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What happened to reform of agricultural trade?

The draft WTO framework: what happened to reform of agricultural trade?

In a detailed analysis released today, international agency Oxfam is sharply critical of the draft framework for negotiations set to be discussed at next week’s General Council meeting of the World Trade Organisation (WTO).

“This draft is a major disappointment. It makes little progress towards making trade fairer to the majority of WTO members, especially on the crucial issue of agriculture,” said Barry Coates, Executive Director of Oxfam New Zealand. “It has long been recognised that dumping of heavily subsidised agricultural products on world markets is the major problem that these negotiations were meant to solve. It is a life and death issue for millions of rural poor in the developing world. The fact that this framework fails to deliver on this issue is nothing short of scandalous.”

Oxfam’s analysis shows that the draft text on agriculture, prepared by New Zealand Chair Tim Groser, heavily favours the EU and the US as the world’s subsidy superpowers, at the expense of both developing nations and agricultural exporting countries like New Zealand.

“Instead of pushing forward with the stated intention of the Doha Development Agenda to require rich countries to decrease and eliminate their trade-distorting subsidies, the text creates two new massive loopholes which invite exploitation by rich country governments eager to keep subsidies in place and their markets protected from competition,” commented Coates on releasing Oxfam’s analysis.

The first of these loopholes is a new category of subsidy tacked onto the so-called “blue box” of permissible domestic support. This box was created as a transition measure during the Uruguay round of talks and until recently discussions in the current talks centred on finding ways to eliminate it.

“The proposed widening of the blue box not only gives it a new lease of life, but also seems tailor-made to permit the United States to reclassify and legitimise illegal subsidies,” said Coates. “The recent hard-won victory of Brazil against the massive subsidies paid to US cotton barons is a case in point. The WTO ruling requiring these subsidies to be eliminated could well be rendered meaningless by the availability of a new bucket to pour the subsidies into.”

The second loophole is the newly-created concept of “sensitive products”, namely products which enjoy heavy subsidisation in the EU and other protectionist countries, such as Japan. This new category can be used to protect rich country domestic markets for such things as sugar, beef and dairy products from outside competition, something never contemplated in the Doha Mandate. The number of products eligible for this carve-out from tariff reduction commitments is likely to be extensive, as the text envisages that all of the hundreds of products currently subject to tariff rate quotas can become “sensitive products”.

The elaborate and extensive treatment of sensitive products is in sharp contrast to the vague language around special and differential treatment (S&DT), which is a make-or-break issue for developing countries. Despite the fact that S&DT is one of the central promises of the Doha Development Agenda, developing countries are left very much in the dark about what provision will be made for their food security and rural development needs.

“The Doha Development Agenda has been turned on its head by this draft framework,” said Coates. “Rich countries seem to have learned nothing from the failure of the talks at Cancun, which was caused by their unwillingness to accept that trade rules must be made fairer to the poor. Unless they face up to their obligation to stop dumping and to take account of developing country needs, they risk bringing the negotiations to a grinding halt.”

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