World Summit on Sustainable Development (world-summit at iatp.org)
WHICH ROAD TO QATAR: FOOD FIRST OR EXPORT FIRST?
by Dr. Vandana Shiva 27 Jun 01
As we approach Qatar, there is consensus that actually existing globalisation is unfair, unjust, and at the root of creation of new poverty and deepening inequality. There is, however, difference abut where do we go from here.
The establishment response from the W.T.O., the World Bank, the Governments of the North and South and NGOs dependent on Government financing is that the real problem is that globalisation was incomplete and partial. Market access to markets of the South was achieved through one sided trade liberalisation, but markets of the North continue to be closed to exports from the South, especially exports of agriculture and textiles. This unidirectional market opening is clearly unfair and unjust. The agenda for Qatar is then justified as further negotiations to open up northern markets and give market access to southern countries. The new Round has, therefore, been called a "Development Round", a round to benefit the Third World through market access especially in agriculture.
There are, however, a number of problems with using the Third World as an excuse for a New Round.
Unfair Trade Practices
The asymmetrics, imbalances and unfair rules in the current W.T.O. agreements can be corrected without a new round.
As against the low Indian custom duty on the agricultural products, the average tariff in OECD countries in 1995 were 214% for wheat, 97% for barley, 154% for maize. Their tariff peaks reach 350% and above in extreme cases for some products of interest to developing countries. The most important areas with highest tariff rates include the major agricultural staples - cereals, meat, sugar, milk butter and cheese as well as tobacco products and cotton. In EU, for instance, the out of quota tariff for bananas is 180%; in Japan these tariffs range between 460% to 600% for dried beans, peas and lentils and in the US groundnuts in shell attract a tariff of 164%. Recently Japan has levied a tariff of about 1000% on rice. However in India the bound rate duties for rice and maize was fixed at 0% many years ago.
Even when they have been allowed to make up for this through higher custom duties, they have put duties on a flexible range of 60-80% on such products. This also allows for corruption. For example with regard to the broken rice with a broken percentage of 50% and above, the custom duty is 0%. Rice traders used this opportunity to misdeclare their first class (unbroken) rise as broken rice in order to import under OG License at 0% duty for sale in the local market, incurring huge profits at the cost of the local rice producers. Despite this no action was taken and in the latest budget 2001-2001 the duty continued to be 0% on the broken rice.
The AOA provides for 24% reduction in the Aggregate Measure of Support (AMS). However in developed countries, overall levels of support on the whole have increased through the ' Green Box' subsidies which do not need to be reduced, and can be increased without any limit. According o FAO, the present structure of Green Box has been tailor made to suit developed rather than developing countries, which have so far been unable to use it. It is therefore imperative that the Green Box should have provision for the general development of agriculture.
The European Union countries increased their total subsidy form 9 billion ECU in 1986-88.
Both TRIPs and the Agreement on Agriculture are under review. The review process should be used for reform of both IPR systems and agricultural trade. The call for a new round is therefore totally unjustified.
Within the current review and reform process there are however two paradigms emerging -- the paradigm of "Expand or Sink" Vs the paradigm of "Shrink or Sink".
The "Expand or Sink" paradigm is based on two basic assumptions.
The first is that globalisation in itself is good, the only problem is that it did not go far enough. Further globalisation for market access is thus the solution.
The second is that export dominated agriculture can remove poverty and reduce inequality in the Third World.
The "expand or sink" globalisation school is in effect an "export first" school for agriculture based on the tenets.
1. Exports come first.
2. Exporting is a right and giving market access is an obligation, no matter what the environmental and social costs.
The "Shrink or Sink" School anti-globalisation movement on the other hand views the way forward as based on a turnaround and shrinkage of the globalisation agenda. "No new Round-Turnaround" and "W.T.O. - sink or shrink" were the civil society calls for the Seattle and Qatar Ministerials respectively. In agriculture, in particular, the turnaround agenda requires the reversal of industrialisation and trade liberalisation policies in agriculture in the North and the Sound and putting sustainability, small farmers and food security and food safety at the centre of trade reform and agriculture policy both in the North and in the South.
Underlying the rejection of further globalisation for market access are three basic realisations.
The first is that food security requires food first, not export.
The second is that globalisation is intrinsically flawed because it puts commerce above survival and its expansion threatens to create more environmental destruction, more poverty and greater inequality.
The third is that export dominated agriculture creates poverty and malnutrition, unemployment and malnutrition because natural resources like land and water which are vital for agriculture are limited and increased exports implies diversion of scarce land and water from generation of local livelihoods and local needs to production for exports.
