CAFOD Proposal for a development box in WTO

This paper makes the case for introducing a package of changes to the WTO Agreement on Agriculture (AoA) to provide enhanced Special and Differential Treatment (S&D) measures in the Agreement, in order to enable developing countries to better address their food security concerns and to preserve and improve rural livelihoods. It concentrates on the changes to the rules required for developing countries and especially poor communities within them to benefit fully from agricultural trade. This set of proposals has been termed a 'Development Box', and could include a combination of an expanded article 6.2 (domestic support commitments for developing countries), a strengthened article 15 (S&D) and an annex listing the provisions for such a 'Development Box'.

This paper arises from a collaboration between Shishir Priyadarshi of the South Centre, an inter-governmental organization based in Geneva, and Duncan Green of the Public Policy Unit of CAFOD, the official aid agency of the Catholic Church in England and Wales.

Note: This paper is initially intended as a contribution to developing countries wishing to address food security concerns in phase II of the Agreement on Agriculture negotiations in Geneva. It may be subject to further revision.

Acknowledgements and Disclaimer: The authors would like to thank the following experts in the field for their invaluable thoughts and advice: Penny Fowler, Oxfam; Jim Greenfield; Karim Hussein, Sheila Page and Simon Maxwell, Overseas Development Institute; Laura Kelly, Action Aid; Panos Konandreas, FAO; Sophia Murphy, Institute for Agriculture and Trade Policy; Jagdish Patel, UK Food Group. However, responsibility for the paper's views, and any errors, lies with the authors. Furthermore, the views expressed in the paper are those of the authors, rather than of the institutions for which they work.

There is widespread dissatisfaction among developing countries with the workings of the AoA to date. Developing countries have, inter-alia, expressed these concerns both in the Analysis and Information Exchange (AIE) process at the WTO as well as in submissions made by them in the first phase of the ongoing agriculture negotiations. In particular, access to developed country markets has not been achieved to the promised extent, and many developing counties have experienced import surges following trade liberalisation. Moreover, the existing distortions in world trade have in many cases impacted negatively on the livelihoods of low-income and resource-poor farmers and on the already precarious food security condition of many developing countries.

Addressing this issue therefore involves changes at both developed and developing country levels. Developing countries need increased flexibility through enhanced S&D, to enable them to strengthen domestic production and defend the livelihoods of poor farmers. For their part, developed countries must reduce their excessive levels of agricultural support which are distorting world markets and damaging developing country farmers. They must also increase market access for developing country exports, particularly those involving a significant number of small producers. Such steps would have to address effectively the problems arising from persistent developed country protectionism, such as tariff peaks, tariff escalation, and trade harassment through abuse of SPS and anti-dumping rules.

Developed countries should also improve market access for small 'single' commodity exporters who are net staple food importing countries, and otherwise find ways to compensate for the 'preference erosion' threatening developing country members of existing preferential trade agreements.

Such steps would be an appropriate response to Article 20 of the AoA which establishes that the ongoing negotiations should take into account 'non-trade concerns, special and differential treatment to developing country Members, and the objective to establish a fair and market-oriented agricultural trading system'.

This paper concentrates on the developing country end of this twin track approach, by proposing a range of enhanced S&D measures in a 'Development Box' to be incorporated into the AoA.

The experience of implementing the AoA has shown there to be a number of basic shortcomings in the provisions, including:

The AoA was designed with developed country agriculture in mind. It institutionalised the production and trade distorting practices employed by the most powerful countries. These countries now enjoy a unique privilege among members of the WTO in the sense that the AoA gives them the legal right to continue to distort agricultural markets. Thanks in part to the blue and green box exemptions, there is in practice no limit to the level of domestic support provided by them which, despite the AoA reduction commitments, continues to be very high. Subsidies to producers in OECD countries made up 40% of farm income in 1999, the same percentage as in the mid-1980s. For Japan, South Korea, Norway and Switzerland, this figure was over 2/3. Total OECD support for agriculture in 1999 was $360bn, 90% of it in the EU, US and Japan. ^[1] These figures compare with total agricultural exports from developing countries of $170 billion. ^[2] The UN Food and Agriculture Organisation (FAO) estimates that it would cost $180bn to provide the total gross annual agricultural investment needed to achieve the 1996 World Food Summit target of halving the number of undernourished people in the world by 2015. ^[3]

No recognition of the fundamental differences between the role of agriculture in developing and developed economies ^[4].

