WTO Agriculture Negotiation Term Paper

  • Length: 8 pages
  • Subject: Agriculture
  • Type: Term Paper
  • Paper: #60368295

Excerpt from Term Paper :

World Trade Organization (WTO) is an independent international organization, with headquarters in Geneva, Switzerland, which establishes and maintains rules governing global trade. Representatives from 146 member countries use this framework in conducting trade agreements, settling trade disputes and evaluating trade policies. WTO believes that a standard set of consistent and enforceable grounds rules will conduce to the proper and profitable international trade without encountering trade barriers, such as excessive tariffs, unfair regulations and similar obstacles. It assesses the entire trade structure and history of a country wishing entry as a member, so that some countries change trade policies in order to become WTO members. WTO members comprise 97% of world trade, so that their membership significantly helps expand the world economy as well as lift their citizens' level of prosperity.

The highest decision-making body of the WTO is the Ministerial Conference, which meets every two years. It maintains a clear system of trade dispute adjudication, when some members feel that other members are violating the ground rules. When the parties are unable to settle the dispute between or among themselves, the dispute resolution process begins to operate. Dispute resolution is a most important contribution WTO makes in insuring stable global trade.

Literature Review

The Doha Round held in 2001 was a once-in-a-generation chance to change the rules that govern international agricultural trade so that both consumers and producers in both developed and developing countries would benefit. The Doha Round was called the "development round" because it was to improve the lives of billions living in developing countries and to extend the benefits of free trade to them in those countries. Focus on these countries, the U.S. believes, must always be there, or an international trading system would fail. This was why it pushed for increased market access for agriculture goods and significant reduction in domestic support in creating real economic growth impetus in developing countries. The Foreign Agricultural Service of the U.S. Department of Agriculture made this report on the Fifth WTO Ministerial Conference.

The Doha Round also sought to build itself on the success of the Uruguay Round of the 90s and the 80s. The Uruguay Round learned from the failure of earlier rounds - that developed countries had to willingly put their policies for all agricultural products on the table. They had to commit to market access, export subsidies and domestic support. This led, in turn, to the establishment of the three-pillar approach: substantial improvements in market access for agricultural products, reducing expert subsidies "with a view" to their gradual phase-out, and substantial reductions in trade-distorting domestic support (AFP). Furthermore, Article 20 of the Agreement bound countries to continue with the reform process through future negotiations. The members also agreed to begin talks on lowering tariffs and other impediments to free and fair agricultural trade. The U.S. saw the Doha Round as a historic opportunity to help farmers, ranchers and growers export more and improve the lives of both producers and consumers in developing countries. Talks begun during the Doha Round were to continue in the Cancun Ministerial I September 2003.

The issues slated for discussion in Cancun centered on agriculture's three pillars previously mentioned. The Ministerial also had to discuss services; market access for industrial goods; the implementation of the Uruguay Round and special and differential treatment; geographical indications; investment, competition, government procurement and trade facilitation; environment; trade rules; and dispute settlement. The overall objective was defined as the narrowing down the gap between rich and poor countries.

But anti-globalization protesters marches to the Cancun resort, as they did in Seattle in 1991, arguing that WTO's free trade rules would, I fact, benefit big businesses at the expense of poor nations, as well as damage the environment. As it was, protesters claimed, global trade agreements were already disadvantaging farmers and other workers, according to CNN reports.

WTO delegates themselves were deadlocked over agricultural trade and investment rules, which many of them believed were obstacles to global trade. Many poor countries demanded from rich countries to make good their commitment made at Doha to cut $300 billion subsidies given by those countries to their farmers. They viewed these subsidies and high tariffs as obstructions to poor nations from breaking into developed markets. They demanded open markets as the key to growth and development. The WTO director-general from Thailand voiced out that such lack of an agreement would signal dim prospect of economic recovery in thee world and redound to greater hardship to workers worldwide, especially in poor countries. Rich countries, like the U.S. And Europe, were urged to reduce aid to farmers, while representatives of 21 developing nations pressured those from rich countries to accommodate deeper and more realistic agricultural reforms. Meanwhile, the U.S. And the European Union came out with a moderate proposal.

An intensely sordid incident occurred during the Cancun meeting when a South Korean demonstrator killed himself as a sign of supreme protest against the WTO, which, the protesting farmer said, "kills farmers." UN Secretary-General Kofi Annan said that today's trading system does not align with the principle, in that there are just too many barriers that stunt, stifle and starve (CNN). China, India, Brazil and Cuba lead a group of 21 developing countries and states in demanding that rich countries scrap the subsidies, as these condemn millions of their farmers to poverty.

Protesters threw stones, sticks, metal bars and bottles at the police that restrained them with batons and tear gas. Many were injured during the incident.

Analysis

The WTO agriculture negotiation has been viewed by many as an imbalanced instrument, because it gives special and differential treatment to developed countries by highly protecting them, while putting pressure on developing countries to liberalize some more (Khor 2003). Developed countries are allowed to maintain high subsidies, while developing countries either have low subsidies that cannot be raised or have none at all. Developed countries may avail of the "special safeguard mechanism" that can protect them from the impact of import surges, but developing countries do not have access to it. In addition, developing countries have been subjected to agricultural tariff reductions due to IMF and World Bank conditions.

A major handicap of the WTO agriculture agreement is its categorizing subsidies into trade-distorting and non-trade distorting. The first type must be reduced, while the second type can be increased. Rich countries can raise their subsidies by switching from one kind to another like a trick (Khor). The high Northern subsidies are deleterious to developing countries in three ways: they prevent market access to these countries' products in the North; they prevent market access in third markets, and they allow costly products to be exported cheaply in many developing countries, thus disadvantaging farmers' livelihood. This third effect is the worst because many developing countries must give up their restrictions, reduce tariffs and remove domestic subsidies and other schemes. Reduced prices of imports and income instability to farmers result.

Re-negotiation of the agriculture agreement has been taking place at the WTO. Developing countries have been urging rich countries to reduce their subsidies. But U.S. And EU policies on domestic subsidies are internally determined and will hardly be affected by the strong demands of developing countries.

Developing countries must continue to defend themselves and their survival against those countries that enter their markets at the expense of their livelihood. They can propose not to be subjected to further tariff reduction for food products and small farmers' products; the domestic subsidies for food and small farmers' products must be raised; these farmers should be allowed flexibility with regard to their other products; the special safeguard mechanism should be available to developing countries; and they should have the option of reverting to quantitative restrictions, now prohibited by the agriculture agreement.

One more significant issue is dumping. Dumping is selling products in another country at a lower cost of production (Global Exchange 2003). Companies can do this because the government sets record-low prices ad then gives farmers the subsidy to make up for lost income. Subsidies are used to help corporate and struggling farmers, and the WTO eliminates them because they are trade-distorting or protectionist. The tragedy is that rich countries are mostly exempted in the subsidies they use, while prohibiting these types to developing countries. Moreover, developing countries do not have enough money to subsidize their farmers

Although dumping is a violation of the trade law, it is common and rich countries fake such policies as subsidies. Heavily subsidized agribusinesses have flooded the international market with artificially low-costing agricultural goods. People in developing countries are not encouraged to develop self-sufficiency in food production, because WTO prohibits internal support programs and import controls (Global Exchange). This results in dependence on imported staples from global market rather than grown locally. And since many of these countries cannot afford imported foods, they need to resort to increasing foreign debt in exchange for increased malnutrition.

Unfair tariff increases are another reality. This practice is favorable to countries with developed manufacturing sectors by increasing…

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