Free trade market access differs from fair trade market access
Market access under W.T.O. rules of globalisation is so called "free trade" market access. "Free trade" market access is not really free because it depends on government policies and public subsidies. It is based on the principles of trade liberalisation - an exporting as a right and importing as a duty. It leaves no room to prevent exports which deprive people of food security, or imports which deprive farmers of livelihoods security. Free trade market access is also based on the assumption of "like-product" - that the method and process of production does not matter, and discriminating between products produced justly and sustainably and those produced under conditions of injustice and non-sustainability is a "non-tariff trade barrier" which must be removed. Free-trade market access therefore prevents fair trade partnerships which promote trade that protects livelihoods, rights of producers, the environment and food security.
Free trade market access destroys high value exports and promotes ecologically destructible exports
Free trade market access has in fact undermined the high value, ecologically sustainable exports from the Third World.
Kerala, which exports spices and coconut, has had its farm economy devastated due to trade liberalisation. With the inclusion of coconut in the OGL list and the reduction of import tariffs on the edible oil, the price of coconut has fallen sharply, even below the minimum support price (MSP), in the state of Kerala. In fact, since the removal of QRs on 714 items in April 2000, most of the agricultural commodities of Kerala have been showing a steady decline in the monthly market prices. The unprecedented fall in prices of all cash crops have devastated the farmers of Kerala. The coconut price collapsed from Rs 6 per piece in 1999 to Rs. 2 in Jan 2001. Similarly the price of coffee down form Rs. 68/kg to Rs. 26/kg, pepper has fallen from Rs. 19055/qtl to Rs. 10550/qtl., arecanut from Rs.10411/qtl.to Rs. 4679/qtl. According to Department of Agriculture, Government of Kerala, during 2000 the farmers of Kerala have suffered an annual loss of Rs. 6645 crores due to the price fall of major plantation crops alone e.g. coconut, rubber, pepper, arecanut, coffee, tea and cardamom.
While export of genuinely high value, ecologically sustainable products is being undermined by trade liberalisation policies, ecologically destructive exports from the Third World are being promoted. These destructive imports leave Third World ecosystems and communities poorer.
Free Trade "market access" is predicated on Corporate Control of Agriculture
The argument that free trade market access will benefit Third World farmers is false.
Farmers sell to local and domestic markets. Corporations buy and sell in global markets. Market access is therefore not farmer based but corporation based. Benefits from trading do not go to farmers but to companies. Even as markets for U.S. agricultural commodities have increased through market access and removal of restrictions on imports in countries like India, U.S. farmers incomes have continued to decline. Higher exports do not imply higher incomes for farmers. Both U.S. and Indian farmers have lost out due to market access. In 1999-2000, soya prices dropped from $ 8.40 to $ 4.2 a bushel in the U.S. even while the U.S. corporations exported soya to India which destroyed India's oilseed farmers. Within one year, soya imports increased by 300%, costing the country a drain of US $ 1 billion of scare foreign exchange and farmers their livelihoods. Exports grow and farmers are dispossessed.
Similarly, as export domination has increased in agriculture in India, displacement and indebtedness of farmers have also grown. The worst epidemics of farm suicides are in areas growing export commodities such as hybrid cotton.
Whether it is exports and market access North to South or South to North, corporations gain and farmers loose. Market access is in fact a corporate construct to gain control over markets globally. It destroys farmers everywhere and strengthens corporate control everywhere, North and South.
Since export oriented agriculture is based on contract f arming and corporate profits are based on buying as cheap as possible from farmers, exports in free trade systems do not transfer export earnings to farmers. Instead exports further impoverish farmers and local communities, unless exports are producer driven and take place under principles of food security and fair trade systems. But fair-trade is different from free trade. It is based on producer-consumer partnership, not market access rules. It is based on small producer driven policies, not corporate driven policies. It is based on sustainability and justice, not profit maximisation alone .
Market access implies undermining of domestic food security
Free trade market access implies that food desperately needed by the poor domestically is exported, creating hunger and starvation. To release food for exports, national policies are changed from food first to export first policies. Subsidies are shifted from farmers and the poor to exporting corporations. India is a good illustration of this shift. As food subsidies have been withdrawn under trade liberalisation, and food prices have risen people are buying less and consuming less. This has led to increase in food stocks. Fifty million tonnes are rotting in the godowns while thousands starve to death. While food subsidies were withdrawn from those earning $1.05 a day on grounds that they were Above the Poverty Line (APL), Cargill and private corporations have been supplied food grains at highly subsidized prices. During 2001, India is exporting 5 million tonnes of wheat and 3 million tonnes of rice. While people pay Rs. 7,000 per tonne, for wheat exporters are getting the wheat at R. 4,300 per tonne, a subsidy of Rs. 13.5 billion. While people pay Rs. 11,300 for rice, exporters are getting it at Rs. 5,650 per tonne, a subsidy of Rs. 10 billion.
