The Uruguay Round of trade negotiations, aimed at updating the General Agreement on Tariffs and Trade (GATT), has been deadlocked for over a year. Nearly three years past the original target date for conclusion, there is still no end in sight. Final "deadlines" have been set on numerous occasions and then ignored. Every small step forward toward a conclusion seems to be followed by an equally large step backward.

The political costs of this deadlocked Uruguay Round have been considerable. For a number of years, many of the world's most important political leaders have been bogged down with the Uruguay Round, taking time away from other very serious political and economic problems.^l In addition, if the talks collapse, it could lead to the undermining of the GATT itself, threatening the entire multi-lateral approach to trade regulation.

The purpose of this thesis is to contribute to the search for an acceptable conclusion for the Uruguay Round. It will focus primarily on the agriculture negotiations, which have been the most controversial aspect of this Round. While agriculture is not the only area of contention in these negotiations,² resolution of the conflicts in the agricultural talks are central to any successful conclusion of the Uruguay Round.

This thesis will present a three-part argument. First, the agricultural proposals which have caused the greatest conflict within the Uruguay Round, including tariffication, de-coupling, and harmonization, were originally made by the Reagan Administration, with the primary aim of altering-domestic farm and environmental policy, mainly in the United States but also in other countries as well.

Second, these proposals were eventually incorporated into the final Uruguay Round agricultural package, the Dunkel Draft Text plus the Blair House accords.³ The inclusion of these proposals generated political backlash in the United States, including opposition by a majority of the members of Congress on some key issues. These proposals also generated fierce political opposition among family farmers and peasants in a number of other countries, including India, Canada, Japan, South Korea, Ireland, Belgium, and France. This backlash, in the United States and in other countries, has now blocked the agricultural negotiations from making any further progress, thus paralyzing the rest of the talks.

Finally, the major political forces now blocking acceptance of the current GATT agricultural package have put forward politically realistic alternative proposals which contain the elements needed to construct an acceptable final GATT agricultural package.

Reaching an acceptable Uruguay Round agricultural agreement requires a comprehensive political approach, including a thorough review of all major criticisms and significant alternative suggestions. Based on this overall analysis, a comprehensive proposal must be developed which addresses the major problems in world agricultural trade, such as export dumping, while keeping in mind the criticisms which have led to the rejection of many of the current proposals. Finally, a political strategy must be developed to convert these proposals into concrete agreements.

The first three elements of this political approach will be dealt with in this paper. The political strategy, although beyond the scope of this paper, is also extremely important and deserves immediate attention.⁴

The United States government, the main force behind the initiation of the Uruguay Round, delivered a near-fatal blow to this round of talks in November of 1992 with its dramatic announcement that nearly two dozen of the most important items included in the proposed final Uruguay Round agreement were not acceptable to the U.S. Congress, and would have to be re-negotiated. This bleak assessment of Congressional reaction to the Dunkel Draft has been reiterated by several cabinet members in the new Clinton Administration.⁵

One of the most disturbing aspects of this particular episode was that the United States government had previously stated its approval of the entire Dunkel Draft, without exception, self-righteously criticizing other GATT member countries for not immediately endorsing the entire Dunkel Draft text. This dramatic contradiction — between the Uruguay Round proposals championed by Presidents Reagan and Bush and what the Democratic Party-controlled Congress is willing to approve — has become one of the most, if not the most, important barriers to successfully concluding these talks.

Throughout most of the history of the GATT, negotiations have been primarily concerned with reducing tariffs. While cutting tariffs is definitely on the GATT agenda, the Uruguay Round has been expanded to cover an extremely broad range of issues. The Reagan Administration took the position that any law or regulation (local, state or federal) that affected companies engaged in importing and exporting would be considered trade-impacting, and therefore fall under their authority to alter or change as a result of trade negotiations. Everything from domestic farm policy and food safety, to worker rights and environmental regulations have been the subject of negotiations.

A close examination of the list of items in the Dunkel Draft labeled by the U.S. Trade Representative as the "most unacceptable to the U.S. Congress" shows that a number of the items were actually proposals made by the Reagan Administration, consciously aimed at using the GATT to make changes in internal U.S. laws and regulations that Congress had previously refused to consider. They hoped to put a number of previously rejected legislative changes into the overall final GATT agreement, and then gain Congressional approval under the expedited "fast track" procedure.*

While the pursuit of domestic political objectives not necessarily related to international trade regulations has been a part of every round of GATT negotiations since its inception in 1947,⁶ the Uruguay Round is the first round where the scope and sweep of the attempted changes to domestic policy has created a level of domestic political opposition which now threatens to scuttle the talks and perhaps destroy the GATT itself in the process.

Fast Track Around Congress⁷

In 1973, under strong pressure from the Nixon Administration, Congress adopted a new procedure for approving changes in international trade rules. Instead of the process for ratifying treaties outlined in the U.S. Constitution, an expedited "fast track" procedure was established. Under "fast track," once a specific set of trade talks were approved by Congress, the President could negotiate completely in secret. The final results of these secret talks would be brought back to Congress in the form of implementing (or enabling) legislation. This legislation was designed to change existing U.S. laws to conform with the terms of the trade "agreement."*

Under "fast track" procedures, this implementing legislation, hundreds of pages long, cannot be changed in any way. No amendments are allowed. Instead of the two-thirds vote required by the U.S. Constitution, the implementing legislation requires only a simple majority vote of both houses for approval. Debate is severely limited, and filibusters are prohibited. The goals of the "fast track" procedure is to make it impossible for Congress to alter the final outcome of trade negotiations, and to make it virtually impossible for Congress to reject whatever agreement the President decides to present.

Before the 1980s, GATT negotiations dealt primarily with fairly narrow, tariff-related issues. Few people were concerned about the constitutional or democratic-process implications of the "fast track" procedure. This indifference began to change after President Reagan recognized that "fast track" could become a key weapon in his fights with the Democratic-controlled Congress. By claiming that specific laws impact international trade, President Reagan began to claim the authority to negotiate changes in U.S. law as part or trade talks. The Reagan Administration argued that a large number of federal, state, and local laws, including a wide range of environmental laws, farm programs, and business regulations were "trade-distorting" and, therefore subject to change as a result of trade negotiations.⁸

With full knowledge that the "fast track" procedures make it extremely difficult for Congress to reject an international trade agreement, President Reagan went into the Uruguay Round with a sweeping, if not radical, agenda for rewriting U.S. farm and food policy via the GATT negotiations. In addition, the Reagan Administration also planned to trade away a number of important domestic industries, including textiles, auto, steel, and forestry, in exchange for improved market access for U.S.-based finance and service-sector transnational corporations.

The Reagan Administration was quite open about its intentions to use the Uruguay Round to rewrite domestic policy. Internal policy documents and public statements described some of their original intentions. Starting in the early 1980s, in the preparation stage of the Uruguay Round, the United States Trade Representative's office (USTR) outlined an overall negotiation strategy that included trading away domestic industries. In a 1984 internal USTR strategy document, the Reagan Administration's negotiating strategy for the Uruguay Round was spelled out:

"In order to get what we want from these negotiations, we will have to [bargain away] US policies affecting the commercial interests of other countries. Many foreign concerns focus on US import restrictions in basic industries such as textiles, autos and steel. ... In agriculture, foreign concerns are directed at both our Section 22 quotas and export credit practices."⁹

The most comprehensive outline of the Reagan Administration's plan for using the GATT talks to re-write domestic food and agricultural policy was spelled out in their first Uruguay Round agricultural proposal. This first proposal, often called the "Double Zero" plan, was submitted by the Reagan Administration in July of 1987, after months of lining up support from a number of other governments. While the "Double Zero" plan certainly included provisions aimed at changing internal farm policies in other countries, the bulk of the U.S. proposal was aimed directly at overturning or re-writing existing U.S. farm policy.

