Global Policy Forum

Civil society groups place appeal to WTO on G-33 proposal

20 civil society groups have issued an appeal to the World Trade Organisation to take the issue of food security in developing countries as a matter of serious and immediate concern, and not to render the G-33 proposal on public food stockholding a travesty by asking developing countries to agree to the current text on the peace clause.

18 November, 2013 | Socialwatch

Do not Dilute G 33 Proposal: Address Imbalance in Global Agricultural Subsidies Rules, Support Public Stockholding for Guaranteeing Livelihoods and Food Consumption of the Poor at Bali WTO Ministerial

We, as members of the global civil society, urge the Director-General of the World Trade Organisation, Roberto Azevedo, and heads of member states, to take the issue of food security in developing countries as a matter of serious and immediate concern, and not to render the G-33 proposal on public food stockholding a travesty by asking developing countries to agree to the current text on the peace clause.

Across the developing world, millions of people, most of them poor, still do not have basic and minimum access to food. According to the FAO, 868 million were undernourished in 2011-12, of them 304 million in South Asia and 234 million in Sub Saharan Africa. Even more disturbing is the fact that nearly 3.1 million children under the age of 5 die each year because of poor nutrition (Hunger Statistics, WFP 2013).

At the same time, in a volatile global economy, millions of small farmers are engaged in near subsistence and precariously poised food production that provides them essential livelihoods and caters to their own as well as their country’s food requirements.  Eradication of global poverty and hungerwould be impossible without addressing these concerns. It is clear that the global economy, with all its growth, has failed to take care of both poor farmers and food consumers across the vast majority of developing countries and LDCs. In sum, they still need support from their own governments, supported by the global community.

However, the rules of multilateral trading that have been institutionalized through the WTO makes it impossible for developing country governments to provide this support.  When GATT (WTO’s predecessor) was negotiated, all, except 17, developing countries which were not giving any subsidy at that time were barred from increasing subsidies, and were to adhere to a limit of 10% of additional production that could be given out as subsidies.

In contrast, developed countries that gave massive subsidies to their agriculture sector were asked to reduce these trade distorting subsidies (OTDS) by only about 20%. Moreover they were allowed to shift most of their subsidies to a “green box” which was marked as non-trade distorting. It is by now well established that both types of subsidies are very much trade distorting and have undercut prices, encouraged dumping of subsidized agricultural products in developing country markets and has threatened global market access for developing country farmers.

This twisted legacy of the WTO has resulted in a gross imbalance in global agricultural production, distribution and trading system. This has prevented developing country governments from providing essential support to their numerous small producers, or to poor consumers through direct measures, price supported public food stockholdingor other processes, even if financially they are now able to do so. For example, India’s recently passed Food Security Act, which aims to provide minimum food entitlements to the poor 67% of the population, will need an allotment of US$20 billion and will conflict directly with WTO’s set limits. The WTO mandated obligations will constrain India from fully implementing its Food Security Act.

This peculiar juxtaposition in WTO’s agricultural trade rules has led the G-33 group of developing countries to table a proposal on food security at the WTO that argues that public food programmes for supporting livelihoods of small farmers and food consumption of the poor should be considered part of the “green box” and allowed without limits by changing the existing Agreement on Agriculture (AoA).

Under the WTO rules,a subsidy through price support shall be calculated using the gap between the fixed external reference price and the applied administered price. The reference price was fixed at average f.o.b. (free on board- price from farm gate till its delivery on the ship) price notified by each country for 1986 – 1988. Since the “fixed external reference price” is much lower than the minimum support price levels (MSP), the subsidy tends to get much inflated in comparison to reality. In addition, the entire production “eligible” to receive the subsidy and not the “actual” production is to be the basis for subsidy calculation, thus inflating subsidies further. Obviously for large developing countries the total subsidy calculated under broad price support programmes tends to significantly overstate the actual financial support provided to farmers.

On the other hand,the total domestic support of the USA grew from US$61 billion to US$130 billion between 1995 and 2010.The EU’s domestic support, which went down from 90 billion euro in 1995 to 75 billion euro in 2002, bloated again to 90 billion in 2006 and 79 billion in 2009.  A broader measure of farm protection, known as total support estimate, shows the OECD countries’ agriculture subsidies soared from US$350 billion in 1996 to US$406 billion in 2011.

Unfortunately the G-33 proposal has found stiff opposition from the developed countries, notably the USA and the EU.This is despite the fact that in 2010, the poor in India received on average of only 58 kg per person, 3.1 times less than the 182 kg per person of the 80 million beneficiaries of cereals food aid in the USA. This is also 4.2 times less than the 241 kg for each of the 46.6 million beneficiaries of the Supplemental Nutrition Assistance Program (SNAP) or food stamp programme in the USA.

A matter of urgent concern is that all elements of the G 33 proposal have now been rejected for consideration in Bali and a peace clause (or due restraint clause) on the G-33 proposal is currently the only element being discussed at the WTO. A peace clause means that use of such subsidies is still illegal but WTO Members will not go to dispute settlement for this period.

The Director General, Robeto Azevedo, has suggested a “take it or leave it” text on the due restraint clause for Bali. However this is to be effective only for 4 years and does not guarantee that a permanent solution will eventually materialise. Further, the conditions sought to be imposed are severe. The Anti-Circumvention/ Safeguard clause asks the member states to “ensure that stocks procured under such programs do not distort trade”. This broad condition may make it virtually impossible for any developing country to use this provision. This will dilute the already weak peace clause rendering it totally ineffective and would sound the death knell for millions of poor in India and in other developing countries.

The time to act, therefore, is now. Before it is too late, before millions perish because their fellow brothers and sisters – the global leaders – could not rise above their own myopic agendas. Before hundreds of thousands of children are not able to make it to school or play or laugh because they are too weak from hunger. Before millions go to sleep not knowing what they will give to their family for food the next day.

In the complex labyrinth of international norm setting, it is the poor and marginalized who are being denied their livelihoods and minimum access to food. Global rules are challenging public provision of essential goods and services across the developing world. It is important for the WTO to address these concerns in its forthcoming and crucial ninth ministerial conference at Bali, if it has to meaningfully deliver on the Doha Development Agenda.

We, as members of civil society, therefore urge the global community, including the WTO Director General and the heads of Member States, to address this issue and make changes in the AoA that allow developing countries to use such subsidies for public programmes on food to support poor farmers and consumers. We demand that you do not make a mockery of the hunger of millions round the world by accepting a peace clause that is unusable and damaging for long term solutions. We urge you to ensure that the international trade rules work for the people across the globe and not against them.

Signed by

  1. Third World Network
  2. Rythu Swarajya Vedika, India
  3. Solidarité, France
  4. Worldview-The Gambia
  5. Southern and East African Trade Institute (SEATINI), South Africa
  6. Sagari Ramdas, Anthra-Hyderabad, India
  7. Mdahusudhan, Yakshi, India
  8. K.Pandu Dora, Convenor, Adivasi Aikya Vedika, India
  9. Indian Social Action Forum (INSAF), India
  10. Asha Kisan Swaraj, India
  11. Equity and Justice Working Group Bangladesh (EquityBD)
  12. Working group Food justice, the Netherlands
  13. Alliance Sud, Switzerland
  14. Center for Sustainable Rural Development (SRD), Vietnam
  15. National Hawker Federation, India
  16. Inter Cultural Resources, India
  17. The Berne Declaration, Switzerland
  18. Green Souls, India
  19. India FDI Watch
  20. Social Watch

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