Agricultural Free trade imposed on the South through WTO agreements and its consequences

Today’s main stream economic theory says liberalisation of international trade and deregulation bring growth, and are therefore the best way towards upholding economical and social rights. The UNDP (United Nations Program for Development) reports show a completely different reality. Because of these policies millions of people around the world are faced with the prospect of famine, unemployment and privatisation of arable land, housing, access to education, etc.

We would like to seize this opportunity to draw the attention of the 51st session of the Sub-commission on the consequences of free trade policies imposed on countries of the South by the world trade organisation (WTO) in particular on agricultural issues.

The WTO officially started its work in January 1995, succeeding to the General Agreement on Tariffs and Trade (GATT) after the conclusion of the Uruguay Round negotiations. The agreements signed at that time include for the first time one on agriculture. This is a source of concern for a growing number of peasant organisations, non-governmental organisations (NGOs) and some countries of the South. This agreement makes it compulsory for these countries to stop controlling importation of food and other agricultural goods. They are also required to reduce and eventually stop all subsidies to peasants, thereby exposing them to the competition of international agricultural markets.

Four years later the disastrous consequences caused by the liberalisation of the agricultural sector in certain countries of the South are becoming more and more obvious: the control of the world food system has fallen into powerful hands, to be more specific it has fallen into the hands of agribusiness. These changes concern the life style, revenue, and even the survival of small farmers worldwide and food security in many countries.

In November 1996 Heads of States and Heads of Government from 186 countries met in Rome for the Food World Summit organised by the Food and Agriculture Organisation (FAO). They proclaimed their national commitment and their political will to make constant efforts to eradicate hunger in the world. They have also decided to do all that is in their power to reduce the number of people suffering from chronic under-nourishment by the year 2015, this concerns over 800 million people.

The FAO adopting free trade theories pretends that withdrawing domestic commercial barriers will enable all countries to export their products which have a comparative advantage and eliminate less productive activities. The FAO concedes that this will lead to “adjustment costs” for producers but insists that these costs will in the long term be made profitable thanks to exportation opportunities and large profits reaped trough modernisation.

But free trade is an illusion, which serves the interests of the strongest, and worldwide liberalisation would be harmful because of the unequal conditions of production and of the diversity of market players.

We would first like to talk about agricultural subsidies. Farmers from the South face enormous inequality when it comes to agricultural subsidies.

A small farmer from the South earns in a year hardly more than what his US “colleague” receives as subsidies per ton through the Export Enhancement Program (EEP), (i.e. 77$ per ton). The latter if suitably equipped will produce between 800 and 1000 tons per year and will consequently receive, in subsidies alone, a 1000 times the revenue of his colleague from the South.

Defenders of free trade admit that subsidies distort the market, but maintain that these distortions will disappear thanks to the new measures progressively introduced by GATT as from 1995. The result is a widely held but illusionary opinion that producers from all four corners of the world are placed on an “equal footing”!

This GATT agreement represents a real fraud. In reality developed countries have agreed to reduce their subsidies by between 20% and 36%. So, far from getting rid of industrialised countries’ subsidy structures, GATT has left them largely intact, notably thanks to the bilateral agreement between the United States (US) and the European Union (EU) called the “Green Box”. Through this agreement, the US and the EU have been able to maintain or even increase subsidies targeted at their agricultural exports! On the other hand, certain governments of the South have been encouraged to further liberalise their economies, reducing their taxes by 24% on imported foodstuffs and by increasing their minimum import from 1% to 4%.

Even if, in the long run, the agreements aim to eliminate subsidies, the following problem remains: differences in productivity between different nations in the world and particularly between countries from the South and countries from the North are such that placing these countries in direct competition can only lead to the elimination of the weakest, which means the destruction of economies of the South.

Now at the end the 20th century, better equipped agricultural producers from the North and a few from countries of the South can reach a level of net productivity of the order of 5000 quintals of cereal or it’s equivalent per worker, at the same time in developing countries, the majority of manual agricultural workers still produce in the order of 10 quintals .The brutal shock caused by liberalising agricultural markets can only lead to an irresistible increase of this differential.

Thus, liberalisation of international commerce cannot lead to the development of national agricultural economies. Indeed, the beneficiaries are neither the peasants nor the third world governments. The liberalisation of commerce has mainly enriched agribusiness transnational companies (TNCs) such as Cargill and Continental. Giant food-processing companies already control three quarters of the world’s cereal trade.