This plan took its name from its two most fundamental proposals: the total elimination of import controls, and the total elimination of domestic farm programs. It also included two other important elements: a ban on export controls and subsidies, and a plan called "harmonization," which called for global standardization of regulations covering pesticide residues (and other contaminants) on and in imported foods.¹⁰ As might be expected, a wide range of transnational corporations that stood to gain from this proposal were, actively involved in shaping and advocating this "Double Zero" plan. Daniel Amstutz, former President and CEO of Cargill Grain Corporation's futures trading and commodity company, was one of the most influential, having served as the Reagan Administration's Chief Negotiator for Agriculture at the GATT talks in Geneva.¹¹

The most visible corporations were loosely affiliated together in a lobbying group called the Multilateral Trade Negotiations (MTN) Coalition.¹²

Reagan's "Double Zero" proposal called for the elimination of all existing quantitative controls on imports. In the United States, these controls are used on a large number of crops and livestock products. They are primarily used to protect farmers from being swamped by subsidized, low priced imports. The U.S. currently has controls in place or authorized for a wide range of commodities, including cotton, sugar, wheat, dairy products, meat and livestock, and fresh fruits and vegetables. For the past twenty years, a number of companies that process, package and sell these commodities, like Coca Cola and Nestle, which use huge quantities of sugar and McDonald's, which buys a lot of beef, have lobbied Congress to eliminate these import controls. They understood that if they had access to unlimited imports of these products, they could use the threat of foreign sourcing as a bargaining lever to drive down the prices they paid to U.S. producers. Unable to get Congress to eliminate these import controls, they turned to thc Reagan Administration for help, which agreed to attempt to overturn these laws as part of the overall GATT negotiations. In their original proposal, they included explicit language designed to eliminate import controls.¹³

Since the 1930s, the U.S. government has operated a wide range of programs intended to maintain farm prices at or near the cost of production. This includes both price support programs designed to set minimum prices, and supply management programs designed to keep production in balance with demand. Food processors and exporters have generally opposed these farm programs, arguing that they keep prices paid to farmers higher than they might otherwise be in a totally free market situation. The farm chemical, seed, and fertilizer companies have also opposed these programs, especially the supply management provisions, arguing that when they result in fewer acres being planted, farmer purchases of fertilizer and chemicals are reduced.

The Reagan Administration, in response to pressure from the corporations, proposed the elimination of all domestic farm programs, including those that put floors under farm prices, as well as supply management programs, (generally land set-aside programs that reduce the number of acres under cultivation). The original "Double Zero" proposal called for the "complete phase-out over 10 years" of a vast array of United States farm programs.¹⁴

From the very beginning, GATT has explicitly recognized the right of each member nation to control the quantity of agricultural and other strategic raw materials that corporations are allowed to export in times of shortage. The original GATT treaty included food security provisions permitting member nations to implement "export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party."¹⁵

A number of U.S. corporations, especially multinational grain trading companies, have argued that this particular GATT rule inhibits their ability to buy grain and other agricultural products from anywhere on the planet and to sell to anyone with the money to buy. They argued to the Reagan Administration that countries would be better off relying on the international market in times of shortages, rather than interfering with free trade by controlling exports.

Over the past two decades, consumer and environmental activists have successfully passed a wide range of ever-stronger restrictions on the levels of pesticide and other contaminants can be left on or in food. These restrictions have been opposed by farm chemical producers and dealers who have argued that they reduce the sale of chemicals. Many food processors also opposed these regulations because they have become dependent on many of these chemicals as preservatives necessary to ship foods over long distances, and thus enabling them to move production to locations with lower wages and weaker environmental and workplace safety regulations. The Reagan Administration, in an attempt to turn back a number of these consumer and environmental regulations and to head-off future efforts to strengthen them, proposed a new approach called "harmonization." Harmonization would have prohibited governments from imposing the same food safety standards on imported foods that they impose on domestic producers if those standards were stricter than the relatively weak international standards set by an obscure UN agency, Codex Alimentarius.¹⁶

In addition to the food chemical companies and processors, many food importers also supported harmonization because they saw it as a way to expand the potential sources for products. If food products could be imported with higher levels of DDT or other chemical residues, it would mean that a greater percentage of food could be imported, and from a wider range of originating countries.

The farm chemical companies supported the harmonization proposal because they believed it would mean they could sell more chemicals in other countries. In addition, they believed that if imported foods could come into the U.S. market with higher levels of chemicals, it would force U.S. farmers facing competition from imported goods to fight alongside the chemical companies to block tightening of food safety laws or even to rollback existing ones.¹⁷

While the "Double Zero" plan received substantial support from many of the largest agribusinesses, it also generated substantial domestic opposition. This opposition was eventually organized into a powerful coalition of diverse groups, many with long-standing ties to the Democratic Party, especially Democrats in Congress. There were well-organized campaigns aimed at eliminating each of the four major components of the original "Double Zero" proposal.

A wide range of U.S. agricultural products are protected by some form of legislated import controls, including the Meat Import Act, controls on fruits and vegetables under the federal marketing order system, and Section 22 of the federal farm bills. All these controls would have been eliminated under the "Double Zero" proposal. The attempt by Reagan to use the Uruguay Round to eliminate these import controls created a tremendous backlash against both the Uruguay Round and the GATT from an extraordinarily wide spectrum of farm, rural, consumer, church and environmental organizations. These ranged from the National Council of Churches and the International Federation of Agricultural Producers, to Greenpeace. One of the leading U.S. farm organizations which opposed the elimination of import controls, the National Farmers Union, explained its opposition in this way:¹⁹

[Banning import controls] would open the flood gate of cheap foodstuffs produced in nations where its citizens have limited human rights, are deprived of public health services and educational opportunities, retirement benefits and social security. Whereas, the American farmer, through their added cost of operations and tax laws, help provide and maintain these benefits and standard[s] of living for all citizens of the nation.

The elimination of [import controls] would hasten the exploitation of Third World nations' natural resources, such as the cutting of the rain forest, discourage soil conservation, and would encourage political unrest and further cause [sic] the military dictatorships, who would dump their own nation's agricultural production onto world markets to fund their self-serving interests, while depriving their own citizens of ample supply of food.²⁰

Church groups opposed the limitation of import controls because of its impact on food supplies in poor countries. For example, the National Council of Churches of Christ Rural Action Task Force issued the following statement:

"[The elimination of import controls would be particularly harmful because it] would abolish the right of Third World nations to protect their borders from subsidized exports (i.e. dumping). If rich nations can sell their crops at below the cost of production in the domestic markets of the Third World, they can destroy many or most of the local farmers who will be unable to sell into their own markets. If surplus-producing countries are prohibited from implementing import barriers, effective supply management would become impossible. Further overproduction would result, followed by export dumping to dispose of surpluses. Such dumping would both harm food producers in poor countries and depress global prices, reducing the export earnings of Third World producers of similar commodities."²¹

Another source of opposition to proposals to abolish import controls came from environmental organizations, like Rainforest Action Network, who were concerned with the potential impact on tropical rain forests and other fragile lands in developing countries. These groups feared that if the U.S. became an open market for increased food shipments, especially beef, it could lead to a rapid acceleration in the destruction of tropical rainforest for cattle feeding.²²

One of the most important expressions of this opposition occurred on November 25, 1991, when a bi-partisan group of over 60 U.S. Senators (nearly two-thirds of the total) stated their firm opposition to any GATT deal that included provisions that would in any way weaken Section 22.2 3

