From Africa Recovery, Vol.17 #1 (May 2003), page 23

Global agricultural trade talks stall

Africans find negotiations a tough row to hoe

By Michael Fleshman

The millions of people now at risk of starvation in Africa are a stark reminder of the region's stake in negotiations under way at the World Trade Organization (WTO) on reforming global trade in agriculture. But three years after they began, the talks are effectively at an impasse, with developed countries still bitterly divided over subsidies and protectionism. African demands for "pro-poor" agreements to improve market access, strengthen food security, attract rural investment and protect domestic markets from unfair competition, meanwhile, remain on the back burner.

In early March, after an informal summit of trade and agriculture ministers in Tokyo failed to make significant progress, the chair of the WTO committee on agriculture, Mr. Stuart Harbinson, acknowledged that "little common ground emerged on fundamental issues." With a critical WTO trade ministers meeting in Cancún, Mexico, just months away, some African trade ministers have cautioned that lack of progress on developing countries' concerns puts at risk the entire trade agenda set at the 2001 WTO meeting in Doha, which promised to make the current round of trade liberalization talks a "development" round (see Africa Recovery, December 2001).

'You liberalize, we subsidize'

It is difficult to overemphasize the importance of agriculture and the trade in agricultural products for Africa (see graph). Farming employs some 70 per cent of sub-Saharan Africa's work force and generates an average 30 per cent of the region's gross domestic product. Yet rural Africans are among the poorest people in the world.

Production in much of Africa is hampered by poor soils, erratic rainfall and severe under-investment in rural infrastructure and inputs. These domestic difficulties have been exacerbated by the current global trade rules in agriculture. Those policies, contained in the Uruguay Round of trade agreements, maintain an array of tariff and non-tariff barriers to African exports and have permitted heavily subsidized European and US food products -- sometimes sold below production costs -- to undercut African farmers in both their domestic and export markets (see article "Mounting opposition to Northern farm subsidies").

It is widely recognized that the global agricultural economy needs fundamental reform, notes a recent UN Development Programme study, Making Global Trade Work for People. But there is no agreement on how, or how fast, to proceed. Powerful constituencies and agribusiness interests in developed countries, the study asserts, have helped block progress by fiercely protecting their markets and subsidies. As a result, almost 60 years after the first tentative steps were taken to regulate the trade in farm products, agriculture remains among the least liberalized and most distorted merchandise sectors in the world.

Ironically, African agricultural markets are already much more liberalized than those of their wealthy trading partners. For more than two decades, African governments have been forced through structural adjustment policies and bilateral aid and trade conditions to eliminate producer subsidies and reduce tariffs at deeper and faster rates than required by the Uruguay rules. By the time the Uruguay agreements are set for full implementation in 2005, the study notes, African agricultural tariffs will average 20 per cent, compared to 36 per cent in Northern markets.

Even that figure can disguise the true impact of US, European and Japanese protectionist policies, however, as tariffs on individual products of interest to African exporters can sometimes be as high as 400 and 500 per cent. Some non-governmental development advocates have derided the developed countries for pursuing a "you liberalize, we subsidize" approach to agricultural trade.

Africa's agenda

Eliminating these inequities, Mr. Cornelius Mwalwanda told Africa Recovery, is "the key issue of the Doha Round of multilateral trade negotiations for most African countries." Mr. Mwalwanda, a trade expert at the UN Economic Commission for Africa (ECA) in Addis Ababa, added that "failure to liberalize will perpetuate the dismal economic situation currently prevailing in many African countries.... Poverty alleviation in Africa cannot be achieved without effectively dealing with the livelihoods of rural farmers."

Since the launch of the agriculture talks in early 2000, the Africa Group of WTO negotiators has submitted two sets of proposals. Observers say they are among the most comprehensive and detailed of any country or trading bloc. Many African countries have also submitted individual proposals, or joined with other countries and blocs on specific issues.

Many of the African proposals address concerns in three of the areas mandated for reform at Doha: securing "substantial improvements" in market access, reduction ("with a view to phasing out") all export subsidies and "substantial reduction" of domestic subsidies deemed "trade distorting."

Key aspects of Africa's agenda at the agriculture talks include:

• rapid elimination of export subsidies
• reductions in, and tighter criteria for, domestic "trade distorting" subsidies in developed countries
• reduction of tariff peaks and escalations on developing country exports
• tariff- and quota-free market access for least developed countries (LDCs)
• implementation of existing measures to help LDCs and food-importing developing countries overcome any negative effects of liberalization
• expansion of special measures for developing countries, including use of domestic supports and tariffs, to assist small-scale farmers and enhance food security
• prohibition of market liberalization and subsidy reduction requirements exceeding WTO standards by donors and international financial institutions
• standardization and rationalization of food safety and processing requirements

maintenance of existing market access preferences under bilateral, and multilateral trade agreements, such as the US's Africa Growth and Opportunity Act.

