Fwd: FW: Food Sovereignty and Rural Development: Challenges for Guatemala

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>

> Editor's Note: Foodnews welcomes Harriet Friedmann,

> Professor of Sociology and International Relations

> at the University of Toronto, to our board or

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>

>

> Policy Confirmation and Gap: This article puts the

> current impasse in WTO negotiations into the larger

> context of international power. Regional trade

> agreements allow the US to impose conditions far

> more unequal and severe than those in the WTO, and

> lock in deeper asymmetrical trade relations already

> instituted through IMF-imposed debt conditions in

> small countries like Guatemala. The Dominican

> Republic-Central American Free Trade Agreement

> (DR-CAFTA) consolidates and deepens trade

> inequalities. Guatemala must further open its

> borders to US maize, which went from zero to more

> than one-third of national supply under " structural

> adjustment. " National maize per capita also

> declined. In contrast to the WTO, there is no

> question in DR-CAFTA of any reciprocal obligations

> by the US to reduce domestic subsidies or government

> support for exports, including food aid. To the

> contrary, the right of the US to continue these

> practices at the expense of Guatemalan farmers and

> food security is upheld. HF

>

>

> Wed, 9 Nov 2005 04:01:07 -0600

> Agriculture and Trade <ag-impact --

> posted by

> smurphy (AT) iatp (DOT) org

> =========================

> ========================= ==========

>

> Coordination of NGO?s and Cooperatives

>

> CONGCOOP

>

> Executive Summary

>

> Food Sovereignty and Rural Development: Challenges

> for Guatemala within the Agricultural negotiations

> of the WTO

>

> Guatemala, October 2005

>

> Guatemala has just ratified a trade agreement with

> the rest of Central American nations, Dominican

> Republic and the United States (DR-CAFTA). The

> agreement implies an even greater acceleration of

> trade liberalization than can be accomplished in the

> framework of the WTO, without even considering the

> United States' subsidies or its asymmetries with the

> rest of members.

>

> Even within the framework of the Agreement on

> Agriculture (AoA) which has been, an instrument that

> favors global food corporations, there are vast

> differences between what has been negotiated in the

> WTO's July 2004 package and that of DR-CAFTA in the

> same area. DR-CAFTA mentions only one of the three

> pillars of AoA, Market Access and leaves out the

> reduction and/or elimination of subsidies to exports

> and domestic support, which are fundamental for the

> continuance of negotiations in the WTO.

>

>

> The main differences between AoA and DR-CAFTA are:

>

> In AoA tariff cuts are bound, and

> In DR-CAFTA tariff cuts are applied[1]

>

> In AoA the goal is tariff reduction,

> In DR CAFTA the goal is tariff elimination.

>

> Sensitive products: Within the July 2004 package,

> tariff reduction on these products will be less; in

> DR-CAFTA these products are subject to safeguard

> application during the rate reduction period. In

> fact, the United States defined 122 products with

> safeguard application and Guatemala 48, meaning that

> the U.S. has more than double the number of

> " Sensitive Products " . This is negative special

> treatment.

>

>

> Special Products and Differential Treatment

> provisions (Special products and Special Safeguard

> Mechanism) vs. equal treatment: In DR- CAFTA there

> is no special treatment for impoverished countries!

> On the contrary, there are 47 products exempt of

> tariff reduction in the U.S. (sugar and substitutes)

> and ONE in Guatemala (white corn). Again it is

> Negative Special Treatment

>

> Protection Mechanism: DR-CAFTA prohibits the

> application of Special Agricultural Safeguards

> (Guatemala is entitled to this within the framework

> of AoA); this makes it almost impossible for the

> application of compensatory rights and the

> anti-dumping tariff has never been an option for

> Guatemala (it lacks an Anti-Dumping Law); a

> safeguard for developing nations that lack Special

> and Differential Treatment was never discussed.