The significant public and political opposition to their proposal for a complete ban on import controls forced the Administration to reverse their "Double Zero" plan. Their fallback proposition was a plan they called "tariffication," which replaced quantitative import controls with tariffs that would then be reduced and eliminated. Although tariffication was a less dramatic proposal than the original immediate ban on import controls, its intention was the same, and, as might be expected, opposition did not change significantly. In the forefront of this opposition were dairy farmers and cooperatives, including the most powerful, The Associated Milk Producers, Inc. (AMPI).²⁴ Further, the second largest dairy cooperative, Farmers Union Milk Marketing Cooperative (FUMMC) pulled together a Dairy Trade Coalition (DTC) and hired one of the most powerful agricultural lobbyists in Washington DC, Mario Castillo, the former staff director of the House Agriculture Committee. The concerns of the dairy farmers were expressed by FUMMC this way:

The same President Bush who vowed to do "whatever it takes" to get re-elected now appears fully willing to sell us out on Section 22 dairy quotas and other vital interests for the sake of a quick GATT agreement. This is squarely aimed at dairy farmers, who clearly have the most to lose.²⁵

"This (tariffication proposal] is a blueprint for disaster for family dairy farmers. Unless this plan is rejected or substantially changed in its final form, we will see our market flooded with cheap, inferior dairy imports that will erode farm income and threaten the safety of the food supply.²⁶

The strategy of using the GATT talks as a way of eliminating domestic farm programs had its origins in the battle over the 1985 farm bill. When Reagan's legislative proposals to abolish existing farm programs were summarily dismissed by Congress, administration strategists turned their attention to the GATT talks as their best hope for eventually eliminating these programs. Here again, an impressive coalition of opposition emerged, including the American Corn Growers Association, the National Cotton Council, the Burley Tobacco Growers Cooperative Association, and the American Sugar Alliance.²⁷ Many farm groups, ranging from the tobacco growers to the National Farmers Union were also dead-set against this proposal.²⁸ The Rural Action Task Force of the National Council of Churches issued one of the most thoughtful statements in opposition to this proposal:

"The 'Free Trade' proposals would significantly add to world food disorder. First of all, the demand to phase out farm price support programs would mean an immediate and disastrous drop in farm prices, resulting in a dramatic fall in farm family income. As a result, all current trends, including displacement of farmers, concentration of land control, and corporate control over agricultural resources would accelerate. As in the past, these falling prices will most likely lead to even greater surplus production as farmers attempt to boost yields to make up for falling prices.²⁹

In addition to the many organizations which opposed Reagan's GATT proposal, many local and state-level politicians also spoke out against the "Double Zero" plan.*

At the federal level, key Democratic Party leaders began attacking this proposal within weeks after it was launched by President Reagan. In the midst of the campaign for the 1988 presidential election, every major Democratic Party candidate was asked by the Iowa Farm Unity Coalition to state their position on Reagan's "Double Zero" proposal. Each one came out in strong opposition. The Democratic Party presidential nominee, Governor Michael Dukakis, said that he was:

Concern[ed] about the Administration's proposal before the GATT that all nations seek to end their government intervention in agriculture over the next 10 years. In my view, the Administration's initiative is neither realistic nor in the best interest of agriculture... [F]arm programs are needed to safeguard world food needs and protect producers. I believe that such programs should continue to feature loans that stabilize prices and assure adequate incomes for family farmers, farm credit and crop insurance programs, agricultural research, acreage controls, soil conservation measures, and cooperative efforts among the nations of the world to share responsibility for managing our surplus."³⁰

Representative Richard A. Gephardt (D-MO), the current Majority Leader in the House of Representatives and a leading contender for a future run for the White House, also took a very strong stance against the "Double Zero" plan.³¹

Facing intense opposition to their proposal to use GATT to abolish all farm programs, the Reagan Administration again came up with a new fall-back position called "decoupling." This approach would have required countries to eliminate all farm programs, but would have allowed these farm programs to be replaced with direct government payments that had to be completely "de coupled" from all price and production considerations. This approach, which had been floated during the U.S. congressional debate over the 1985 farm bill by Senators Boschwitz (R-MN) and Karnes (R-NE), was soundly rejected, receiving only a handful of votes. Both of these Republican Senators were defeated by Democratic challengers who attacked the proposal in their following election races, so discrediting the idea of decoupling that it has not been seriously considered ever since.³²

Immediately after the Reagan Administration announced their decoupling proposal, a large number of the family farm organizations came out strongly against it. The National Association of Wheat Growers,³³ National Farmers Union, National Farmers Organization, the American Corn Growers and many other farm groups all began to work to block de-coupling, often attacking the entire Uruguay Round agricultural trade talks. The following policy statement, from the National Family Farm Coalition, exemplified the vehemence of family farm organization opposition to decoupling:

The decoupling approach to agriculture — abolishing commodity programs and putting farmers on welfare — would be established as one component of a broad trade agreement, the whole of which would be presented to Congress for a single up-or-down vote. Due consideration for the treaty's effects on farm programs would be difficult since it would cover trade in a wide variety of commodities, manufactured goods and services, not just agriculture. Congress would be under pressure to ratify the results of what had already been a long and contentious negotiating process, but ratification would lock in provisions on domestic farm price supports, import protection and supply management programs.

Advocates of decoupling — primarily multinational agribusiness — had been seeking such a circumvention of Congress. Their domestic decoupling proposals had been stymied repeatedly by opposition from farmers. One of the concept's leading proponents, former Nebraska Senator David Karnes, was defeated decisively last November in his bid for re-election in a contest that centered on farm policy.

Attaining a GATT accord on current administration terms would amount to the imposition of decoupling here by the President's trade team, with virtually no congressional input or accountability. The plan would further institutionalize high-volume exports at low prices, helping agribusiness but hurting farmers and the environment. It would exacerbate the disasters the nation has already seen in recent non-drought years: rural depression, high taxpayer costs, worsening balance of trade, and soil erosion."³⁴

Another controversial part of Reagan's "Double Zero" proposal was his attempt to remove the provisions of the existing GATT treaty which permits countries to limit exports of basic commodities in times of shortage.³⁵

Opposition to the U.S. government's attempt to delete this provision was swift and furious. For example, church leaders believed this proposal would compromise poor countries' ability to feed themselves in times of shortage and weather-related difficulties. In particular, they challenged the fundamental argument of the U.S. government, that food security should be purchased on the world market, not based on domestic food production.

Environmental groups also opposed this plan, viewing it as a "back door" attempt to reverse hard-won laws designed to protect jobs in the timber industry, as well as to preserve old growth forests by prohibiting exports of raw logs from the northwestern states of Washington, Oregon, and Idaho. These groups had fought difficult battles to pass these laws and feared GATT was being used by the timber companies to reverse their victories.³⁶ These log export bans were the result of fragile compromises worked out between loggers, timber mill owners and workers, and environmentalists, and were based on the agreement that raw logs would not be exported, thereby preserving old growth forest while protecting jobs.

Opposition also came from groups working to support economic development in poorer nations of the Third World. They argued that developing countries needed to maintain the right to limit exports of raw materials, such as tropical timber, in order to both protect the environment and to build their local economies.³⁷

In the face of this opposition, the United States government eventually abandoned this proposal — the first major victory for the groups organizing to stop the "Double Zero" Plan.

By far the most controversial element of the Double Zero proposal was its "harmonization" provision, designed to limit the right of countries to set their own food safety standards, such as pesticide residue limits, on imported foods. The goal of this provision, as stated by President Reagan in his July 6, 1987 press release announcing this plan, was: "uniform food health regulations around the world."