Agriculture in poor African countries, 1999
	% of GDP	Imports ($ mn)	Exports ($ mn)	% of total employment
Sierra Leone	50.1	133	10	63
Niger	41.7	138	102	88
Ethiopia	47.9	169	477	83
Burkina Faso	31.5	120	158	92
Burundi	51.7	22	59	91
Mozambique	37.3	204	40	81
Guinea-Bissau	64.9	21	22	83
Mali	46.8	105	288	81
Central African Republic	51.5	39	32	73
Rwanda	45.2	80	48	90
Source: UN Economic Commission for Africa, UN Development Programme.

In addition, many African and other developing countries have called for adoption of what is known as a "development box" of rules and exemptions that would allow poor countries to enhance food security, protect domestic markets from subsidized imports, encourage rural investment and protect the livelihoods of small farmers. The proposals are an elaboration of an existing WTO principle, "special and differential treatment" (S&D), which is intended to help developing countries in implementing their Uruguay commitments and ease their integration into the liberalizing global economy. S&D provisions typically grant developing countries more time to reach compliance with WTO rules or permit slower and smaller reductions in tariffs.

Many development box proposals go beyond current S&D agreements and are supported by many, but not all, African countries. Advocates maintain that developing countries require much greater policy flexibility in harnessing their agricultural sectors to poverty alleviation and other development goals. They propose that developing countries be allowed to exempt staple food crops entirely from tariff reductions and other liberalization commitments, use tariff barriers and subsidies to promote diversification, employment and infrastructure development, and have access to a simplified "safeguard" mechanism to raise duties on surges of imports of crops essential to domestic food security.

Other provisions would link further market-opening measures by developing countries to substantial elimination of subsidies and protectionist policies by wealthy countries. The pricing of subsidized agricultural exports below the cost of production, a practice known as "dumping," would be banned, and all S&D agreements, most of which are currently optional, would become binding.

Africa asserts its interests

The scope and sophistication of Africa's engagement at the WTO, Mr. Mwalwanda said, demonstrates that "African countries have progressively come to play a dynamic and pro-active role" in trying to shape the global trading regime and are now "fully engaged" in the talks on agriculture and other sectors of vital interest. The same is true of Africa's institutional capacity, in which governments have greatly strengthened their technical and policymaking machinery, in partnership with the ECA, the UN Conference on Trade and Development, UNDP, WTO, World Bank and International Monetary Fund.

"African countries have learned the importance of active participation in the WTO negotiations," Mr. Mwalwanda noted. At previous negotiations, he acknowledged, African countries often felt ill-prepared to challenge the major trading powers. Following Africa's de facto veto of new negotiations at the 1999 Seattle WTO meeting, however, "this situation has changed dramatically. African countries are now taken very seriously." The inclusion of development concerns in the Doha agenda, he said, proved that, "together as a bloc, the voice of Africa can be heard."

Failed 'litmus tests'

The extent to which the WTO member states have genuinely embraced those concerns, however, remains very much in doubt. To secure the agreement of African and other developing countries at Doha on a new round of negotiations on issues of interest to developed countries, the WTO agreed to review developing countries' concerns about the implementation of existing trade rules.

The WTO also agreed to begin talks to entrench and operationalize existing S&D measures, and, most urgently, to ensure that WTO patent rules would not block access by poor countries to affordable medicines. The organization further agreed to complete negotiations on these two issues by the end of 2002. Agreement on those issues and real progress in the agriculture talks, said Mr. Mwalwanda, were seen by developing countries as "litmus tests of the political will of the developed countries ... to a true development round."

But a growing list of missed deadlines for agreement on these "litmus test" issues has fuelled scepticism about the North's commitment to development concerns. In agriculture, negotiators failed to meet a crucial 31 March deadline for agreement on the broad outline, or "modalities," of a final deal on trade liberalization.

A draft modalities paper prepared by Mr. Harbinson in February was criticized by virtually everyone. European and Japanese officials rejected the paper's call for steep reductions in export subsidies as "unbalanced" and accused Mr. Harbinson of tilting towards the US position. US trade officials in turn, accused the Europeans and Japanese of obstruction. The senior US trade negotiator, Mr. Robert Zoellick, said that the Europeans would have to accept major agriculture reforms "if they want to get Doha done."