> Therefore, there is no mechanism of protection left

> except for DR-CAFTA?s, Agricultural Safeguard (that

> applies to a few products and only during the period

> of tariff

> reduction)

>

> · Export subsidies: this is an instrument

> mainly used by the European Union to foment its

> exports, and it is the only one mentioned in

> DR-CAFTA to be eliminated. Thus, Guatemala and the

> other Central American countries are going to

> endorse the U.S.'s commercial struggle against E.U.

>

> · The elimination of export credits, and

> trade-distorting food aid (which entails a large

> percentage of U.S. food aid), was prevented under

> DR-CAFTA. On the contrary, food aid was mentioned in

> DR-CAFTA to ensure the U.S.'s right to dumping. It

> states that, (no member can add food aid or other

> non commercial shipments to determine it as part of

> their import quota). In other words, the issue of

> food aid was addressed in DR-CAFTA to perpetuate its

> practice.

>

> Domestic support was not even mentioned in

> DR-CAFTA, although it represents the biggest chunk

> of subsidies given to agriculture in the U.S.

>

>

> Adding to the disastrous agricultural negotiations

> in DR-CAFTA, the United States is by far Guatemala's

> biggest trading partner. Therefore, a large

> percentage of Guatemala's agricultural trade will be

> defined by the DR-CAFTA framework, particularly in

> terms of protection for sensitive agricultural

> products, which guarantee food security, life and

> rural development.

>

> Agricultural trade with the U.S. (between 1996 and

> 2001) made up 39.24% of imports and 44.44% of

> exports. 100% of white corn, el 99.75% yellow corn

> and 70% wheat imported by Guatemala come from the

> U.S.

>

> The United States' corn production with large sums

> of domestic subsidies and export mechanisms without

> tariffs will inevitably flood the Guatemalan market

> with yellow corn at prices below the cost of

> production, which will drive out not only local

> yellow corn producers and consumers, but will wipe

> out production and consumption of white corn.

> Previous cases lend credence to this prediction: due

> to the tariff reduction to imports imposed within

> the framework of Structural Adjustment, the imports

> of corn (white and yellow) increased between 1985

> and 2002 from 0 to 36.38% over the national supply.

> The supply per person in the same period, declined

> from 100% to 80%; in other words, more imports, more

> dependency, less corn.

>

> Given the above scenario, it is also important to

> reflect on the multilateral mechanisms left on

> agricultural trade, despite the ratification of

> DR-CAFTA to protect some of the strategic product

> like corn, or at least, protect them from the

> subsidized competition that is institutionalized

> under DR-CAFTA. In other words, Which of the

> decisions made in the framework of the WTO could

> still benefit Guatemala and which ones were already

> determined under DR-CAFTA?

>

> DR-CAFTA already determined everything on the

> 'market access' pillar. The elimination of

> agricultural tariffs (except white corn) is a fact

> and any decision taken at the WTO over modest

> reductions will not have implications for trade

> between Guatemala and the U.S. (and the rest of

> Central America)

>

> The issue of Sensitive Products is not applicable to

> DR-CAFTA, or to the Special and Differential

> Treatment that include Special Products. Even with a

> meaningful change in the agricultural trade system,

> to remove from trade some of the sensitive products

> from developing countries. Guatemala could only

> applaud it as an outsider. DR-CAFTA has condemned

> the country, because the United States is, by far,

> the main importer of Guatemalan products that could

> fall under 'special' provision.

>

> There is only one mechanism of this pillar that

> could apply to DR- CAFTA: the Special safeguard

> mechanism. If the negotiations are successful under

> this mechanism, it will be useful for Guatemala.

> This will allow an increase of tariffs to deter the

> oversupply of imports and/or price distortions

> expected in the DR-CAFTA context. This mechanism

> could provide long-term protection for local

> agriculture.

>

> In the 'export competition' pillar, in relation to

> export subsidies, their elimination, will not carry

> significant advantages for Guatemala, because the

> U.S. does not use them on a large scale. It could

> help against the import subsidies coming from Europe

> that currently are low in volume, but it will not

> change very much the worrisome future DR-CAFTA.