Early critiques of harmonization came from all of the major environmental organizations, including Greenpeace, the National Wildlife Federation, Sierra Club, and Friends of the Earth. On May 24, 1990, a number of these groups launched a combined attack on the harmonization proposal. Central to this attack was support for a congressional resolution, proposed by Congressman James Scheuer, calling for the Administration to eliminate or modify all environmentally damaging proposals in the Uruguay Round, including harmonization. At the May 24 press conference, the National Wildlife Federation declared:

[The Scheuer resolution] shows Congress what exactly is at stake in the current [GATT] negotiations — not the least of which is the ability of Congress to help formulate environmental policy here within our own borders. It's possible that occasional environmental benefits may arise from free trade principles. But if we blindly apply those principles across the board, we are declaring open season on our planet's dwindling resources.³⁸

Greenpeace expressed its overall concern in the following ways:

Under the U.S. proposal, the pesticide residue standards of the WHO/FAO Codex Alimentarius Commission would become the basis for new worldwide standards, and countries' ability to set stricter standards would be compromised. About 16 percent of all Codex residue standards for which there are also EPA standards permit greater amounts of pesticide residues on foods. EPA estimates 42 percent of its standards are the same as Codex standards, and another 42 percent are actually weaker. However, Codex has published standards for only 133 pesticides, far short of the 350 pesticides for which EPA has standards. Furthermore, Codex has standards for far fewer commodities than the EPA for any particular pesticide...The current US position at the GATT eliminates the ability of the EPA to be responsive to public concerns to better regulate pesticide residues in our foods. It completely strips the rights of states to enact stricter regulations over imported foods, such as the tighter pesticide tolerance standards proposed in the 'Big Green' ballot initiative now under way in California.³⁹

A few weeks later, the National Wildlife Federation spoke out in even stronger language against harmonization:

"The trade negotiators to GATT tell us not to worry when they propose setting unified global environmental standards that are lower than our own. They tell us not to worry when they seek to prohibit a country's right to restrict imports and exports... They tell us not to worry because GATT already allows for environmental measures 'necessary to protect human, animal or plant life or health,' Yet, according to the chairman of the Senate Finance Committee, these restrictions apply only to 'contaminated meat...rabid dogs...and infected plant life.' Clearly, we have every cause to worry."⁴⁰

Perhaps the most blistering critique of harmonization came from consumer organizations, who saw this proposal as an attempt to roll back gains that they had made over the past dozen years. U.S. consumer leader Ralph Nader went so far as to declare:

"More than one giant multinational corporation is watering at the mouth over the opportunities presented by the forthcoming GATT Treaty. For example, take the food companies. Under one proposal, the importation of food such as bananas, potatoes, carrots and grapes containing 10 to 50 times the amount of DDT permitted by the U.S. Food and Drug Administration would be allowed. If the U.S. blocked such imports, foreign governments could sue the U.S. under the treaty for erecting non-tariff barriers to trade. If found in violation of GATT rules, the U.S. could be charged damages and/or the imposition of retaliatory trade measures. There is a citizen vacuum that is being filled by corporate schemes. [We must] take back this vacuum and fill it with an informed concern reaching all the way to Capitol Hill before it is too late.⁴¹

Many of the consumer advocates' worst fears were confirmed in the speeches and pronouncements made by then-U.S. Trade Representative Clayton Yeutter, in which he cited various federal and state food safety and other consumer and environmental protection laws that he planned to overturn, using the harmonization proposal in the Uruguay Round. Laws that were cited included:

• Wisconsin state law prohibiting the use of hormones (Bovine Growth Hormone or Bovine Somatotropin) to artificially stimulate milk production in cows.⁴²
• California's Proposition 65, which required labeling of any product containing or produced with cancer-causing materials.
• The temporary ban on the use of the chemical Alar on apples and other fruit crops.⁴³

Yeutter was supported in his attempt to use harmonization to reverse consumer safety laws by a number of other policymakers and agribusiness firms who joined him in an all-out campaign.

Yeutter's assertions about his intentions to use GATT to reverse environmental and consumer protection laws created a widespread sense among environmental organizations that the GATT was a serious threat to their accomplishments of the past two decades. As a result, they decided to mount a national campaign to stop the GATT from gaining enough power to really threaten environmental protection legislation. Many of their concerns were also raised in the debate over the North American Free Trade Agreement (NAFTA). For example, in a letter to the United States Trade Representative, National Wildlife Federation trade staff Stewart Hudson argued that if GATT did not meet at least NAFTA environmental standards, it would have serious trouble in Congress.

The need for GATT reform has been heightened by the progress that was made during the negotiations for the NAFTA. The GATT Working Group should be aware that while official U.S. policy has not yet been struck, it is a safe political bet that the Uruguay Round is 'Dead On Arrival' in the U.S. Congress unless it, at a minimum, incorporates the environmental safeguards now contained in the NAFTA, as well as in [the side] agreements. The GATT Working Group needs to state its intentions for environmental reform of the GATT, especially in light of the NAFTA environmental safeguards, and the global call for environmentally sustainable development emerging from the Earth Summit.⁴⁴

The opposition of environmental, consumer and animal rights groups became a major political factor, making it possible for many members of Congress who had grave concerns about the wisdom of other aspects of the Dunkel Draft to express their doubts without being accused of being "protectionists."

Despite the intense criticism and pressure that has been generated by this proposal inside the United States, the Clinton Administration has not significantly altered its stance towards harmonization, which remains the basic proposal in the Dunkel Draft text.⁴⁵

Although Reagan's proposals were largely aimed at altering domestic U.S. laws, many were also designed to impact domestic farm policies in other countries. As in the United States, many elements of the "Double Zero" Plan created enormous backlash in other countries, at times leading to violent demonstrations of opposition. Three of the most important battles in other countries that have been created by Reagan's GATT proposals are the battle over the proposal to apply the U.S. tariffication to the Japanese rice import controls; attempts to force the European Community to convert its farm programs to the decoupling approach; and resistance in India to the GATT proposals on the patenting of seeds.

While the primary motivation behind the U.S. government proposal for tariffication was to open U.S. markets in order to permit U.S.-based food processors to buy more imports, it was also true that tariffication was aimed as well at forcing other countries to eliminate their import controls. This was particularly the case with respect to Japan's tight controls on rice imports.

Demanding that Japan open its rice market to imports had been a constant refrain from some U.S. politicians for over 20 years, since the end of the Vietnam war. During the last few years of that war, U.S. rice milling companies dramatically expanded their production facilities in order to fill U.S. government purchases of rice for distribution to the people of southern Vietnam. But with the defeat of the U.S., this outlet was lost. This loss of markets was relatively sudden, catching the rice milling industry off guard, and created a situation where there was a huge over-capacity in the rice milling industry.

A concerted effort was launched to find other outlets for the rice that formerly went to Vietnam, with some limited success through the use of additional food aid dollars and expanded export subsidies. However, this was not enough to avoid a severe slump in overall demand and depression in the U.S. rice industry. The eyes of the rice milling companies soon turned to Japan, with the belief that if only the Japanese would open their market a small amount, it would be a substantial boon to U.S. exporters.

The kind of rice eaten in Japan is now grown in the U.S. only in California, although it could perhaps be grown in some other states as well. In California, there are only a handful of rice milling companies, employing a few thousand workers and handling the production of rice from only 1200 farms. In U.S. politics, only a handful of companies can be very powerful, such as the steel firms. The ultimate political clout of the rice milling companies has been enough to fuel a twenty-year battle between the U.S. and Japan over rice policy — leading to numerous power struggles inside the former ruling party in Japan, the Liberal Democratic Party (LDP) and now inside the fragile political coalition that is currently in power.

Unfortunately for U.S. rice exporters, recent USDA studies indicate that among the world's major rice exporters — Burma, Thailand, Vietnam and Brazil, the U.S. is the highest cost producer, without factoring in the enormous federal and state-financed water subsidies enjoyed by a large number of California rice producers.

In fact, U.S. costs of production are so high that the USDA recently concluded that even if Japan did open its market, the U.S. would not achieve a very large percentage of the market. There are two other political factors in this U.S.-Japan GATT battle over rice imports which are central to the dispute. The first is an underlying U.S. factor: the belief by some food processors that if Japan can be forced to open its rice market to imports, then the U.S. market for rice, which is now almost as closed as Japan's, could be opened by using the argument that "since Japan has opened their market the U.S. should be consistent and open its market for rice as well." This was the strategy used by U.S. fast food restaurants which wanted to eliminate the strict beef import controls used by the U.S. government to block hamburger imports. By demanding that Japan open its market for beef, which they eventually did, it created the climate for U.S. restaurants and other meat suppliers to demand that the U.S. should do the same to be consistent. It is an argument also used by Australians who want to ship their beef to these U.S. fast food restaurants.⁴⁶

The second political factor in this equation' involves Japan: the effort by Japanese automobile and electronic goods export corporations to promote the idea inside the U.S. that the problem of the U.S.-Japan trade imbalance can be fixed by the U.S. exporting rice to Japan. They hope that if the U.S. public and politicians believe that this is the right solution, they will not demand further import limits on Japanese cars and electronic goods. In fact, Japanese corporations have funneled money to U.S. groups who advanced this position in public.⁴⁷

Japanese corporations have spent millions on their own media and press campaigns to advocate this idea as well. For example, a New York Times article profiling the head of Ronda U.S. stated that the solution to the U.S.-Japan trade imbalance should be the opening of the Japanese market for rice imports, rather than the limiting of access to the U.S. market for Japanese autos.

These political factors — the political power of the U.S. rice milling industry, the desire of U.S. food processors to get rid of U.S. import limits on rice, and the desire of Japanese exports firms to stave off further limits on their shipments to the U.S. — have combined to create a major controversy within GATT. Japanese farmers have, predictably, reacted very negatively and forced the Japanese government to come out against tariffication.

Although the decoupling proposal was clearly designed to be mainly a tool for eventually eliminating the U.S. farm programs, especially price supports and supply management, it was also designed as a way to eliminate farm programs in other countries, including the European Community's Common Agricultural Policy (CAP).

The Reagan Administration, at the request of the grain exporters and food processors, had consciously lowered the prices paid to farmers in the 1981 Farm Bill, promising farmers that this would spark a giant leap in U.S. export sales, which would, in turn, raise prices back up to levels where they could survive. Unfortunately, but not surprisingly, this strategy failed. The main excuse they used was that other countries kept stealing U.S. markets which undercut our prices.⁴⁸

Although the poorer countries of the Third World were an important target of U.S. policymakers, the main objective was to attack the European Communities' Common Agricultural Policy (CAP), which many in the U.S. agribusiness community thought could be bankrupted and destroyed in the Uruguay Round.⁴⁹

Another particularly nasty fight took place recently over oil seeds and crushed oilseed meal (primarily soybeans and corn gluten feed) exports from the United States to the EC. Used as a substitute for domestically grown cereals, U.S. (and Latin American) shipments of these oilseed products displaced millions of acres of EC production.

In the mid-1960s, when the European Community's Common Agricultural Policy was being developed, the EC established the policy of placing levies on agricultural imports, in order to bring the prices of these goods up to "common" international prices. However, this policy was waived in the case of soybeans, soy meal, and corn gluten feed. It was not foreseen what an important crop this would become in the future.

Because most other agricultural imports were blocked by the variable levy import control system, demand inside the EC for the "exempted" products (soy, colon gluten feed, etc.) soared, with supplies coming primarily from the United States, Argentina, Uruguay and Brazil. This became a gigantic problem in the EC, costing over 2 billion dollars (US) per year in government price supports. In an attempt to halt this outflow of goods, the EC adopted a number of measures to reduce the costs, while proposing various options to the U.S. and to the Latin American countries to stabilize the cost. One proposal, for example, was to guarantee the U.S. a continuation of their current market penetration while capping imports at this level. Not surprisingly, the U.S. refused.

In fact, the U.S. government, under pressure from U.S. oilseed processing corporations, challenged the EC's oilseeds program in GATT, and succeeded in having it declared illegal. Two attempts by the EC to develop alternative programs were rejected by the U.S., who went back to the GATT for a second ruling against the EC.

What the U.S. wanted the EC to adopt was the form of farm program called "decoupling," which is what they were proposing in the GATT. In fact, the 1992 Common Agricultural Plan farm program was a nearly complete capitulation to the decoupling demand of the United States, taking on a huge budgetary expense and sending the EC down the road toward dismantling much of the CAP in the future.

This capitulation set off a firestorm of protest inside of the EC, primarily directed at the EC leaders rather than at the original source of the pressure, the grain companies and Administration in the U.S. Ministers in the former Socialist government in France found it impossible to travel outside of Paris without violent confrontation after they finally agreed to go along with this decoupling idea. And the implementation of decoupling also touched off an incredibly divisive row inside of Europe, creating rifts between Germany, the U.K. and France.

The political results have been disastrous for the Uruguay Round process. Massive, almost-weekly farmer demonstrations in France, some of which have turned violent, have pushed the current Balladur government to look for a way to turn back the overall Uruguay Round agreement deal. The French government has repeatedly threatened to use their veto against the GATT in order to force the EC to back away from its previous acceptance of the U.S. decoupling demands.

By far the largest and most dramatic protests against GATT occurred in India where there have been dozens of huge demonstrations, some with nearly a million farmers. India's farmers have protested attempts by U.S.-based seed and biotechnology firms to use the Uruguay Round of GATT to change their seed patenting laws in favor of greater control by the transnational corporations. At least two of these demonstrations led to the physical destruction of facilities owned by the Cargill company, which Indian farmers viewed as the major culprit in the GATT.⁵⁰

Although India's governmental positions at the Uruguay Round have varied widely during the last seven years, it is clear that this new round of domestic pressure is making it more difficult for the current government to remain supportive of the current Dunkel Draft. In fact, Indian farmers claim that the New Delhi government promised to oppose GATT's agricultural provisions after a 3-day protest by 30,000 farmers ended on September 20, 1993.⁵¹

On October 1, 1993, the farmers in India were able to launch simultaneous demonstrations in over a dozen countries while staging a national demonstration of over 500,000 farmers to press their case against the Uruguay Round.

A successful conclusion to the Uruguay Round has thus far eluded negotiators and politicians. At the center of this failure was the attempt by the Reagan Administration to use the Uruguay Round talks to change internal U.S. policies. This approach ignited fierce political opposition in the United States and around the world, and was largely been responsible for the stalemated talks.

It is important to successfully conclude this round of GATT talks as quickly as possible, both to preserve some of the progress that has been made and, most importantly, to enable political leaders to re-focus their attention onto the very serious economic and political problems they are facing at this moment. The urgency to conclude the round is a concern that is widely shared, becoming nearly a "mantra" for political and business leaders over the last three years.

The only hope for breaking the current deadlock is to reach a compromise agricultural agreement that can be supported by all major stakeholders and political actors, including family farmers, consumers, and environmentalists, not just agribusiness interests. Although the round is stalemated on a global basis, the starting point must be in the United States. This approach will require the U.S. government to abandon its attempts to use the GATT as a "back door" to change domestic environmental, consumer, and farm policies, and instead to begin working directly with the opponents of the Uruguay Round proposals to find an acceptable compromise. A starting place for developing a politically realistic approach to GATT agricultural rules would be to contrast the three original Uruguay Round agricultural objectives with the major objectives and concerns stated by the family farm, consumer, and environmentalist organizations that have spoken out publicly on these issues.

Following are the three major objectives for the agricultural negotiations, as outlined in the Punta del Este Declaration, which was the starting point for the entire Uruguay Round talks back in 1986:

• improving access to markets, notable by reducing import barriers.
• increase in the discipline covering the use of all subsidies, either direct or indirect, as well as other measures which affect, directly or indirectly, trade in agricultural produce.
• reducing to the minimum the unfavorable effects which health and plant protection obstacles and rules may have on trade in agricultural produce, by taking into account international agreements which apply under the circumstances."⁵²

Less than two months later, in November of 1986, a conference was held in Switzerland to examine the Uruguay Round's agricultural mandate from the perspective of family farmers and peasants. At this conference, farm, consumer, environmental, church and Third World development organizations thoroughly critiqued the Punta del Este Declaration.

