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Cancun Fiasco
WTO: End of the Road?

by Devinder Sharma
New Delhi, India


Devinder Sharma.
Devinder Sharma. Photo by Nic Paget-Clarke.
The big boys have returned home, this time empty handed.

They have vowed to return back. And obviously, like 'Morgan, the Pirate' who dominated the high seas in that yesteryear's Hollywood blockbuster, the four big trade bullies - United States, European Union, Japan and Canada - the so called 'Quad' group, too will return with a vengeance. The failure of Cancun Ministerial only strengthens their resolve to re-emerge with some more ruthless manipulations.

The world has come a long way since 'Morgan, the Pirate' used to rule the major trade route - the high seas. Developing countries too have learnt the hard way the dictum of international trade, lobbying, coercion, and deft manipulations. No wonder, in just a span of four years, two of the WTO Ministerial collapsed. First Seattle in 1999, and now the sudden death at Cancun 2003, the developing world has demonstrated that it will no longer take it lying down. Their anger and rebellion has already caused the biggest derailment to the development agenda. And, rightly so.

Just before the Cancun Ministerial, President Toure of Mali co-authored a letter to the New York Times condemning the cotton subsidies in America that have been devastating for West African countries -- Burkina Faso, Mali, Chad and Benin. His colleague, President Compaore of Burkina Faso, spoke to the Trade Negotiating Committee of the WTO in June. They voiced their concern at the way direct financial assistance by a number of exporting countries, including US, European Union and China, to the tune of 73 per cent of the world cotton production, destroyed millions of livelihoods in West African countries. As a result, African cotton producers realise only 60 per cent of their costs, although their cost of production is less than half of that reaped in the developed countries.

In 2001, the 25,000 US cotton growers received roughly $3.9 billion in subsidy payments, for producing a cotton crop that was worth only US$ 3 billion at world market prices (One Arkansas cotton grower received US $ 6 million, equal to the combined annual earnings of 25,000 cotton farmers in Mali). Such are the glaring inequalities, that an American cotton farmer on an average receives US $ 10.7 million a day as subsidies. More for pacifying the public sympathies than for correcting the dirty economics, the WTO did consider the contentious issue of cotton subsidies, as if it was an isolated case of exploitation of developing country farmers.

Unrelenting, the WTO has delivered its verdict. The text of the Draft Cancun Ministerial says: "The Director-General is instructed to consult with the relevant international organizations including the Bretton Woods Institutions, the Food and Agriculture Organisation and the International Trade Centre to effectively direct existing programmes and resources towards diversification of the economies where cotton accounts for major share of their GDP."

In simple words, there is nothing wrong with the highly subsidised cotton farming in the US, EU and China, the fault rests with millions of small and marginal farmers in West Africa. Cancun Ministerial had instructed (the draft obviously remains rejected with Cancun failure) the WTO director general, the FAO and the World Bank/IMF to make available adequate investments for suitable programmes that enable these farmers to diversify from cotton to other crops.

WTO says the West African farmers should stop growing cotton.

The lesson for the rest of the world is crystal clear. The developing world should stop growing crops that are being negatively impacted by monumental subsidies that the rich and industrialised countries provide. For the G-21, that created a lot of noise and dust over the US $ 311 billion in farm subsidies that the richest trading block - the Organisation for Economic Cooperation and Development (OECD) - provides for its agriculture, the writing is on the wall. And this is exactly what I have been warning all these years. The process to shift the production of staple foods and major commercial commodities to the OECD had in fact begun much earlier. WTO is merely legitimising the new farming system approach.

World Bank/IMF have under the Structural Adjustment Programmes (SAP) very clearly tied up credit with crop diversification. It continues to force developing countries to shift from staple foods (crucial for food security needs) to cash crops that meet the luxury requirement of the western countries. It has therefore been forcing developing countries to dismantle state support to food procurement, withdraw price support to farmers, dismantle food procurement, and relax land ceiling laws enabling corporates to move into agriculture. Farmers need to be left at the mercy of the market forces. Since they are 'inefficient' producers, they need to be replaced by the industry.

The same prescription for farming has never been suggested for the rich and industrialised countries. Let us be very clear, one part of the world that needs to go in for immediate crop diversification is the industrial world. These are the countries that produce mounting surpluses of wheat, rice, corn, soybean, sugar beat, cotton, and that too under environmentally unsound conditions leading to an ecological catastrophe. These are the countries that inflict double the damage - first destroy the land by highly intensive crop practices, pollute ground water, contaminate the environment, and then receive massive subsidies to keep these unsustainable practices artificially viable. These are the countries that are faced with the tragic consequences of massive farm displacements, and are in the grip of food calamities arising from industrial farming.

