Arlan Suderman / Farm Progress / Thursday, October 12, 2000
The World Trade Organization (WTO) has become both respected and reviled. In 1995, the United States entered into an agreement with other WTO members that will impact agriculture for many years. Now as members enter the second round of WTO negotiations, few understand what we've agreed to, or where we're headed.
Larry Martin recently addressed the issue with bankers from Canada and the United States at the North American Agricultural Finance Conference. Martin is from the George Morris Centre, an agricultural think tank in Guelph, Ontario.
Martin first asked his audience, "Why should we care?" First, the WTO agreement is supposed to give us market access with reduced subsidies. History proves that farmers must have export markets, or they will smother in their surplus production.
But a challenge is to create a level playing field, where no international competitor has an edge over another. The key is getting rid of subsidies. "Removing subsidies means competitors will have to earn their way into the customer markets instead of buying their way into it," according to Martin. Furthermore, he contends that removing subsidies means moving towards both low cost and environmentally sound production.
Finally, the last round of negotiations implemented sanitary and phyto-sanitary (SPS) provisions. The SPS provisions harmonize standards and prevent nonscientific rules from being imposed as non-tariff barriers to trade. The agreement requires the use of sound science in trade decisions.
A well-known example of the problem is the European Union's (EU) refusal to accept hormone-treated beef. The United States has appealed to the WTO in this case, and won. As a result, the EU must remove the barriers or compensate the United States. Europe continues to refuse U.S. beef, and in response the United States has instituted trade sanctions that are approved by the WTO. It's an imperfect process but it does allow countries to seek solutions to sticky trade questions.
The current round
In 1995, WTO members agreed to reopen agriculture agreements for negotiation in the next round. Non-agricultural issues were left open for renegotiation, but not required. Martin believes this will create some problems.
There's not a lot of interest in reopening the non-agricultural issues. However, "Japan has little interest in giving in on agricultural issues without getting concession in nonagricultural issues," according to Martin.
Many people remember the protests in Seattle when the current round of negotiations opened late last year. These demonstrators insist that labor and environmental issues also be included in the negotiations. Martin questions whether they would have agreed to include trade issues in the Kyoto agreement several years ago?
Martin also believes negotiations may run into a roadblock if China is allowed to enter the WTO. China has a history of being a strong protectionist, with little desire to compromise on these issues.
The current round is scheduled for completion sometime in 2003. However, it takes political pressure to reach an agreement and there is currently little pressure from the business sector to relax trade rules. This makes it difficult to push forward through tough negotiations.
There is also little common ground among WTO members regarding agriculture. Member nations have very different beliefs about what is best for agriculture and food security. Related to this, countries are far apart on the SPS provisions.
Finally, food security issues remain a significant roadblock. Developed countries want to be able to continue food aid programs to get rid of surplus grain, while relaxing trade barriers. The less developed countries support opening up markets, but strongly oppose food aid. They contend that food aid undermines the profitability of their own farmers, making it difficult for them to reach self-sufficiency.
As a result of these obstacles, Martin believes there may not be another agreement in 2003. Even if there is an agreement, it will likely be phased in over a five- to 10-year period. As a result, reduced subsidies are not likely to be a significant factor in the upcoming Farm Bill talks.:
