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We have
evidence that food prices, even after declining from last year, are still
high by historical standards. Combined with the present economic slowdown,
we continue to face a crisis with respect to food security. Even in this new
situation, the underlying principles and conclusions encompassed in the
Comprehensive Framework of Action (CFA) and the Rome Declaration remain
valid, and are even more urgent to emphasize.
With respect to trade policies, the CFA emphasizes inter alia:
keeping in mind the effects on poor
consumers and farmers,
reducing restrictions, including
tariffs, and other distortions in the trade policy regime,
improving trade facilitation,
rapidly completing the Doha Round of
trade negotiations to provide an enhanced set of agreed rules for
a more transparent and fair international trading system, and
implementing an “Aid for Trade”
package to strengthen the capacity of developing countries.
The Declaration from the Rome meeting last year
also emphasizes these initiatives. It also notes that new opportunities
arise for developing countries through international trade. This is both due
to larger market opportunities and through access to cheaper food that
international trade provides. For poor countries, international trade is
particularly important. Net food-importing countries, which include the most
vulnerable, rely on imports for a large portion of their domestic
requirements, ranging from about a quarter to even more than half of their
domestic requirement. Trade allows supply to adjust to demand, and helps
raise the availability of food in comparison to the situation when markets
are restricted. Noteworthy in this context is also a recent assessment by
von Braun of IFPRI that self sufficiency is not a solution to the food price
crisis.
When we consider the types of trade policy responses of various countries to
the current global food crisis, we can see that many more countries have
relied on trade liberalization than on trade restriction. For instance, in a
data set covering 104 countries for the period from 2006 to August 2008,
IFPRI has shown that while only 20 countries used trade restrictions, more
than double, i.e. 47 countries, relied on trade liberalization. Of these, 16
countries used both trade restrictions and trade liberalization policies.
Thus, in some cases we had the same country responding with trade
liberalization in order to allow cheaper food imports, but using export
restrictions with respect to exports.
More recent information from 2008 and January 2009 also shows that the
number of countries adopting trade liberalization policies were more than
those resorting to trade restriction. Furthermore, a number of these
restraints have been reduced over time as concerns from importing countries
were registered and the food prices came down. Some countries have also put
in place policies for trade facilitation, and several have taken steps to
try and ease the availability of trade finance. It is interesting to note
that in certain instances, export restraints on agriculture products have
been reduced together with the package implemented to stimulate the economy.
Nonetheless, at present, there is growing pressure to adopt protectionist
policies, thus reducing market opportunities. Recognising this, there are
many who emphasize a need to be careful and to not resort to protectionist
policies. These efforts to contain protectionist pressures reflect the
memories of protectionist trade wars which contributed to the great
depression in the 1930s, as well as the realization that prosperity in the
world today is significantly derived from international trade. Furthermore,
the adverse effects of protectionist policies and curbing international
trade extend across several areas of global concerns, including development,
environment, or food security.
Take for example environmental concerns, and in this context a recent Draft
Report of UNEP on “A Global Green New Deal” (or GGND). This Report concludes
that “trade protectionism, which may increase as a result of the deepening
global recession, is an anathema to the GGND”, and that “the international
community needs to reach successful conclusion of the Doha Round trade
negotiations, especially on fishery subsidies, clean technology and services
and reducing agricultural protectionism.”
Likewise, one of the targets of Goal 8 of the Millennium Development Goals
is to “develop further an open, rule-based, predictable, non-discriminatory
trading and financial system”. The WTO is such a trading system, and the
Doha Round is an effort to develop this system further. This multilateral
trading system provides a collective insurance policy against the disorder
caused by unilateral actions, whether open or disguised. Its role is
obviously crucial in the situation we face today.
However, some commentators have expressed the view that the WTO system is
too restrictive for achieving domestic objectives, and that this system
treats agriculture products like any other manufactured products.
The WTO Agreements specifically recognize various domestic policy objectives
and provides the flexibility to address them in a disciplined and
transparent manner. For agriculture, the WTO system has been developed
taking account of the sensitivities particular to the agriculture sector.
Thus, the WTO disciplines relating to agriculture are different from those
relevant for non-agricultural products. That is why there is a separate
Agreement on Agriculture, which provides relatively greater flexibility.
Furthermore, for poor farmers, developing countries are allowed to give any
domestic policy assistance that they wish to give.
This basic structure is maintained in the Doha Round too. The Doha Round
also includes the possibility for developing countries to use a new and
easier safeguard mechanism for agriculture, and provides additional
flexibilities for public stockholding operations in developing countries.
The Doha negotiations aim at reducing the inequities which arise due to
differences in levels of development, thus creating a more level playing
field for competition. This will help countries produce more efficiently and
to increase the beneficial effects of the several agriculture investment and
infrastructure-related initiatives that are mentioned in the CFA.
Likewise, WTO disciplines do not prevent the adoption of policies normally
mentioned to achieve objectives, such as promoting pro-poor agricultural
growth, reducing market volatility, and expanding social protection and
child nutrition. Even for agriculture tariffs, there is a significant
flexibility, including for least-developed countries. In fact, all the
domestic policy initiatives, such as seeds, fertilizers, focus on small
farmers, investment, availability of funds etc., that have been mentioned in
the sessions today for addressing food security are possible to be
implemented under the WTO. The WTO Agreement is not a constraint on using
such initiatives.
In the Doha Round agriculture negotiations, further progress was made even
in the second half of last year on issues which were a stumbling block in
the July Ministerial meeting. The negotiating group Chairman’s paper shows
that there are only a few key issues that are left to be addressed to
conclude on modalities for agriculture. On trade facilitation too, WTO
members have made considerable progress. Today, we need continued political
focus on the negotiations to conclude them and therefore the emphasis
calling on their successful conclusion needs to be maintained.
Work on Aid for Trade has progressed at the WTO, together with partner
agencies. A major meeting is being considered for this year. Thus, while
relevant work is continuing, protectionist pressures need to be addressed,
and the messages of CFA and the Rome Meeting need to be re-iterated to
emphasize continued progress on them.
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