>

> The progressive elimination of export credits,

> export credit guarantees or insurance programs with

> repayment periods of more than 180 days could have a

> positive impact for Guatemala, because these are

> mechanisms widely used by the U.S. to foment its

> exports, which generate distorting prices for many

> products. DR-CAFTA does not mention them at all. If

> within the framework of the WTO their elimination is

> defined, this will apply to U.S. trade with other

> nations tied by Trade Agreements.

>

> If distorting food aid is eliminated in the WTO

> framework, this will help Guatemala under DR-CAFTA.

> Even with the explicit mention in DR- CAFTA that

> food aid is left out of the quota and could enter

> without restrictions, if the WTO eliminates it, its

> application will include members of trade agreements

> with the U.S.

>

> Any reduction of the 'domestic support' pillar that

> is successfully established in the WTO framework

> will help Guatemala against the unfair dumping

> practices of U.S. companies. Any measure taken in

> the WTO framework in this regards will apply, even

> though the subject was not mentioned in the DR-CAFTA

> text.

>

> To conclude, we can see that even with the meager

> margin of decision-making power in agricultural

> trade policy left by DR-CAFTA, the actions and

> decisions taken at the WTO could contribute

> (minimally) to confront the catastrophic panorama of

> vulnerable, local

> agriculture under DR-CAFTA.

>

> However, the lack of political will of the

> Guatemalan government and especially of its

> negotiating commission in Geneva to launch or

> support policies that could be beneficial to the

> country is worrisome.

>

> An example of this lack of commitment is food aid.

> In the last four years, the U.S. has brought US$100

> million in market-distorting food aid into the local

> market. The G 20, of which Guatemala is a member, is

> the main entity fighting for its elimination, but

> Guatemala's Geneva mission supports the U.S.

>

>

> On the other hand Guatemalan trade policy represents

> a strange ambivalence. While at the WTO it claims to

> support the most vocal groups for fairer trade, the

> G 20 and G 33, but at the same time the country

> ratified a DR-CAFTA agreement that deeply

> contradicts not only the group's demands, but also

> the spirit on the current WTO agricultural

> negotiations within the framework of the Doha Round

>

> In conclusion, the different aspects that could

> buffer some of the negative effects of DR- CAFTA

> are:

>

> Elimination of distorting food aid

> Elimination of export credits

> Significant reduction of AMS (amber box)

> Revision of the criteria and application of

> substantial reductions of

> the blue box

> Revision of the criteria and application of the

> green box

> Reduction and/or progressive elimination of de

> mínimis for developing

> countries.

> Introduction of Special Safeguard Mechanisms

>

>

> Other aspects that could open other markets are:

>

> Significant tariff reductions of developed nations

> Elimination of export subsidies

> Liberalization of access for Tropical Products in

> developed nations

> However, with all its potential in the

> agricultural multilateral

> negotiations, the real advance on the big

> commercial blocks (USA and

> UE) still needs to be seen. The negotiating

> process is very slow,

> full of contradictions and without real changes

> from the logic of the

> global commercial system that perpetuates

> center-periphery imposition

> and exploitation.

>

> Lastly, there is evidence that the concentration

> of market power by a

> few transnational agro-businesses is even more

> distorting than

> subsidies. And these mega-companies also

> concentrate the largest

> amount of subsidies given to agricultural

> production in the countries

> of the North.[2]. However, this subject is never

> mentioned in the

> multilateral agricultural trade negotiations (or,

> of course, in

> bilateral or regional agreements like DR-CAFTA)

>

> It is therefore, urgent to develop and implement

> export competition

> policies, particularly an Anti Dumping Law, and a

> law that will

> prohibit monopolistic and oligopolistic practices.

>

>

> [1] White and yellow corn in Guatemala has a bound

> tariff level of

> 75%, an applied level tariff of 35% (yellow corn

> beyond quota), 5%

> (yellow corn within quota) and 20% (white corn

> respectively).

> [2] In the EU, more than 75% of domestic support

> goes to 10% of the

> largest beneficiaries of subsidies. In the U.S.,

> only 40% of farmers

> receive some type of subsidy and among this group,

> 5% - the biggest

> ones take more than half, approximately US$470,000

> each.

>

> =========================

> ========================= ==========

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