doha round of talks. The G-20 members again met in Sao Paulo on June 12, 2004. The Sao Paulo meeting took place at a decisive moment because WTO members were seeking an agreement on a framework for agriculture negotiations. In the meeting, the G-20 invited then WTO's Director General Dr Supachai Panitchpakdi and Ambassador Tim Groser, chairman of the Special Session of the Committee on Agriculture, as special guests. The meeting repeated the G-20 call for reduction of subsidies and tariffs, stressing that the subsidies should not be shifted from one category to another.
As the Hong Kong ministerial meeting on WTO, scheduled for December 2005, approaches, the developed countries seem least interested in giving priority to agriculture. They are rather interested in discussing other issues such as Non-Agriculture Market Access (NAMA), Services and Intellectual Property Rights (IPRs). This was evident during agenda of mini-ministerial conference held in Mombassa, Kenya. Developed countries stance is that agriculture is only one component of the Doha round of trade talks. So in order to finalise the round, there should be progress in other sectors such as market access for industrial products, services, TRIPs, etc.
The G-20, however, has made it clear at its New Delhi meeting on March 18-19, 2005 that nothing will move at the Hong Kong ministerial meeting unless there is progress on AoA.
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