Banana crop. Tamil Nadu, India.
Banana crop. Tamil Nadu, India. Photo by Nic Paget-Clarke.
If the WTO has its ways, and the developing countries fail to understand the prevailing politics that drives the agriculture trade agenda, the world will soon have two kinds of agriculture systems - the rich countries will produce staple foods for the world's 6 billion plus people, and developing countries will grow cash crops like tomato, cut flowers, peas, sunflower, strawberries and vegetables. The dollars that developing countries earn from exporting these crops will eventually be used to buy food grains from the developed nations - in reality, back to the days of 'ship-to-mouth' existence.

Take the case of Central America. The debt crisis that inflicted the Central American countries in the 1980s, was very conveniently used as the right opportunity to shift the cropping pattern to non-traditional exports. Aided and abetted by the United States Agency for International Development (USAID), farmers were lured to the illusion of greener pastures in the developed world. They shifted to crops like melons, strawberries, cauliflower, broccoli and squash that were shipped to the supermarkets, mainly in America. In turn, these Central American countries disbanded cultivation of staple crops like corn and bean, and have now become major importers and that too from the United States.

In India, which has only three decades back emerged from the shadows of massive food imports, the strategy is the same. World Bank/IMF have forced successive governments to adopt policies that forces farmers to abandon staple crops like wheat, rice and coarse cereals, and diversify to cash crops. Punjab, the country's food bowl, is presently engaged in a desperate effort to shift from wheat-rice cropping pattern to cultivating cut flowers and the likes. Andhra Pradesh, in south India, has already embarked on a misplaced rural development vision that aims at industrial agriculture at the cost of its millions of small and marginal farmers. As if this alone is not enough, biotechnology companies are being doled out with State largesse and prime real estate so as to encourage corporate farming.

What the developed countries therefore are trying to sell to the world as "development round" following the undemocratic conclusions arrived at Doha 2001, is in reality a political exercise (under the garb of trade and commerce) for their own economic development. Through a variety of instruments, the rich countries have ensured complete protectionism. Whether it is the special safeguards, reduction in tariffs, removal of non-tariff barriers, the developed countries have manipulated the commitments in a way that suit their own narrowly conceived objectives. Trade policies therefore have remained highly discriminatory against the developing country farmers.

Developed country agriculture has so far enjoyed a unique 'special and differential' treatment that was actually reserved for the developing and least developed countries. The impeccable wall that has been built since the days of the Uruguay Round, is not so easy to impregnate. Unfortunately, the developing countries are making no concerted effort to demolish the wall of protectionism that the rich and industrialised countries have thrown around their highly subsidised agriculture. Even the G-21, in the final stages, was busy working out a compromise formula to save the Cancun Ministerial from going the Seattle way. Little realising, that there is no way such a bad agreement on agriculture can be reformed.

Coffee estate in the Servarayan Hills. Tamil Nadu, India.
Coffee estate in the Servarayan Hills. Tamil Nadu, India. Photo by Nic Paget-Clarke.
For millions of toiling farmers in the majority world, the failure of Cancun Ministerial does not signal the end of the evil. It is merely a stop in their long and arduous battle to retain control over their own food security needs, to protect their own livelihoods from the trade robbers, and to move towards a sustainable farming model that survives on equity and justice. For a few million farmers on either side of the Atlantic, the cause is no different. Only the scale and home turf is different. Developed country farmers have much in common with the poor farmers in the Third World. What the WTO however has successfully managed is to pit the farmers of the developing world and the industrialised countries against each other. Unless farmers' association in the developed countries comes to the rescue of their less blessed cousins in the developing world, agribusiness companies will continue to have the last laugh.

Cancun conundrum does not mean that the big players will make any significant cuts in their subsidy support. The new EU Common Agricultural Policy reform proposals that have been announced prior to the Cancun WTO Ministerial have also made no attempt to make radical changes in reduction commitments. Moving on US lines, it has shifted most of the 'blue box' subsidies to 'green box'. Although the developed countries have blamed the G-21 for 'asking the moon', the fact remains that the western countries have got too used to being a parasite on the developing countries. The plight of the farming community, following the Marrakesh agreement - from Chile to South Korea, and from India to Brazil - has failed to move the industrialised countries to bring in any meaningful reforms in international trade.

Tragically, the suicide by the Korean farmer Lee Kyung-hae amplifies the devastation that WTO has wrought on the farming communities all over the world. Not listening to the voice of the marginalized and the poor, a majority of them actively involved with farming, will not only be suicidal but can be catastrophic for the powers that be. The message from Lee's sacrifice is loud and clear. Not listening to the growing discontent and frustration that prevails on the farm front, exacerbated through the trade reforms, will only globalise anger.

'Morgan, the Pirate' too had underestimated the power of peoples' anger.

About the author: Devinder Sharma is a New Delhi-based food and trade policy analyst. Among his works are GATT to WTO: Seeds of Despair and In the Famine Trap.

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Published in In Motion Magazine September 28, 2003