In the final declaration from this conference, the participants argued that the Punta del Este Declaration's main goals of lowering customs barriers and reducing subsidies failed to appreciate the positive role that import controls and farm programs play in the maintenance of viable family farm and peasant agriculture economics in both rich and poor countries. They further argued that GATT's fixation on trade barrier reduction severely limited its ability to deal with the deeper causes of the global farm crisis, such as export dumping, and potentially threatened to undermine domestic laws which protected consumers, farmers and the environment. Finally, they condemned the GATT for excluding from their discussions a wide range of groups with clear interests in the outcome of the agricultural negotiations.⁵³

The United States government put its "Double Zero" proposal forward in the summer of 1987. It was at this point that citizen's organizations began to address the GATT in a serious way. In December of 1987, family farm, consumer, and environmental leaders from around the world began to gather on a regular basis, often near the GATT headquarters in Geneva, Switzerland, to spell out the principles that they wanted to guide the agricultural talks. These farm leaders developed seven basic principles of "fair trade" that became central to almost all subsequent discussions about alternative policy options:

1. Nations must retain the right to determine the level of food self-reliance, and food security appropriate to their situation;
2. Nations must retain the right to establish and manage their own agricultural policies within the framework of the international agreements;
3. Agricultural policies must allow farm income to be derived from the sale of products at fair prices above the cost of production, rather than relying on government welfare payments, such as decoupling;
4. Nations must retain the right to implement effective supply-management programs essential to balancing production and supply with demand, including the strengthening of GATT Article XI-2, which currently protects supply-management programs;
5. Export dumping must be forbidden, even if this means establishing market shares and reference prices;
6. The GATT agricultural negotiations must recognize the special needs of developing countries;
7. Urgent emergency measures, coordinated through existing international bodies, must be taken to reduce and manage stocks, to establish fair world prices, and to raise farm income, while the GATT negotiations continue.⁵⁴

The differences between both lists of objectives/principles were stark.

First, the original Punta del Este statement put improving access to markets as their top demand. The top priority of farmers, on the other hand, was the right of nations to determine their own food security measures and the right to establish their own agricultural policies.

Second, the original GATT statement put a high priority on efforts to reduce or eliminate farm programs which directly or indirectly affect trade. The family farm leaders supported calls for the elimination of the deficiency payment-style farm program in favor of fair prices in the marketplace. While both shared the desire to reduce government spending, it was clear that farmers wanted to continue and strengthen government programs that support farm prices at or above the cost of production levels, while the governments wanted to eliminate all farm programs.

Third, the Punta del Este Declaration argued that health and plant protection rules were "obstacles" to trade and called for measures to reduce their effects. This concern was not addressed in the earliest documents from family farm groups concerning GATT.

It is important to note that the farmers' declaration addressed two issues which were completely ignored in the original Punta del Este declaration.

The first was the demand that current GATT rules prohibiting export dumping, contained in Article VI, should be enforced. This was in direct contradiction to attempts to put the spotlight on export subsidies. Focusing on export subsidies, while an important element in some countries' export dumping schemes, is not enough.*

Another area of concern addressed by the farmers but ignored by the Punta del Este agriculture statement was the need for emergency measures to reduce and manage world grain stocks in order to raise unbearably low world prices.

There have been significant efforts by farm organizations from around the world to find common ground with each other. The goal has been to establish mutually beneficial rules of international farm trade which could be offered as an alternative to the agribusiness-oriented proposals made by President Reagan.

For example, there have been more than a dozen major gatherings over the course of the Uruguay Round between European and U.S. farm organizations to discuss shared concerns and develop common plans. At one of these gatherings, for example, held in Strasbourg, France in August of 1992, a delegation of U.S. farmers representing a number of different states and organizations joined with the Europeans to protest the Dunkel Draft. Following this, members of the U.S. delegation spent a week meeting with French farmers to work on mutually agreeable alternatives.

As recently as July of 1993, major farm leaders from France, the U.S. and other nations gathered in Tokyo to draft a joint resolution on the GATT, declaring their shared opposition to the Dunkel Draft and outlining principles for which they were willing to fight in an international accord.

A close examination of the documents from these various meetings reveals a series of basic points of agreement that can help guide the development of a GATT agricultural text that can both address the major objectives of agribusiness in this round and which are acceptable to the other major constituency forces, such as consumers and environmentalists.

Following are excerpts from one of the most important statements drawn up by consumer, environment, and farm group leaders expressing their ideas of what should be included in a good GATT agreement. It was issued at the conclusion of the International Summit on GATT, held in Stuttgart, Germany in December of 1987. Although it is fairly detailed, it is included here to illuminate the range of concerns that were being addressed as an integrated package:

Reducing Surplus Production

Putting an end to surplus production must be a cornerstone of any effort to end export dumping. Unfortunately the two major concepts, advocated in most of the current GATT agricultural proposals would only make the situation worse. The only way to actually prevent the build-up of surpluses is, quite simply, to not produce one in the first place. This means balancing production with demand through supply management. The central importance of supply management has long been recognized within GATT, including inclusion of provisions in Article XI of the Agreement which enable countries to protect their supply management programs.

For example, the U.S., Canadian, and Cairns proposals imply a clear opposition to supply management on an ideological basis, including provisions to alter or dismantle all import protection barriers, which are absolutely essential to the proper function of supply management programs. The other crucial element necessary to effectively balance production with demand is the ability to accurately forecast demand. Although this is often relatively easy to do with domestic demand, world markets are, at present, much more unpredictable and chaotic. GATT must take a greater role in compiling and sharing global demand information, and must facilitate market share understandings so that countries can make accurate estimates of the overall demand which they must balance with production. The long-term approach to overproduction, which must accompany effective supply management, is a re-orientation of research to place a greater emphasis on new product utilizations rather than greater yields through new chemical — or energy — intensive technologies.

The trend and scope of technical progress in crop and animal husbandry will undermine all endeavors to restrict production unless a policy on technology and agricultural production methods is integrated into the negotiations and market regulation attempts. This relates especially to the development of a legal framework for approving bio-technological products and research (for instance, patent laws versus seed breeding rights, Codes of Conduct, procedures and criteria for granting licenses, safety regulations for laboratories, etc.) and to the support given to public and private research.

Reducing Existing Surpluses

Existing surpluses must be liquidated in an orderly process. This will require negotiation among the major holders of stocks and the major consuming nations. Smaller producers and the poor food-deficit nations should also be party to these negotiations. The cost of surplus disposal must be equitably shared, and all surplus disposal regimes must be carefully controlled to prevent negative impacts on either world prices or domestic prices in both exporting and importing countries.

Strengthening GATT Anti-Dumping Provisions

Once existing stocks are eliminated and supply management programs are in place, market forces will be able to function more normally. However this temptation to dump exports, for whatever reason, will always remain. For this reason, there must be a strengthening of anti-dumping provisions within GATT, and within the national laws of contracting parties.

GATT procedures to detect, evaluate, and pass judgment on these violations are too slow at present. Faster, more efficient methods of investigation, determination, and remedy must be found. This must include the full application of GATT Article VI anti-dumping measure to agricultural products.

At the same time, all nations must remain vigilant to this problem, and maintain strong national anti-dumping laws and regulations to stop these practices.

Addressing the Impacts of Improved GATT Disciplines on Importing Countries

Although a bulk of the world food exports go to relatively wealthy nations, a significant portion is either purchased by or given as aid to governments in poorer, food deficit nations to feed chronically undernourished citizens.

Unfortunately, the rules of current food trade, especially export dumping, has often made this situation even worse. Over one billion people now do not have either the land to feed themselves, or the money to buy enough food to avoid hunger or starvation.

The reversal of this situation will not take place very quickly, even with improvements to the rules of world food trade. We need multi-lateral assistance to 'bridge' the gap between a nation's current ability to grow and buy the food they need and a future transition to greater food security.

