When rich countries double cross
The Philippine Star
09/05/2003

The largely agriculture-dependent economies of the world’s poorer countries including the Philippines are sharpening their tools against the globe’s economic giants in preparation for the make-or-break World Trade Organization (WTO) ministerial meeting in Cancun, Mexico next week.

The WTO is scheduled to come up with an agreement to expand agricultural trade, cut tariffs and open financial services, thereby increasing the world’s existing agricultural trade to $547 billion.

Already, developing countries are making it clear that they won’t be taken in again by the United States and European Union after the two failed to live up to their end of the bargain in the last round of world trade talks. The two countries – which account for farm exports valued at $287 billion – refused to eliminate their own subsidies on agriculture even after agreeing in 2001 to phase out all forms of export subsidies.

The resulting trade distortions caused poor countries to reel from cheap farm imports while finding the doors of these rich countries‚ lucrative markets tightly shut. The situation has become so glaringly one-sided that the affected countries no longer take the situation lightly.

Blatant disregard of agreement

Records showed that last year, the industrialized nations spent about $311 billion to subsidize their farmers. The EU shelled out about $100 billion, Japan $44 billion, and the US $39.6 billion. In addition, the US – the Philippines’ biggest trading partner – also signed into law last year an $80-billion US Farm Bill to subsidize its agricultural producers and processors.

In contrast, countries like the Philippines that embraced globalization by joining the WTO in 1994 are not reaping the promised benefits. The 500 million new agricultural jobs a year, the additional annual P60-billion gross value added in agriculture, and P3.4 billion net agricultural export earnings are nowhere to be seen or felt.

Quite the opposite happened. The Philippines is now a major agricultural importer of rice, corn, vegetables, chicken, beef and pork. Local farmer incomes have gone down, production costs have gone up, badly needed cheap loans for planting are not forthcoming, and lower-priced imported farm products swamp the domestic market.

Local safety nets tattered

Worse, the much-talked about safety nets promised to help Filipino farmers get their act together for the eventual liberalization are not in place or simply full of holes.

Tariff revenues from the Agricultural Competitiveness Enhancement Fund, supposed to be used for agricultural programs that would make agri sub-sectors competitive in the global arena, are not going to the farmers but is apparently being used by the Department of Budget and Management to cover the budget deficit.

Another safety net measure, The Agricultural and Fisheries Modernization Act does not have adequate budgetary support.

The repercussions of giving in so much to the richer members of the WTO without the benefit of reciprocity has taught developing nations like the Philippines some ghastly lessons. Sweeteners dangled by big countries now less enamor them. Sweeteners such as food aid programs have subsequently turned out to be disguised subsidies for the farmers of these economic giants.

Learning to bark instead of whimpering

The early posturing of developing countries comprising the Philippines, Indonesia and 14 others will hopefully strengthen the call to reverse unfair trade practices that have been keeping poor countries from gaining access to the profitable market of richer countries of the WTO.

The Cairns Group, a group of 17 countries whose economies also rely chiefly on agriculture, is rejecting as well the US-EU joint proposal that calls for bigger cuts in duties but remaining quite and refusing to address the issue of export subsidies. China, an emerging economic powerhouse, could also be a persuasive ally, if it sees fit to join the group of developing countries.

The developing countries appear to be off to a good start. Already, the WTO has tabled for discussion the creation of a category of special products (SPs) and the provision of special safeguard measures (SSMs) to protect third world’s fledging agriculture from cheap imported farm produce.

The SSMs will allow developing countries to impose the equivalent tariffs on import products that were provided with subsidies from exporting countries. On the other hand, the SPs enable developing countries to exact higher tariffs on sensitive products considered crucial or strategic to the economy of said developing countries.

Alliance must bark and bite

This time around, developing countries seem to have the momentum and it can do more than verbally lash out at unfair trade practices. The group should be more resolute in pushing the draft agreement prepared by WTO agriculture committee chairman Stuart Harbinson that gives developing countries a better protection.

The alliance knows only too well what it is like for their domestic markets to be vulnerable to subsidized foreign competition. More so now that domestic support measures like tariff are forcibly being dismantled in the name of free trade. Free trade for whom? For countries that are flexing their muscles, of course.

Clearly, the stakes are high. The combined group of opposing disadvantaged countries has a combined population of 1.83 billion people, or close to 30 percent of the 6.21-billion world population.

These countries’ economies are dominated by agriculture and global trade distortions only increase distress and destitution.

And merely barking won‘t earn them a piece of the bone.

TOP