Mr. Harbinson put the best face on the impasse, noting progress in technical areas and on some specific tariff issues. But he acknowledged that little movement was visible on the main issues and that he had received "little collective guidance" from member states on how to proceed with a revised modalities proposal.

Photo : ©World Bank

Negotiations on S&D and medicines have fared no better. On 3 December, talks about strengthening S&D deadlocked when developing countries, led by the Africa Group, rejected as insufficient an offer by the "Quad Group" (the EU, US, Japan and Canada) to accept 27 of the developing countries' 84 demands. Negotiators were unable to agree even on whether to continue discussions.

Although Quad Group ambassadors blamed African intransigence for the impasse, one African negotiator characterized the Quad Group offer as "peanuts." The issue will likely be added to the Cancún agenda in September, prompting senior WTO officials to caution about the danger of "back loading" too many unresolved issues on the summit.

Negotiations in the WTO Council on Trade Related Aspects of Intellectual Property Rights (TRIPS) to permit poor countries to export cheaper generic copies of vital medicines have also collapsed. Existing trade rules allow countries facing medical emergencies to manufacture essential drugs without permission from the patent holder, but only for domestic consumption. The Doha declaration committed the WTO to amend TRIPS to allow poor countries without manufacturing capacity, including many in Africa, to gain access to generics. Despite one extension, the negotiations finally ground to a halt in late December over US demands that such "parallel exports" be permitted only for the three diseases mentioned in the Doha declaration -- HIV/AIDS, malaria and tuberculosis. A final compromise proposal by the EU to allow the World Health Organization to approve exports for other illnesses on a case-by-case basis was rejected by the developing country group as inconsistent with the intent of the Doha declaration, with African countries again in the lead.

"The only concession we got as developing countries at Doha was the declaration on TRIPS and public health," the former chairman of the TRIPS council, Zimbabwean UN Ambassador Boniface Chidyausiku, told Africa Recovery. "There's nothing developmental about Doha. The lack of engagement we have experienced from our development partners is an indication of their lack of seriousness about the issues we have put on the table."

'Shadow boxing' in Geneva

Ambassador Chidyausiku's frustration is shared by a growing number of African trade officials. At a meeting of East African trade ministers late last year, the Kenyan trade and industry minister, Mr. Nicholas Biwott, accused developed countries of obstructing progress on the Doha trade agenda and called for far-reaching reform in agriculture. A few weeks later, South Africa's chief trade negotiator, Mr. Xavier Carim, told reporters that there is "grave and widespread concern" among developing countries that the lack of progress in the agriculture talks could lead to the failure of the Doha agenda.

"Agriculture is probably the most important negotiating issue for most countries," he said, and especially important for development in Africa. He charged that developed countries are "shadow boxing" in Geneva instead of negotiating, and are conducting a "one-sided debate" to the detriment of African interests. "By protecting their farmers from competition, they are holding back Africa's development."

For many years, developing countries have been urged to eliminate subsidies, while developed countries persist with their own subsidies, UN Secretary-General Kofi Annan noted on 14 April, at a high-level meeting that included WTO representatives. "I urge developed countries to dramatically reduce agricultural subsidies, without delay. It would provide a much-needed boost to the Doha negotiations, signalling to developing countries that they can still hope for the development round they were promised."

Development agenda 'just a slogan'? Negotiations to amend the WTO rules on Trade Related Aspects of Intellectual Property Rights (TRIPS) on essential medicines, former TRIPS Council Chairman Boniface Chidyausiku told Africa Recovery, were never taken seriously by developed countries. "It was a pure exercise to stem the tide of opposition back home," he said, noting the increased public pressure on Northern governments to respond to the health crisis in Africa. "The hopes we had for the TRIPS agreement and public health came to naught." Much the same fate has befallen other key aspects of the Doha development agenda, he asserted. When the Africa Group presented detailed proposals for implementation of existing special and differential provisions, "we were told by our developed country partners that 'no, we can't read it. It's too big. Can you reprioritize the areas you think we can look into?' We felt insulted, really." These issues, combined with the disagreements over agriculture, he cautioned, made agreement at the upcoming Cancún trade ministers meeting much less likely. "If there is no progress in areas of concern to developing countries, I don't see why they will make concession at Cancun." To call the WTO trade agenda a "development agenda," he concluded, "was just a slogan. I don't see anything development-oriented that has come out of all the talks we have had. In terms of development, forget it."