‘Expose U.S. hypocrisy in WTO talks’

Interview with Deborah James, director of International Programmes at the Centre for Economic and Policy Research.

Published : May 13, 2015 12:30 IST

Deborah James: "The U.S. is the world's largest agriculture subsidiser."

Deborah James: "The U.S. is the world's largest agriculture subsidiser."

DEBORAH JAMES IS A LEADING VOICE IN THE fight for just rules in the global trade order. She is the director of International Programmes at the Centre for Economic and Policy Research, a Washington, D.C.-based think tank that was founded in 1999 as part of the alter-globalisation movement. Deborah James had previously worked at Global Exchange, where she was an expert in the unfair trade policies that emerged out of the “globalisation” era of the 1990s. As the director of the World Trade Organisation Programme at Public Citizen’s Global Trade Watch, she participated in the debates leading up to the WTO’s Doha Round, which began in 2001. Deborah James also served as the first executive director of the Venezuela Information Office in Washington, D.C., an organisation that sought to intervene in the public debate on the progressive social transformation under way in Venezuela.

In this interview, Deborah James spoke about the ongoing tussle in the WTO around the question of food security. This debate is germane to India, whose government played a role at the last WTO meeting. Excerpts:

Currently, there is an open-ended negotiation on global food security that must produce some kind of consensus for the WTO by December 2015. What divides the WTO member states over the idea of food security?

The WTO has a myopic focus of merely increasing trade. There are many downsides to holding a discussion on food security at the WTO as a result. It would be better to hold these negotiations in the Committee on Food Security at the Food and Agriculture Organisation [FAO], which has a better track record of being sensitive to the need to guarantee food security. No member is proposing to take the WTO out of the discussion on agriculture, however. There are many who argue that to remove agriculture from the WTO would only make global agricultural trade much more unfair.

The problem is that it is the WTO, not the FAO, which regulates agriculture and trade. Thus, WTO obstacles to food security must be removed. Developing countries should be allowed to invest in their own agricultural production and feed their own populations. This would allow these countries to no longer be dependent on global food aid. Public stockholdings for food security should be welcomed, as should protection for markets against import surges through a workable special safeguard mechanism. Countries that subsidise agriculture, as many developed countries do, should not be able to export that food at subsidised prices because it competes unfairly with local farmers and prices them out of their own markets, diminishing local production in the long run.

The process under way should revise WTO rules in line with the global consensus on agricultural investment and food security. Millennium Development Goal no. 1 called for the eradication of poverty and hunger. The current rules at the WTO work against this goal. They need to be revised urgently.

You talk of the “global consensus on food security”. Could you elaborate on this?

Every international body that deals with agriculture has come to recognise the need to prioritise food security over simply promoting trade. While the original Rome Declaration on Food Security in 1996 emphasised ensuring food security through market-based mechanisms, the 2009 World Summit on Food Security placed emphasis instead on national investments in agriculture. The African Union announced in the “Maputo Declaration” in 2004 the commitment by each country to invest 10 per cent of national budgets in agricultural production; 2014 was the African Union’s Year of Food Security.

Olivier de Schutter, the former United Nations Special Rapporteur on the Right to Food, has detailed how WTO policies are incompatible with the right to food. He wrote a paper on this, which caused a massive uproar at the WTO [de Schutter’s 2011 paper is entitled “The World Trade Organisation and the Post-Global Food Crisis Agenda: Putting Food Security First in the International Trade System”]. De Schutter highlighted the importance of developing countries maintaining food reserves, as well as the importance of protecting their markets from international market volatility.

The policies that people like de Schutter talk about amount to subsidy regimes and other kinds of protective measures. Does not the United States, which is opposed to such regimes, have a subsidy regime in place for its domestic food production?

Yes, this is the case. The U.S. is the world’s largest agriculture subsidiser. In 2011, it spent over $139 billion for domestic support, double the subsidy paid out in 1995. Most of this is for food stamps for the poor, something similar to the public distribution system in India. But $15 billion of this was for overtly trade-distorting support. The European Union [E.U.] also provides domestic support—to the tune of $79 billion in 2013.

No wonder that the U.S. is often taken to the WTO on charges that its farm subsidies distort the level playing field. It has lost many of these cases. U.S. cotton subsidies alone have so depressed global cotton prices that Brazil has twice won WTO cases against the U.S. But rather than change the subsidies, the U.S. pays off Brazil to the tune of hundreds of millions of dollars. Sadly, this leaves less politically powerful small farmers in Benin, Burkina Faso, Chad and Mali in the dust.

