WTO backs agricultural reforms, split on Doha

23 Dec 2015 | Author: | No comments yet »

Africa’s big win on agriculture as curtains fall on Nairobi WTO summit.

After a bruising battle between the rich countries and blocs of not-so-rich ones, the Nairobi World Trade Organisation (WTO) meeting of 160 nations failed to reach an agreement on an issue that directly affects 250 million farmers and farm workers in India. One of the bitterest fights, continuing from previous rounds, saw India lead a group of nearly 50 developing countries to stave off attempts by richer countries to kill food and agriculture subsidies and open domestic markets to agricultural commodities. When the conference ended late last evening, the delegations had agreed to eliminate production and export subsidies, which have been blamed for distorting market prices by keeping them artificially low. However, developed nations refrained from making any commitment to trim massive trade-distorting farm subsidies offered by them, despite hectic negotiations that exceeded the scheduled closing of the ministerial by almost a day from December 18.

In the process, Foreign Affairs and International Trade Cabinet Secretary Amina Mohamed — who chaired the conference — got a standing ovation over the major decisions that were reached. But some countries, such as Kenya and Ghana that rebased their economies and were elevated to middle-income status, will now miss out on this package.

According to a commerce ministry statement here, while the majority–consisting of the G-33, including India, least-developed countries and the African group–wanted a reaffirmation of the Doha round mandate, a few members opposed it. “This marks a significant departure from the fundamental WTO principle of consensus-based decision making,” the statement said. However, despite the difficulty in negotiations, the draft Declaration “reflects India’s demand for a reaffirmation from all members to work towards a permanent solution on public stockholding (PSH)”, according to the statement.

But what the richer countries — US and EU — want is that countries like India, China, Brazil and Indonesia should cut their own subsidies and lower import duties so that agri commodities from richer countries can be easily sent in. WTO Director-General Roberto Azedevo told the delegates at the closing ceremony that the outcome of the conference was not the best but good in the prevailing circumstances. “When we came here, we were not looking for the best outcome but I can say we have delivered a huge amount of benefits for the poor countries,” Azevedo said. Another preposterous demand, enshrined in the 1995 Agreement on Agriculture, is that farm subsidies in developing countries should be calculated at 1987 prices. At least seven major decisions were reached at the stormy conference, including an agreement to remove taxes on electronic goods among 53 major nations and resolution on how much in food stocks different countries should hold in their reserves.

It was a round of talks like no other on the basis that an alternative outcome could significantly weaken the WTO — the global body that seeks to promote trade through developing rules that member countries are required to play by. The nation’s GDP is now $55.2 billion, up from $44.1 billion before rebasing — making it the fourth largest financial system in sub-Saharan Africa after Nigeria, South Africa and Angola.

India got it in & ensured a decision for a work plan too notwithstanding a lack of consensus, even as the language was getting developed on the ‘factual’ narrative paras on the DDA, India ensured that on PSH & SSM the relevant decisions of Bali, GC, & ref to DDA were brought in as the necessary & reassuring links.” “That all unfinished pillars of DDA shall be carried forward was also ensured.The special & differential treatment shall also be carried on,” she said in the tweets. Representatives from tens of poor countries were clear on their positions since the conference opened on Tuesday that it was only through the Doha programme that their voices could be heard and concerns relating to poverty addressed. And with donors pledging another Sh32 billion for the 48 LDCs as replenishment to the Enhanced Integrated Framework (EIF) at the start of the 10th WTO Ministerial Conference in Nairobi, some countries like Kenya are up in arms. India, along with other developing countries known as the G33, has been vociferously seeking an SSM to protect farmers against a sudden spurt in dumping, especially from developed nations, including the US and the EU, that offer massive trade-distorting subsidies to farmers. The Aid-for-Trade initiative launched in 2006 has so far dispersed about $250 billion (about Sh25.5 trillion) and it has mostly gone to developing countries.

The declaration at Nairobi, which also marked the 20th anniversary of the WTO, reflected the importance of multilateral rules-based trading system and reaffirmed the pre-eminence of the WTO as the global forum for trade rules setting and governance, in an apparent hint of supremacy of the negotiations at the WTO vis-à-vis agreements like the Trans-Pacific Partnership (TPP). In the end, the ministers only noted their views in a short acknowledgement. “Other members do not reaffirm the Doha mandates, as they believe new approaches are necessary to achieve meaningful outcomes in multilateral negotiations. This includes advancing work in all three pillars of agriculture, namely domestic support, market access and export competition, as well as non-agriculture market access, services, development,” the statement reads further. Some critics have argued that rebasing did not really improve the lives of Kenyans. “We need to rethink and discuss this particular issue,” said the Chief Executive Officer of the Kenyan Agribusiness and Agroindustry Alliance (KAAA), Ms Lucy Muchoki. While that is the ideal trading environment as envisioned by the WTO, the disparity in development among different economies could hand most tenders to more established companies from developed countries.

Nigeria leapfrogged South Africa to become Africa’s biggest economy after rebasing its economy, but the levels of poverty in Nigeria are much higher than in South Africa. How western farm dole-outs affect third world farmers is clearly brought out in a recent study by the Geneva-based International Center for Trade and Sustainable Development (ICTSD). These new issues pushed by the US include global value chains which would open up all markets to international competition, commerce, competition policies, investment pacts and state-owned enterprises. They estimate that the US cotton subsidy under its new 2014 farm Bill would lower global cotton prices by nearly 7%, causing losses to farmers in African countries and India to the tune of a staggering $3.3 billion per year. There is nothing that prevents the European Union or the United States from giving the same treatment that they give to LDCs to Kenya,” said Bernard Hoekman, Professor and Director, Global Economics in the Global Governance Programme of the Robert Schuman Centre for Advanced Studies, European University Institute in Florence, Italy.

He cited the African Growth and Opportunity Act (AGOA), a United States Trade Act, which gives some sub-Saharan African countries preferential treatment to access its market. The new US farm Bill has done away with the direct cash payments system and replaced it with an ingenious way of subsidising their farmers: in the name of insurance, the government will guarantee that farmers can sell their crop above a certain price or make a certain amount of revenue. Still, Africa and LDCs must speak with one voice in global trade talks. “Immediately we start to disaggregate we are giving our negotiating partners room to argue against addressing our demands,” said Mwape.

Procurement of food grain is done by the government at fixed prices and this grain is then routed into the public distribution system at subsidised prices. Kenya became the 60th country to ratify the ITFA. “Negotiations for the tripartite free trade agreement are complete which brings together Comesa, SADC, and EAC. Mwape said African countries have gained from their membership at WTO despite all the failed negotiations. “Trade is now a component of those strategies.

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