Agricultural trade and food security

Group for Environmental Monitoring’s position

Group for Environmental Monitoring’s (GEM) position on engaging with international fora is to “strive for equity and environmental justice by contributing to the formulation and implementation of integrated local, national and international policy.

There is a philosophy to use resource economics tools to influence the national and global policy within the existing “conventional wisdom” paradigm while at the same time attempting to “shift that paradigm”. From this perspective, the issue is how to use positions within the formal framework to strengthen the ability and space of people to develop alternatives parallel to or outside the formal framework. This can be achieved not only by creating legal space, but also by allowing people to begin to set up practical alternatives that will eventually supersede the top-down and corporate driven globalisation of the present.
With this approach in mind, key issues relating to the global processes will be spelled out, followed by the South African government’s positions in these processes and a consideration of the potential impacts on food security of these positions. Recommendations on positions in the global processes, with specific regard to agricultural trade, will then be provided.
This will be followed by a consideration of how these recommended positions may contribute to creating the necessary alignment with forces seeking to shift the “conventional paradigm”.

INTERNATIONAL PROCESSES REGARDING TRADE AND FOOD SECURITY

World Trade Organisation negotiations on the Agreement on Agriculture
The WTO was formed in 1995 as a result of the Uruguay Round of negotiations of the General Agreement on Trade and Tariffs (GATT). Although GATT was first signed in 1947, agriculture was first included in 1987 at the start of the Uruguay Round. The negotiations on agriculture were extremely problematic, given that the US, EU and Japan were unable to agree. Finally a private deal between the US and EU was tabled in 1992.
Agreement favours the United States
It is widely accepted that the agreement favoured the US in particular, and was based on the domestic reforms the US and EU were already carrying out as well as the opening up of third country markets. The US government, representing the interests of its corporations, assessed that the loose and flexible GATT arrangements should be replaced by a far more powerful and wide-ranging WTO.

US decides World Trade Organisation to replace GATT arrangement

Developing country delegations were extremely weak in the negotiating round, and most felt they had no choice but to sign. Most were driven by the fear of being further isolated from world trade if they did not sign, and also by the promise of a rules-based system that would protect weaker countries from the big trading powers²². This remains one of the key arguments for the need to launch a new round, as will be shown later.

One most important result of the Uruguay Round was the loss of trade policy as a tool for development. The import substitution path, followed by most industrialised countries at one time or another in their history, has been removed by the agreement. Trade Related Investment Measures (TRIMs) undermine the ability of individual states to apply local content and other policies regarding the development of productive forces, as well as labour and environmental standards.²³ Trade Related Intellectual Property Rights (TRIPs) prevent technological diffusion and reduces incentives for local innovation.²⁴
In the same way, the agricultural agreement has resulted in the loss of trade policy as a tool for developing the agricultural sector. Essentially, the Agreement on Agriculture (AoA) aimed to reduce the use of border protection, internal support and export subsidy measures to favour domestic production. It required creating tariffs and reducing all protection measures, minimum market access and the removal of internal support from production volumes.²⁵

Clause on “special and differential treatment”

An important part of the Uruguay Round negotiations is the “special and differential treatment” (SDT) clause. This clause also applied to the AoA.

Negotiated during earlier GATT rounds, this clause was included as a trade-off for developing countries accepting many unfavourable Uruguay Round agreements.²⁶

SDT theoretically takes into account the special needs of developing countries, and allows for differential obligations based on these needs.

The reality of “special and differential treatment”
The reality of SDT is that it has not been carried out as agreed and is largely a “best endeavour” clause. In practice, SDTs:

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  do not have the force of possible sanctions behind them.
  
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  do not carry the same weight as other WTO commitments concerning reconciling different commitments entered into under WTO agreements²⁷.
  
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  SDT rights are therefore often lesser to other WTO principles and thereby rendered fairly meaningless.
  

The principle of SDT has been reduced to a temporary measure to allow weaker countries to “catch up’ and fulfil the necessary WTO commitments.²⁸ Part of current negotiations is the status of SDT clauses. While some suggest that it should only enter into discussions as a ‘cross-cutting’ issue where applicable, others argue that it should be treated as a separate area that must be fully negotiated on a par with the other main issues.²⁹

South Africa is classified as a developed country
The basis of distinguishing developing from developed countries for the purposes of SDT is Gross Domestic Product (GDP). This has meant, for example, that South Africa is classified as developed, along with the US and EU. This is regardless of the massive income inequalities internally which place the majority of the population in ‘underdeveloped” status.
The result is that South Africa does not have access to SDT rights. While SDT in agriculture allowed for differential obligations in tariff reductions for developing and industrialised countries, the latter manipulated the agreement to actually increase their levels of support to agricultural producers.
For OECD countries, overall subsidisation to agriculture rose from $182 billion at the birth of the WTO in 1995 to $362 billion in 1998.³⁰ They were able to do this partly as the result of loopholes they managed to negotiate in the Uruguay Round.