In 2013, despite having its own domestic food security provisions, the U.S. blocked negotiations in the WTO. It specifically argued that India was trying to “roll back commitments” or that its distribution of poor farmers’ produce to poor citizens would somehow distort global markets.

Could you explain how the U.S. and the E.U. get away with their subsidy regimes?

First, the WTO rules allow countries that had subsidy regimes before 1994 to continue these polices, with the idea of reducing them over time. At the time of the inception of the WTO, almost all the countries that were engaging in subsidies were developed countries. Over 100 developing country members are not allowed these subsidies. Ten years ago, the U.S. and the Europeans agreed to phase out the tens of billions of dollars worth of legal subsidies. They have not lived up to their bargain. Second, even with all this latitude, they do get fined, which they prefer to pay off rather than participate to change the rules for the benefit of all countries.

There is one more problem, which relates to the “reference price”. To calculate the “trade-distorting” subsidies, countries have to figure out the difference between the minimum support price [MSP] and the WTO “reference price,” which is the average world price from 1986 to 1988. The WTO prefers to use this archaic method rather than calculate the difference between the MSP and the current market prices. Since developing countries have experienced terrible inflation, the gap between the MSP and the WTO “reference price” is ludicrously high. India’s Ambassador to the WTO, Jayant Dasgupta, has been a vocal critic of this “reference price” system. It disadvantages developing countries. Developed countries, by the way, don’t have to use this system because their food security programmes are considered “non-trade-distorting” by the WTO rules.

Could you describe what happened regarding food security at the WTO meeting in Bali, Indonesia, in December 2013?

The Bali meeting was very contentious. The U.N. Special Rapporteur on the Right to Food again called for developing countries to be granted the freedom to use food reserves to help secure the right to food without the threat of sanctions by the WTO. He said that states that must provide food security polices should not have to “tiptoe around WTO rules”. Indian farmers, I recall, wanted the Indian government to hold fast. This pushed India to lead the food security coalition in the WTO, which fought a hard battle against U.S. intransigence.

No final agreement was reached, only a commitment to further negotiations. The WTO members gave themselves four years to reach a settlement. The interim agreement was what was called a peace clause. It came with concessions to developed countries in the guise of a Trade Facilitation Agreement, which would force developing states to put resources towards making trade easier rather than health care and education. Transnational shipping and logistical corporations won out over “development”. This was called the Bali Package.

Could you elaborate upon the peace clause?

Under the peace clause, countries that have existing subsidy programmes cannot be subject to legal cases by other WTO members if they comply with onerous reporting requirements and prove that their subsidies do not distort markets. By the way, the U.S. does not need to follow these requirements. No new programmes may be implemented, and there was no guarantee that a permanent solution would be agreed on the end of the four years.

However, there was a wrinkle. Legal ambiguity in the text meant that it was not clear whether the peace clause would be in effect until a permanent solution was agreed on, or only for four years—and would then expire. Thus, when the new Government of India came to office last spring, they requested a clarification that the peace clause would be in effect until a permanent change in the rules was agreed on. Again, the U.S. refused to make this clarification, demonstrating that indeed it had been planning on allowing the peace clause to expire without a new deal in place.

India then countered that it would not let the other aspects of the Bali Package come into effect until it had received this simple clarification. And while the U.S. spent the summer blaming India for supposedly scuttling the Bali Package, it refused to make the clarification. Indian farmers and Indian Left parties, supported by global civil society, kept the pressure on their government. Months dragged on. U.S. corporations didn’t want their trade facilitation deal imperilled. Because of the trade facilitation gift, the U.S. agreed to allow the peace clause to remain in place until a permanent solution is agreed upon. WTO members agreed to make “all concerted efforts” to find a permanent solution on public stockholding for food security by the last day of 2015. They moved up the date for the expiration of the peace clause by two years. This means that the decision would have to come out of the upcoming WTO ministerial meeting to be held in Nairobi, Kenya, from December 15 to 18 of this year.

Thus, there is a short window of time in which to expose U.S. hypocrisy in the negotiations and work to build global pressure to ensure that the most damaging rule in the WTO can be brought into line with the global consensus in favour of developing countries engaging in the global best practice of strategic food reserves, for the benefit of farmers’ livelihoods, rural development and the right to food.

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