Agriculture is a way of life for the majority of the population in many developing agrarian economies, and support to agriculture and agricultural production is essential for ensuring food security and alleviation of poverty.

(i) Agriculture continues to be the main employer in low-income countries. It employs over 70 per cent of the labour force in low-income countries, 30 per cent in middle-income countries and only 4 per cent in high-income countries.

(ii) Agriculture is a significant contributor to GDP in developing countries. Between 1990 and 1996, the contribution of agriculture as a proportion of GDP was an average of 34 per cent for low income countries as compared to 8 per cent for upper middle income countries, and 1.5 per cent for the high income countries of the OECD.

(iii) Agriculture continues to be an important source of foreign exchange and revenue for developing countries, accounting for 27.3% of developing country and 34% of least developed country merchandise exports from 1995-97. By contrast agricultural exports accounted for only 8.3% of developed country exports over the same period. ^[5]

(iv) Food consumption accounts for a large share of expenditure out of the total household income in developing countries, while in developed countries, it accounts for a small and decreasing proportion. Therefore, even small changes in agricultural employment opportunities, or prices, can have major socioeconomic effects in developing countries. For most developing countries, the need is to raise agricultural productivity and increase production, particularly of basic foodstuffs. In contrast, in developed countries the primary concern appears to be to maintain some sort of parity of income between the small proportion of the work force in farming and those in industry.

(v) The social and economic vulnerability of agriculture in developing countries is generally reflected in parameters such as the substantial contribution of agriculture to their GDP, low level of commercialisation of agriculture, low productivity, weak market orientation, the preponderance of small and marginal uneconomical operational landholdings, lack of infrastructure, dependence on rainfall, susceptibility to natural calamities, and dependence of a very large percentage of population on agriculture for their livelihood. Such vulnerability fully justifies the extension of special provisions to the developing country members for ensuring their food and livelihood security concerns.

For all the above reasons and also because it would not be possible for developing countries to provide alternative sources of employment for the rural poor, it is critically important that the ongoing agriculture negotiations do not undermine the viability of the agricultural sector as a source of livelihoods to the large percentage of population dependent on it.

Does not recognise the pressing need to increase food production in developing countries

Looking to the future, it is in the developing countries that nearly all of the increase in global food demand will come. It is in these countries that food will have to be predominantly produced to meet increasing needs coming from population (and income) growth. Yet the AoA fails to differentiate between support used to boost exports and support used to enhance production for the domestic market.

Furthermore, the AoA does not adequately recognize the major transportation bottlenecks existing in many developing countries which prevent an effective link between surplus rural areas and deficit urban areas. Such bottlenecks, if not alleviated by state intervention, will perpetuate the increasing dependence of these countries on imported food supplies and deprive rural communities of the opportunity to develop their agricultural potential and to stem unsustainable levels of rural-to-urban migration.

Aside from a very specific exception in Annex 5, ^[6] the AoA does not distinguish between staple foods needed for food security, and other crops. This paper argues for a range of special measures for what it terms 'food security crops'. These are crops ^[7] which are either staple foods in the country concerned, or which are the main sources of livelihood for low-income and resource-poor (LI/RP) farmers. That is, crops which are sensitive from a food security perspective.

No possibility of correcting anomalies in the tariff structure, particularly related to sensitive staple crops.

Several developing countries inadvertently bound tariffs of certain important and sensitive staple products at zero or at very low levels. This has increased the vulnerability of their agricultural sector, particularly given pressures for further trade liberalisation. These countries should be allowed the flexibility of renegotiating their tariffs, especially for food security crops, without having to 'pay twice' through further trade-offs in the new negotiations.

The AoA does not recognise the particular impact of cheap imports on LI/RP farmers and fails to answer the developmentally crucial question, how do you address the concerns and threats to small farmers when you liberalise the agriculture sector? ^[8] The experience of the Uruguay Round already shows that, following trade liberalisation in developing countries, agricultural imports have risen more rapidly than have exports, leading to import surges in some countries and a deterioration in the net agricultural trade position. ^[9] Rules and procedures should take account of, and allow governments to compensate for, this asymmetrical response to trade liberalisation. However the current provisions fail to do so: few developing countries have the resources and institutional and legal capacity to apply the measures in the general safeguard agreement, while only 21 developing countries are eligible for the Special Safeguard (SSG) provisions within the AoA, and then only on a limited range of nominated product lines. This is because only those developing countries opting for line by line tariffication, rather than general ceiling bindings, are eligible for SSG under the AoA.