At the same time, enormous external debts are both reducing nations [sic] ability to buy food, and pushing many nations to increase export sales under almost any circumstances to generate foreign exchange.

The Agricultural Committee's negotiations must include the intervening issues of transitional food aid and debt relief in order to build a lasting framework for effective, disciplined world agricultural trade. Special and differential treatment should be provided for the developing countries according to their needs.

Sanitary and Phytosanitary Measures

Almost all of the proposals tabled thus far call for either a complete 'harmonizing (of) sanitary and phytosanitary regulations among countries' (Cairns, U-S.) or at least 'encouraging the use of international standards' (Canada). The EC proposal calls for negotiations on a specific 'framework of rules' to 'lay down criteria for the harmonization of regulations,' without a precise definition of 'harmonization.' As with grain export quality standards, if a country decides to maintain low standards, importing countries must have the right to set their own standards and to reject shipments that do not meet these standards."⁵⁵

The same themes were echoed at many other GATT conferences, including the International Grain Growers Congress, held in the Netherlands, in February of 1988; the global farmers summit entitled "Towards World Trade Peace" held in the United States in June of 1988; the International Federation of Agriculture Producers (IFAP) world meeting held in June of 1989; and the Consumer, Environmental and Agriculture Conference on GATT, held in Geneva, Switzerland in February of 1990.

The International Farmers Conference on GATT, held simultaneously with the GATT Ministerial Meeting in Brussels in December of 1990, addressed the concerns of delegates from poor Third World countries, including the following specific ideas in their final declaration:

The major food exporters (the EC and U.S.) should phase cut export subsidies and reduce surplus production of commodities which depress world market prices. Minimum world reference prices should be set.

As a result, low-income net food importers would need compensation for higher world prices until their own farm output picked up. Compensation might take various forms: any food aid should where possible be provided using triangular transactions.

Special and differential treatment for developing countries should be recognized as including the right to safeguard domestic food production, food security and the environment. Measures such as tariffs, import quotas and import prohibitions (for example, cereals in Nigeria) should therefore be recognized as legitimate for developing countries. Extension of the anti-dumping rules to agriculture would also help defend Third World food security.

Food security might be defined as the secure availability to the population, at prices they can afford, of sufficient food produced in the country or region. GATT must recognize it as a legitimate policy aim: food dependency exposes populations to the fluctuations of the world market. It must operate not only at national level [sic], but for all a country's people including the poor. At present some countries such as Brazil are large, competitive food producers but many of their population are hungry.

The EC, United States (and other industrialized countries) should improve market access for farm products from the South, in particular reducing tariffs on processed foods and, in the case of the EC, removing restrictions on products which compete with the CAP.⁵⁶

The International Federation of Agricultural Producers, which includes significant representation from Third World countries, addressed a number of similar issues:

Clear rules are needed in GATT for the conditions under which it is allowed to use any policy instruments which affect trade, and in particular the following:

Two price systems — Clearer and stronger rules are needed under GATT Article VI.7(b) concerning operation of two-price systems in domestic farm programs. In particular, the meaning of the following terms needs to be clarified: 'effective regulation of production', 'not stimulate exports unduly', and 'otherwise seriously prejudice the interests of other contracting parties'.

Quantitative Restrictions — Rules related to the use of import controls in conjunction with the operation of domestic supply management programs for agricultural commodities need to be clarified. Consideration needs to be given to measures to stabilize domestic production of basic foodstuffs in countries where the self-sufficiency rate is particularly low. Trade embargoes should be outlawed in the GATT, or placed under strict rules. The sudden cutting of import access should be outlawed in the GATT, or placed under strict rules whereby such import restrictions must be temporary.

Export Subsidies — The use of export subsidies was banned in the GATT on 1st January 1958 for all trade, except in primary products. There is a need for more effective rules to bring greater discipline to all direct and indirect subsidies which affect international trade.⁵⁷

The largest, and perhaps most important meeting of farm organizations during the early stages of the Uruguay Round, was held simultaneously with the official GATT mid-term review, held in Montreal in December of 1989. All of the major farm organizations from most industrialized countries, plus a significant representation of groups from the Third World, were represented in the drafting of the final document, called "Building a World Agriculture". Following are the key provisions:

The international farm community is concerned about the chaotic state of agricultural trade and very worried about the direction the current round of the GATT negotiations is taking to find solutions to this situation. In "an unprecedented gesture of international solidarity," farm men and women from both developed and developing countries allover the world are taking this opportunity, halfway through GATT negotiations now being held in Montreal, to express their concerns. They also wish to take advantage of this meeting to propose solutions tailored specifically to agriculture as an economic activity as well as a social, cultural and political activity. These solutions clearly run counter to the direction dominating discussions at this time. Our solutions are more realistic, and more respectful of farmers and the environment. ...

• By encouraging prices acceptable to both farmers and consumers, as well as stable and adequate incomes to offset the capital and labor devoted to farming;
• By making every effort to maintain the 'family farm' model;
• By promoting environmental protection and the preservation of a heritage that is economically and socially sound, while facilitating the task of transmitting it to future generations;
• By providing for measures favorable to developing countries.

The time has come for a thorough agricultural reform. Clearly it must be done with respect for the rural community, for farm men and women and their families allover the world.⁵⁸

These meetings culminated in a gathering of farm organization representatives at the Global Farm Organizations' Summit held simultaneously with the G 7 Summit in Tokyo, July 1993.

Summarizing all of the major themes and ideas that had been previously developed, they stated:

As representatives of farm organizations from around the world, speaking on behalf of our memberships which have the ultimate responsibility of providing food for human survival, we believe that trade liberalization must not be pursued to the detriment of the numerous elements necessary for food production, for the environment and for the preservation of viable rural life.

Therefore, we urge that, in addition to the need to establish greater stability and order in the international trade of farm and food products, the following recommendations be fully taken into account as GATT negotiators meet at this critical time:

Every nation deserves the right to retain the authority to shape food policy for its security — and the health of its citizens. In particular, solutions adapted to local and national conditions, including the maintenance of effective supply management programs, must be permitted.

Agricultural production on a family-run farm is without substitute in this contribution to social and political stability, the economic viability of rural regions, and hence the welfare of a nation. Unless family farm policy, as encouraged by most nations up until now, is maintained, the socioeconomic balance between rural and urban areas will be further eroded, and is unlikely to be recreated.

Family farming is best suited to safeguard the countryside and the environment. It encourages maintenance of the land and its resources for use by succeeding generations.

We believe that the respect of these principles is essential not only for food producers and consumers but also for the sound development of society throughout the world, to the benefit of this and subsequent human generations. We urge that the multi-functions of farming, adapted to each country's priorities, including national food security, environmental protection and preservation of rural society, be the basis for any GATT framework for agriculture. Rules governing agricultural trade must be different from those governing trade in industrial goods. To ensure that this is a fair and balanced agreement on agriculture in GATT, substantial improvements must be made to the Dunkel Draft and the so-called Blair House compromise.⁵⁹

Although a GATT agricultural agreement will not necessarily guarantee the successful conclusion of the Uruguay Round, there most certainly will not be a conclusion until there is an agriculture agreement. Any conclusion must address the concerns and objectives outlined by the opponents who now stand in the way of an agreement.

Four main elements of a GATT agricultural deal are common to almost all of the major position papers released by farm, consumer, and environmental organizations over the past seven years. These mall points represent a politically feasible basis of compromise for a final GATT agreement on agriculture.

Across the board, the major criticism of the current agricultural trade situation is the export of products, especially grains and dairy products, at prices below the cost of production. This dumping of agricultural products has negative impacts on developing countries in two ways. First, countries attempting to export must compete against these artificially low prices if they hope to gain any market share. At the same time, farmers attempting to sell into their local markets must compete against extremely low-priced imported foods.