In short, world competition that the World Trade Organisation (WTO) aims to introduce is altogether unfair, inappropriate and disloyal.

Unfair because TNCs from the North have at their disposal highly developed technology and experience in agricultural industry that can only lead to the disappearance of traditional agriculture which has no means to defend itself. “In general (traditional agriculture) is not in a position to survive competition with powerful transnationals which benefit from strong economy of scale, from large capital investment and technology, and which have good access to world markets. The technological and management skills brought by investors render then more competitive compared to local producers.”¹

Inappropriate because free trade doesn’t correspond to any real need but serves the profits of TNCs and the enrichment of elites.

Disloyal not only because agriculture is subsidised in countries of the North but also because “on the one hand foreign investors are strongly encouraged, and on the other hand small scale producers are subjected to significant constraints particularly an inequitable fiscal burden designed to discourage them.”² And finally TNCs are not subjected to any controls.

Ecological and Sanitary Consequences:

The system of intensive agricultural production, which allows such an international competition, represents a danger for consumers’ health and for biodiversity, since only high yield species are selected for reproduction. Mad Cow disease has seriously affected beef trade in Great Britain and has resulted in the slaughtering of 165’000 cows because of the risk of transmission to humans. We do not know yet the magnitude of the recent scandal that surfaced in Belgium with the chicken contaminated by dioxin. Farmers are now becoming wary of intensive agricultural production and the general public has learnt the lesson that nature cannot be squeezed like a lemon. It is no prophecy to say that if adequate measures are not taken, similar cases such as mad cows or chickens with dioxin will recur and multiply.

Genetically modified organisms (GMOs), under cover of higher productivity, help agricultural profits go to TNCs, they lead to an additional reduction in biodiversity and in food security in countries of the South. Furthermore, the long-term ecological and sanitary effects that these organisms could have are completely unknown.

Meeting Food Requirements of the Global Population?

Contraryto the claim by firms commercialising them, GMOs are not a solution to satisfy future food requirements in developing countries. Should they monopolise agronomic research effort to the detriment of other solutions GMOs could have in this field too a negative impact.

Mr. Danilo Türk has said ” free market has never been able to create the conditions under which the economic, social and cultural rights of all citizens could be satisfied and fulfilled”³. International free trade of food has little or nothing to do with the satisfaction of human needs. On a global level, the role of international food trade is not to ensure adequate nutrition, but to meet an effective demand, to wit a solvable demand. This is why the majority of agricultural trade is developing between populations that are already well nourished.

A clear example is the trade in grain such as maize, 60% of which is for livestock feed rather than for human consumption. (A highly inefficient way of converting protein into energy. Meat proteins are over 10 times more expensive than lentils or grain proteins). This example should make us think about productivity in terms of energetic and environmental costs and we should conclude that certain agricultural methods use more energy than they produce.

On an international level, hunger is not the result of absolute shortage. There is more than enough to feed everyone and yet there are more undernourished people than ever before. This is not a demographic problem but a problem of means of production, of distribution and of unequal buying power. In addition to global food insecurity, free market in agriculture reinforces the structures leading to poverty in reducing people’s capacity to grow their food or to acquire it .

In rich countries too, poverty and hunger are a reality:

There are for example mountains of food in Great Britain and kilometres of food shelves in supermarkets, but one fifth of British population cannot afford a balanced diet because of rising unemployment and cuts in public funding. Five companies control 70% of the food market in Great Britain. The more the food production system is centralised the more food insecurity rises in rich countries.

When we speak of human rights it is imperative to have a global approach so as ” to give true meaning to the concept of indivisibility and interdependence of all human rights “⁴. In this context the right to decent food must be defended just as much as the right to live. But in signing a series of trade agreements, such as the ones concerning liberalising agriculture as we have seen above, most states endanger the lives of their citizens. If we cannot demand that each state satisfy the food needs of its citizens, we have the right to demand that each state create the necessary conditions to fulfil those needs (as stipulated in article 11 of the International Pact on economic, social and cultural rights), and therefore do not accept conditions that thwart this fundamental right. Must it be reminded that implementing human rights is compulsory for each state, and not optional?

We demand that a study be made within the Sub-commission on the effects of free trade and the GATT and WTO treaties on human rights especially in the agricultural field.