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TRADE: Rising Food Prices Could Affect WTO Talks

Analysis by Aileen Kwa*

GENEVA, Apr 21 2008 (IPS) - The rising food and fuel prices, with related social destabilisation, may necessitate a ‘‘course correction’’ in the liberalisation talks on industrial goods and agriculture, the African, Caribbean and Pacific group of nations told World Trade Organisation (WTO) Director General Pascal Lamy at the end of last week.

Lamy announced to the WTO’s trade negotiations committee on April 18 that he wants to conclude the negotiations on agriculture and non-agriculture (industrial goods) market access (NAMA) in May. In response, developing states from Africa, the Caribbean and Pacific (ACP) regions warned Lamy about following the agreed sequence of steps in the talks.

As one African negotiator commented afterwards on condition of anonymity, ‘‘Lamy is giving the same story: that we are making a lot of progress and we expect revised texts very soon. In contrast, we are saying we are not yet ready for ministers to decide on texts.

‘‘We have made much progress in agriculture, but a ministerial (meeting) would be premature. We would be taking a step backwards because people will resist.’’

Lamy said that negotiations will move to a higher level, the so-called ‘‘horizontal process’’, by May 5 when trade-offs will be made between agriculture, NAMA and some other issues. This will involve only about 25 to 30 invited senior officials in Green Room meetings (closed meetings with selected member states). After that, Lamy intends to host a week of Green Room ministerial meetings.

He did not mention specific dates for the mini-ministerial meeting but, as of last week, it is widely known that the WTO Secretariat is making preparations for hosting ministers in the week of May 19. Such a ministerial meeting would then culminate in a meeting of the entire membership at the level of the trade negotiations committee to rubberstamp the outcome.

Representing the ACP countries at the meeting on April 18, Ambassador of Jamaica Gail Mathurin reminded the director general of the following: ‘‘The ACP group wishes to recall that we supported the process which you outlined at the last meeting of the trade negotiations committee, that is, to continue working in the negotiating groups (which deal with the agriculture and NAMA issues) in order to develop, in a balanced way, full modalities (rules), especially on agriculture and NAMA.

‘‘This would lead to revised texts which we would have an opportunity to review in our capitals, in our respective groupings and in the respective negotiating groups before moving to a horizontal process and eventually to a meeting of ministers. This was recognised as a process which would give comfort to all members,’’ said Mathurin.

‘‘I note that you are still committed to continuing that approach… We would not want to see this approach jeopardised by the introduction of artificial timeframes.’’

She went on to state that ‘‘the ACP group represents a vast constituency of the WTO membership and it is important that the views of its members be fully taken on board in these negotiations. While there has been progress in many areas of the negotiations, there are still many issues to be further addressed and many of these concern the interests of the ACP group.

‘‘We are just (starting to see) momentum on some of the issues of concern to the ACP group. We wish to place on record that we will not accept being pressed to enter a horizontal process with partial modalities,’’ Mathurin added. ‘‘Partial modalities’’ refer to agreement on some issues while leaving out others.

Interestingly, Mathurin cautioned the director general that, ‘‘our countries are grappling with various policy alternatives in order to address the rapid and continuing rise in food and fuel prices, along with the potential for social instability. It is important to draw lessons from the current crisis. This might necessitate a course correction’’.

Some developing country delegates commented later that Lamy did not attempt to address the need for more time the majority of members had spoken out about.

What are some of the outstanding issues in the negotiations? Last week, talks on ‘‘sensitive products’’ broke down. These are products that the developed and large developing countries would like to protect.

The Group of Six, including the U.S., EU, Brazil, Canada and Australia, disagreed among themselves about their own joint proposal. Any outcome on this issue would impact on many of the smaller countries which export to the EU.

Closely related to this is the direct clash between small countries on market access. ‘‘Tropical products countries’’, such as Costa Rica and Ecuador, are pushing for faster liberalisation of their exports to the EU. The ACP countries, on the other hand, are fighting for measures to help them deal with ‘‘preference erosion’’, which refers to the loss of preferential treatment of their products due to liberalisation.

They want the EU to undertake a slower liberalisation process in relation to its non-ACP trading partners – particularly for those products which the ACP currently exports to the EU under preferential terms. Unfortunately, there is considerable overlap in the list of tropical and preference products, including bananas and sugar. How this issue will be resolved remains a puzzle.

Also unresolved are the issues developing countries have for years been fighting for to safeguard rural livelihoods and food security: the special products and special safeguard mechanism clauses.

In the special products (SP) negotiations, where developing countries want slower or no liberalisation on products important to food security and rural livelihoods, negotiators are far from agreeing on the details of how these products will be designated.

They are also yet to agree on the percentage of tariff lines that can enjoy SP treatment; and the highly contentious issue of whether some products could be exempted from tariff cuts. In talks last week, the U.S. and a group of exporting countries, including New Zealand, Australia, Canada and Thailand, submitted a proposal that was clearly aimed at watering down the proposal of the SP proponents.

Equally, there is no consensus on the special safeguard mechanism (SSM). The SSM would eventually allow developing countries to impose higher tariffs in the event of large agricultural import surges. There is no agreement on product coverage (how many tariff lines will be covered by this mechanism), how it will be triggered and what the remedies might be.

An agriculture meeting on Friday, chaired by New Zealand’s Ambassador Crawford Falconer, again saw the majority of members asking for more time before he releases the next version of his agriculture text. It looks unlikely, therefore, that Lamy’s timelines for May will materialise.

At the forefront of attempting to push the current Doha Development Round of WTO negotiations to a hurried conclusion are the WTO Secretariat, the European Union, Brazil and the U.S.’s Bush administration. The Indians on the other hand, breaking ranks with Brazil on this issue, have been expressing grave doubts about whether a conclusion in May is possible.

Negotiators are likely to aim for a mini-ministerial meeting to be held only in July.

* Expert writer Aileen Kwa is an independent trade policy analyst on leave from Focus on the Global South, a non-governmental organisation that engages in policy research and activism to generate critical analysis and debate on globalisation and neo-liberalism. This article is the second in a series of two.