While devastating for poor countries, export dumping has not helped farmers in more wealthy countries. The primary benefit has gone to the buyers of these commodities, the grain traders and food processors.

The first component of an acceptable GATT deal would be to clarify and begin enforcing Article VI, which prohibits dumping. Implementation of this provision would require the commitment by all governments to gradually reduce and eventually eliminate the gap between the average cost of production in a country and the average export sales price, expressed in local currencies. For example, the goal could be a 50% reduction in export dumping over the next 5 years, with a commitment to continue these reductions if the process is proceeding smoothly and the desired effect is being obtained.

The most complicated aspect of this proposal is the process for determining the average cost of production. This clarification of what exactly constitutes "dumping," rather ambiguous in the current GATT Article VI, has already been largely solved as a result of this round of negotiations. Countries have already drawn up lists of the "hidden" costs of production that are currently being paid by some level of government. These are expressed in dollar amounts on national lists submitted as part of the overall attempt to establish the "Aggregate Measurement of Support" for most farm commodities.

One way to determine the average cost of production would be simply to add up all of the visible and invisible costs of production for the entire national crop divided by the total national production. Other approaches could be chosen, but as long as the approach is consistent for each country the net effect should be to decrease export dumping.

Some environmentalists may argue that adding up all visible and hidden costs does not fully reflect the total cost of production, because it may not include certain externalized costs, like environmental degradation. The cost of ecological damage could be factored in as well, as long as each government worked from the same assumptions about the monetary value (cost) of various elements of ecological depletion. However, the actual process for doing this type of ecological accounting is still very under-developed.

Import controls are absolutely necessary for the functioning of domestic farm programs. This may, in fact, be the reason why agribusinesses and food companies made the banning of import controls such a high priority, knowing that this would eventually lead to the elimination of all farm programs. However, no other single proposal from anyone has proved to be a greater threat to the survival of the Uruguay Round. Over half of the U.S. Senators have signed letters saying they won't support a final GATT treaty that weakens U.S. farm import control rules under Section 22 of the Farm Bill. The president of the Young Farmer's Union of South Korea committed symbolic "hari-kari": in the GATT lobby in Geneva to protest attempts to force Korea to import rice. The massive demonstrations in Japan, France, Germany, and other countries also testify to the intense political opposition to this proposal.

Alongside the intense protest to protect import controls there is clearly a recognition among a wide range of stakeholders, including farmers, that there needs to be an improved system of applying import controls, one that is fair and clear for everyone that is involved or affected. The fact that the United States and the European Community have been effectively exempted from the rules applied to other GATT member nations when it comes to import control laws is just one example of the inequities that need to be addressed in the Uruguay Round.

The reform approach that has garnered the greatest support, thus far, is the proposal from the Canadian farmers, carried by their government, to strengthen and then enforce the rules for import controls contained in the current GATT's Article XI. Under present rules, countries are free to use import controls as long as they are tied to domestic supply management programs. The U.S. currently does not have to follow this rule because exemption granted in the early 1950s. The form of import control used by the EC, the variable levy, is not mentioned by the GATT so they have been able to avoid compliance.

Even for the Canadians, who attempt to faithfully comply with the rules of Article XI, there is a great deal of ambiguity with regard to processed foods. Canada has the right to restrict milk imports as long as they have supply management for their dairy farmers, but they are being denied the right to restrict ice cream imports. This, of course, makes the limits on milk imports nearly meaningless. Canada wants the actual provisions strengthened to permit import controls on processed goods that directly undercut supply management programs, and they want the U.S. and the EC to eventually bring their import control programs under the Article XI provisions instead of being "outside the law." Adoption of this approach would go a long way toward addressing some of the inequities in the current GATT system.

The massive droughts in North America in 1987-89 and the floods and droughts of 1993 are reminders of how fragile the world's food reserves really are. At the same time, the gigantic oversupplies that kept world market prices at disastrously low levels in 1990-92 are also reminders of how quickly a price inflating shortage can turn into a price destroying surplus.

It is vital for consumers as well as producers to establish a gram reserve mechanism that ensures that an adequate world reserve is established with the costs fairly-shared among all nations, and one that ensures that surplus stocks do not build up to the point where they destroy world prices. This would require that all nations share the cost of storing the world's grain reserve and that all producing nations share the responsibility of reducing production when surpluses, beyond food security levels, are building up. Senator Kent Conrad (D-ND) has introduced a resolution in the U.S. Congress calling on our GATT negotiators to pursue this overall approach to a GATT-led world food reserve.⁶⁰ His proposal has three major elements:

First, the cost of storing the world's food reserve would be shared equitably among all of the world's countries.*

Second, in times of serious worldwide oversupply all major producing countries must equitably share the burden of reducing the oversupply to a level that is not price depressing. Presently, when there is a persistent glut on the international market, U.S. farmers implement most of the land idling aimed at bringing supply into closer alignment with demand.

Third, that the GATT should take the lead in developing a World Food Reserve Management Agreement to implement these policies.⁶¹

While it is clear that it is not in the interest of smooth trade for health and safety rules to be used as hidden trade barriers, it is also clear that concerns over environmental and consumer protection will remain high on the public's agenda for quite some time. Attempts to use the Uruguay Round talks and current GATT rules to undermine existing domestic environmental laws have already provoked a wide range of very powerful organizations to come out against the GATT. Any final deal must repair the damage that has been done by specifically confirming the right of national and sub-national units of governments to enforce environmental and consumer protection laws as strictly as they choose, as long as they do not discriminate against imported goods and do not use the laws as a hidden, unwarranted trade barrier.

This could be simply done by clarifying that the current GATT language in Article 20, which allows for trade barriers to protect "human, animal, or plant life or health" does indeed cover the full range of concerns being addressed in modern environment and consumer legislation. Language that would be acceptable for this provision has been developed by Steven Shrybman while he was serving as staff attorney at the Canadian Environmental Law Association. He suggested the following:

1. Nothing in this [GATT] agreement shall be construed to prevent any party from taking any action which it may deem necessary to protect the environment including the establishment of import or export restrictions and the use of subsidies to:
1. prevent or remedy adverse environmental effects, and/or;
2. conserve natural resources⁶²

The central argument of this thesis is that the Reagan Administration's farm policy proposals to GATT, which were ultimately incorporated into the final Dunkel Draft agreement, have produced a deadlock in the agriculture negotiations, which subsequently became one, if not the, most important stumbling block to a successful conclusion of the entire Uruguay Round of GATT. While this farm fight has often been portrayed as a struggle between the farmers in the U.S. and France, in fact it has primarily been a battle between family farm interests and transnational corporate agribusiness. Family farm organizations from around the world have come to the conclusion, very early in these talks, that the major GATT agriculture proposals would primarily enrich agribusiness at their expense, both in the U.S. and around the world.

This led to fierce political opposition from family farmers, joined in many countries by consumers and environmentalists, to the final agricultural proposals, incorporated in both the Dunkel Draft Text and in the Blair House Accords. This has produced a deadlock in the agricultural talks that is being blamed for the deadlock in the overall negotiations. This opposition by family farmers must be overcome before an agricultural agreement can be adopted, which is necessary before the rest of the talks can proceed.

The outlines of a deal that would be acceptable to most family farm organizations has been spelled out in various position papers and resolutions that have come out of dozens of family farm organization summits and international meetings held over the past six years.

What is not clear is how these family farm proposals will be greeted by the agribusiness interests who stood to gain so much from the earlier proposals, and how much they are willing to fight to block the introduction of new proposals. In these talks, it is clear that inertia is a powerful force.

This inertia gives the "final" GATT proposals now on the table a distinct advantage in this debate. Unless this inertia can be overcome and a more politically feasible proposal put forward, it appears that the rest of the talks cannot advance, thus leading to further deadlock and threatening eventual collapse.