Such distortions that aggravate hunger become necessary in order to export food grains from the Third World and benefit from market access rules of free trade. But the benefit goes to corporate traders, not to the Third World poor people. Without the diversion of food subsidies for corporations exports would not be "competitive". The export first logic which is at the heart of market access rules is thus a recipe for hunger and famine. Internationally, export first policies of trade liberalisation have increased hunger and malnutrition. From the period 1979-81 to 1992-93, the decline in food grain consumption per capita has been - 6.7 in Mexico, -- 2.7 in Argentina, -- 5.1 in Brazil, --18.1 in Kenya, -- 8.7 in Tanzania, --0.5 in Ethiopia, -- 10.1 in India.
Free Trade "Market Access" implies a globalisation of non-sustainable industrial agriculture
Producing large quantities of commodities for long distance trade is a major driving force for the expansion of monocultures and the increased use of chemicals and non-renewable fossil fuel energy in agriculture. This implies the destruction of diversity, the pollution of ecosystems, rising costs of production for farmer, increasing debts and increasing farm suicides. Farmers suicides in India are concentrated in areas where hybrid
cotton seeds have spread. Cotton cultivation has increased 25% since trade liberalisation. In Warangal, Andhra Pradesh, cotton cultivation increased from 0 areas in 1985 to 100000 hectares in 1998. In Punjab, the area under hybrid cotton has increased from 10,200 ha in 1998 to 76,800 ha in 2000-2001. Input costs and costs of cultivation have also increased. In Warangal pesticide use increased by 2000% over a decade. In Punjab, cost of chemicals and seeds increased cost of cultivation from Rs. 1535.95/hec to Rs. 19,496.52, nearly a ten fold increase. Pesticide use went up from Rs. 40/ha to Rs. 2401 per/ha a 6000% increase. A quintal of cotton which used to cost Rs. 149.19 in 1972 now costs Rs. 1703.04 more than a ten fold increase. Meantime, the price of cotton has been falling systematically, creating a negative economy in which agricultural production is neither environmentally sustainable nor economically sustainable for small holders.
These increased exports have brought death and suicides to both cotton farmers and weavers.
"Market access" implies increased CO2 emissions and increased climate instability
When countries stop producing food for their own food security, export their agricultural produce and import what they need, there is an inevitable increase in greenhouse gas emissions and climate instability. 1 kg. of food traded globally contributes 10 Kg of CO-2. If all the food people eat reaches them through long distance trade, the current CO2 emissions would increase dramatically, creating floods and drought, hurricanes and heat waves. This would totally wipe out agriculture. The cyclone in Orissa caused Rs. 60 billion in terms of agricultural damage, and the 2000 drought in Gujarat has caused Rs. 10 billion in terms of agricultural damage. The climate change externality of the CO2 emissions linked to increased market access and global trade in agriculture will thus rapidly outweigh all benefits accruing to global corporations in terms of increased trade.
If for no other reason, than climate stability, localisation of food systems to the highest extent possible is a survival imperative.
The road to Qatar and beyond will either be paved by the expansion or shrinkage of the globalisation agenda. The latter will involve policy commitments, globally and nationally to and protect the small farmer, reduce costs of cultivation, reduce environmental destruction, reduce purchase of external inputs such as seeds and chemicals, localise production of staples, focus on food first rather than export first policies, focus on high value exports based on fair trade and environmental protection.
The expansionist agenda of globalisation will promote exports at any cost, it will put exports before food security, it will shift ecologically destructive production to the Third World, it will increase the use of toxics and chemicals, it will lead to higher rates of suicides for farmers and starvation deaths for the poor, it will increase corporate control over land, water, seed and food processing and food distribution.
Sustainability, justice, democracy and survival demand that we take the road of "Shrink or Sink". If trade liberalisation expands, we will all sink.
Mark Ritchie, President Institute for Agriculture and Trade Policy 2105 First Ave. South 612-870-3400 office 612-870-4846 fax Minneapolis, Minnesota 55404 U.S.A. mritchie at iatp.org www.iatp.org www.wtowatch.org, www.farmbillwatch.org www.gefoodalert.org, www.sustain.org/biotech
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