Agricultural trade and food security

The WTO: Cairns Group and African Group positions

The South African government favours launching new WTO negotiations, believing these will benefit the agricultural negotiations. The government wants to concentrate on:

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  domestic support (including special treatment for developing countries)
  
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  export subsidies and market access.
  

South Africa has submitted four proposals as part of the Cairns Group, and one proposal as part of the African Group.

The African group’s proposal⁴⁷ calls for an operational and binding SDT. On market access, the group calls for “substantial reductions” in tariff escalation (for value added products) and tariff peaks. There are also proposals for the maintenance of current levels of bound rates (i.e. no reductions) on key staples and special measures to be taken to assist small-scale exporters to take advantage of quotas in industrialised country markets. It calls for a review of the Special Safeguard clause, and the adoption of an agricultural safeguard for developing countries as part of SDT.
On export competition, the African group calls for the substantial and progressive reduction of export subsidies by developed countries, with a view to their eventual elimination. It also seeks to strengthen the right already accorded to developing countries to subsidise the costs of marketing, internal transport and freight charges on export shipments.
On domestic support, the African group proposes “the expansion of the scope of S&D treatment in the area of domestic support [to] allow developing countries to employ policy measures which target the viability of small-scale and subsistence farmers, rural poverty alleviation, food security, as well as product diversification”.

It also calls for developed countries to substantially reduce trade and production-distorting measures. It also appeals for green box criteria to be tightened to reduce distorting effects.

The basis of these proposals is the recognition that developed countries have far greater ability to provide domestic support than developing countries. The African group also proposes that food aid is in fully grant form, and that a mechanism be established to ensure that food aid does not disrupt domestic production in recipient countries.
In its proposal on export competition,⁴⁸ the Cairns Group argues that “price and quality are the only fair means of export competition and it is unfair to support exports through subsidised prices or subsidised terms of payment”. It therefore calls for an end to all forms of export subsidy in agriculture, with a substantial reduction in the first year of implementation in outlays and volume of subsidies as a “down payment”. It calls for SDT for developing countries, but still with the aim of eliminating their export subsidies, although over a longer period.
On domestic support,⁴⁹ the Cairns Group proposes major reductions ultimately leading to developed countries eliminating blue box supports, with SDT for developing countries. SDT provisions relating to domestic support should build on existing provisions, including enhanced green box provisions for developing countries which would address their specific concerns regarding food security, rural development and poverty eradication.
On market access,⁵⁰ the Cairns Group states its conviction that “better market access conditions in a world free of trade distorting subsidies is essential for the development of developing countries”. This is because high levels of export and trade-distorting subsidies “undermine efforts to become more competitive and export oriented and reduces the potential to gain from world trade”. Consequently, the Cairns Group proposes “vastly improved market access opportunities for all agricultural and agrifood products”. This includes cuts and reductions in tariffs, and their elimination where possible. The Group also proposes the elimination of access for developed countries to the special agricultural safeguard mechanism. Specific proposals are also made on tariff reductions and an expansion in the tariff quota volume for imports into developed countries. Significantly, the Cairns Group notes that access to markets is essential to stimulating economic growth to facilitate rural development and poverty elimination.
Underlying the proposals are a recognition that developing countries must be allowed to use the state to stimulate development, parallel with a belief that economic growth and trade is the key to the success of development, including food security. The importance of agricultural trade for food security, from this perspective, is the ability to use agricultural exports to generate foreign exchange for the country and to boost economic growth. Development programmes can be carried out from the increased revenue obtained.

While there is some role for new entrants able to connect into the export market, virtually nothing is said about the simultaneous need to broaden the base of food producers inside South Africa. Little is said about the redistribution needed to achieve this. In the current framework, redistribution refers more to the wealth generated from growth (future wealth) rather than the redistribution of existing assets.

However, the withdrawal of the state from productive activity, and the concentration of existing assets in the hands of a wealthy minority suggests that even future growth is likely to benefit primarily those in control of existing assets.
Agriculture and food security in the New Africa Initiative
The New Africa Initiative (NAI) is a plan for sustainable growth and development in Africa, with South Africa as one of the leading supporters it. Despite the constant changes of the NAI — the latest development being the New Partnership for African Development (Nepad) — the core features of the plan are unlikely to change much.
Underpinning the plan is a commitment to good governance and market-oriented economies. As part of a “global partnership”, according to the NAI, Africa is offering a rich biodiversity and strong natural resource base and the potential for investment and new markets.⁵¹ A “first priority” is to ease private investors’ concerns regarding “insecurity of property rights, regulatory weakness and markets” (Part V, para 54.7 iii). Indeed, the newly formed African Union is said to be willing to “censure deviation from the norm” in political and economic matters (Part III, para 45) – and this can be taken to mean any deviation from liberal democracy and neo-liberal economic policy.
It is claimed that structural adjustment programmes (SAPs) in Africa were needed and correct, but did not take into account social development (Part II, para 24). A connection is therefore not made between the economic decline referred to in the plan and the SAPs.
The NAI states that: “the advantages of an effectively managed integration [into the global economy] present the best prospects for future economic prosperity and poverty reduction” (Part II, para 28).
At the same time, it recognises that there is nothing inherent in the process of globalisation that leads to a reduction of inequality and poverty, and that greater integration has led to the marginalisation of those countries unable to compete effectively.
The conclusion that is drawn is that African countries need to be able to compete better at a global level. Underlying Africa’s inability to compete effectively is the outflow of resources and unfavourable terms of trade (Part II, para 34). New markets inside Africa created by the meeting of basic needs are seen as the potential engine of global economic growth (Part II, para 38). This is closely aligned with the attempt to bring basic services into the realm of the market, a core feature of neo-liberalism.
Agriculture is one of five priority areas in the NAI, as is the promotion of: “Diversification of production and exports, with a focus on market access for African exports to industrialised countries” (Part VI, para 48b).
Irrigation development, infrastructure, research and extension services and increased donor aid are identified as key considerations for improving agricultural productivity (Part IV, para 53.9). Since the natural resource base is seen as the most important of Africa’s advantages, value-adding in agro-processing for export is one of the key strategies identified. Improved access to industrialised country markets for products in which Africa is competitive is seen as crucial for development in Africa (Part VI, para 53.11).
An indication of the broad orientation to the role of agriculture is evident from agriculture being under the heading of “diversification of products and exports” in the action plan.
Food security and productivity increases with a focus on small scale and women farmers are amongst the objectives. In this regard, actions include security of water supply for agriculture (with a concentration on irrigation), the promotion of necessary land reform (although this remains undefined) and improved access to credit (Part V, para 54.5 i).
This is the only reference to redistribution of resources, and nothing is explicit about broadening the production base to include support to those outside of the market.
The NAI offers “broad-based support for the WTO” and calls for SDT for African countries in the WTO. A related objective is to ensure that preferential trade agreements already reached are not undermined by “further multilateral liberalisation” (Part V, para 54.6).
It does not go so far as to call for a new round of negotiations, since this is not the position of most African governments. The role of multinationals in the international agenda is not referred to at all.
Indeed, the only reference to multinationals is the need for governments to form a partnership with pharmaceutical multinationals to “secure access to existing drugs” (Part VI, para 69). In this, as in the document as a whole, the initiative fundamentally accepts the current paradigm of globalisation as legitimate. It merely seeks to identify ways in which African countries can participate in the existing paradigm. It does not challenge the neo-liberal agenda that entrenches and increases inequalities.