Slow death of a farm sector

Published : Sep 12, 2003 00:00 IST

WTO membership puts the Philippines' agriculture in serious trouble, but the government appears to be unmindful of the problems on the eve of the Cancun Ministerial.

LAST month's mutiny of junior military officers in Manila has been the focus of media attention. Unfortunately, the drama has served to draw the attention of both the government and the people away from an event with far more momentous consequences for the country: the approach of the Fifth Ministerial of the World Trade Organisation (WTO), which will take place in Cancun, Mexico, in mid-September.

The negative impact of the WTO has perhaps been more evident in the Philippines than in most other developing countries. This is especially the case in the countryside, where the consequences of the country's adhering to the Agreement on Agriculture (AOA) were summed up by one negotiator at a recent meeting of the WTO's Committee on Agriculture: "Our agricultural sectors that are strategic to food and livelihood security have already been destabilised as our small producers are being slaughtered by the gross unfairness of the international trading environment. Even as I speak, our small producers are being slaughtered in our markets, even the more resilient and efficient are in distress."

Yet, three weeks before the WTO meeting in Cancun, the government, in the opinion of a former Cabinet member of the Arroyo administration, "appears to have no coordinated negotiating strategy". A coalition of civil society organisations posed a more alarming possibility: "Is the Arroyo administration clueless about the implications of Cancun?"

IN 1994, then Senator Gloria Arroyo, led the drive in the Senate to ratify the historic Uruguay Round Agreement, which paved the way for the membership of the Philippines in the newly established WTO. At that time, government technocrats claimed that joining the WTO would result in a net gain of 500,000 new jobs in the agricultural sector annually and increase significantly the country's agricultural export earnings. Such arguments tipped the balance in favour of ratification. Over two-thirds of the labour force in the country is in the agricultural sector.

Instead of deriving benefits from WTO membership, it is now clear that, as an editorial in The New York Times a few weeks ago put it, the Philippines "got taken" in signing the Agreement on Agriculture. Far from increasing, employment in the agricultural sector dropped from 11.3 million in 1994 to 10.8 million in 2001. Instead of solidifying the Philippines' role as a net food exporting country, membership to the WTO consolidated its status as a net food importing country, with the agricultural trade balance moving from a surplus of $292 million in 1993 to a deficit of $794 million in 2002.

Eight years after the country joined the WTO, the fate of two million rice farmers, who make up nearly 20 per cent of the labour force, was in doubt owing to massive rice imports; corn production was in terminal condition, with the displacement of thousands of corn farmers and the contraction of the land under corn from 3.1 million hectares in 1993 to 2.5 million hectares in 2003; the meat and poultry industries had been devastated by the massive entry of cheap imports facilitated by the United States' threat to suspend preferential tariffs for exports from the Philippines unless the government liberalised the granting of import licences for meat and poultry products; and the once-thriving commercial vegetable industry was in danger of extinction, with imports rising from a minuscule 10,000 kg in 1999 to 2 million kg in 2002.

At the same time that the country's domestic food production was battered by market openings that sometimes went beyond formal WTO requirements, membership in the WTO did not save Philippine exports from being savaged by protectionist moves on the part of the European Union and the U.S. High tariffs slapped on Philippine tuna exports by the E.U. and the U.S. in 2001 resulted in a drastic fall in canned tuna exports from $130 million in 1998 to $64 million in 2001.

Even Australia, an ally of the Philippines in the "Cairns Group" (a grouping of developed and developing countries exporting agricultural products), blatantly violated WTO rules, and used sanitary and phyto-sanitary standards to ban the import of Philippine Cavendish bananas at the behest of the Australian banana industry.

IT is not lack of competitiveness in global trade that is bringing about the demise of Philippine agriculture. A mix of reasonable protection and efficiency in production would make Filipino farmers thrive. The problem is the truly massive subsidisation of agricultural interests in the developed countries, which is creating tremendous pressures for dumping surplus production in third-country markets and drastically distorting global agricultural prices.

Like most other developing countries, there is little subsidisation for farmers in the Philippines. In contrast, agricultural subsidies in the Organisation for Economic Cooperation and Development (OECD) countries rose from $182 billion at the time of the founding of the WTO in 1995 to an estimated $318 billion in 2002. Subsidies now account for 40 per cent of the value of agricultural production in the E.U. and 25 per cent in the U.S. With such support, E.U. and U.S. agricultural products will out-compete those produced by unsubsidised Filipino farmers in the Philippine market at any time.

Unrestrained by AOA, which really serves to protect its monopolistic competition with the E.U. over third country markets, the U.S. has recently moved towards even greater subsidisation of its agricultural interests, with President George W. Bush signing into law in May 2002 $190 billion in new subsidies over the next 10 years. The E.U., for its part, has not budged on allowing greater access to its markets, resisted all pressures to cut export subsidies, and simply shifted its domestic subsidies for its big farming interests from market support to direct income payments.

The recent negotiations on renewing the AOA have been a spectacle of the pot calling the kettle black. In this fight between the E.U. and the U.S., the voices of developing countries have been thoroughly marginalised. In the lead-up to the Cancun Ministerial, the negotiating teams of the Philippines and other developing country governments in Geneva proposed a "rebalancing/countervailing mechanism" that would allow them to raise their tariffs on crops subsidised by the rich countries by amounts calibrated to the levels of subsidisation. Not surprisingly, according to an exasperated Philippine negotiator, "the major blocs (U.S., E.C., Japan, and so on) have refrained from engaging us and our developing country allies in floor debate on the proposal."

The rearguard moves by some worried negotiators in Geneva, however, are not reported on the front pages of newspapers in Manila, as the administration and the media have chosen to focus on more "interesting" events. In the summits of governments, the fate of agriculture is a matter of indifference when farmers do not have the clout to defend their livelihoods by making politicians accountable. As for the media, there are more exciting things to cover than the slow death by asphyxiation of Philippine agriculture.

The Philippine government will have high-level representation at Cancun, many of the delegates will be politicians on a junket. Why bother to send a delegation when its members will just sit on the sidelines, clueless about what is really at stake for the country in the negotiations? farmers' organisations ask.

Walden Bello is executive director of the Bangkok-based research programme Focus on the Global South and Professor of Sociology and Public Administration at the University of the Philippines. He is the author of the recently published study Multilateral Punishment: The Philippines in the World Trade Organisation, 1995-2003.

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