The Marrakech Ministerial Decision was supposed to protect the Net Food-Importing Developing Countries (NFIDCs) from price spikes caused by the AoA. In the event, however, prices rose, but developed country Members refused to implement the decision. Proposals for the Decision's reform include the creation of a fund, managed by the FAO, that could be drawn on to cover price hikes and an automatic trigger for the fund, to avoid the politics that marred the Decision's non-implementation in 1996. While extremely important, the Marrakech Decision is covered extensively elsewhere in the literature, and is not included in the Development Box proposal.

3. Experience with the implementation of the current S&D provisions in the AoA

It is helpful to recall what forms of S&D have been used by developing countries up to now. The WTO groups the S&D provisions in the AoA into four categories ^[10]:

Article 15.2: Smaller reductions and longer implementation periods on tariffs, AMS ^[11] and export subsidies for developing countries and exemptions for Least Developed Countries (LDCs). Widely used in schedules, but of little practical value to many of them, especially in the case of domestic support and export subsidies, since governments' spending options are so limited that they did not have much to reduce. In any case, developing country governments are subject to a number of other pressures to reduce tariffs and cut spending, both through their own fiscal problems, and due to structural adjustment programme agreements with the World Bank and IMF.

Article 6.2: Investment subsidies and input subsidies for small and resource-poor producers. Data for 1995-1997 show that total notified outlays under this provision amounted respectively to $2.5 bn, $2 bn, and just under $1 bn for the three years in question. This represented respectively, 7.1 per cent, 8.2 per cent, and 4.5 per cent of total notified domestic support provided by the Members in question. Twenty Members notified zero outlays under this provision in 1995.

Article 6.4 (b): Higher (10%) de minimis level for domestic support. In 1995, total notified outlays falling under this provision amounted to just under $7bn out of a total of roughly $35bn in notified domestic support.

Measures which have not been widely used include Article 9.4 (marketing and transport subsidies for exports, only a few countries); Article 12.2 (export prohibitions, no countries); Annex 2, para 3, footnote 5 (public stockholding for food security purposes, only a few countries); Annex 2, para 4, footnotes 5 & 6 (domestic food aid, only a few countries); Annex 5, section B (special treatment for staples, only South Korea and Philippines)

Even though there are references to 'food security' in the AoA, both in the preamble and in Annex 2 of the Agreement (the Green Box), there is no attempt to define the term or set out any specific measures that would enable developing countries to address their food security concerns.

'Food security, at the individual, household, national, regional and global levels [is achieved] when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.'

At the World Food Summit, leaders of 186 countries committed their governments to halving the number of malnourished people in the world by 2015. Latest projections from the FAO, however, suggest actual progress is likely to fall well short of that figure, with 580 million people expected to be malnourished in 2015, rather than the target of 400 million. The most recent figures (1996-98) show that 792 million people in developing countries are currently undernourished.^[12] In the words of the FAO's 'The State of Food and Agriculture, 2000'

'Despite past progress, during the 1990s one in five people in developing countries ate less than the caloric minima for metabolic, work and other functions. Worldwide, there are still more than 150 million children under five who are underweight; more than 200 million - more than one in four - are stunted. These conditions appear to be implicated in about half of the 12 million deaths annually of children under five and, for some of the more damaged survivors, in physical and even mental retardation.' ^[13]

Although the AoA would undoubtedly benefit from adopting the World Food Summit definition of food security, neither the agreement nor the definition make any reference to income levels, poverty, or employment generated by the agricultural sector. Given the centrality of agriculture to the livelihoods of the world's poor, this is a serious omission. In the light of this, and of the international community's undertakings at the WFS, food security should have figured far more explicitly and prominently in the AoA.

During the course of the current negotiations, several developing countries have made the argument that food security is part of national security. Under GATT Article XXI, national security issues may be exempted from WTO trade disciplines. Food security is inextricably connected to national security and political sovereignty. Chronic food insecurity and a growing dependence on imported food supplies puts national security in jeopardy by placing at risk the health of a large number of people. It also incites internal turmoil and instability. ^[14]

Sen's entitlements approach provides a useful framework for exploring the impact on food security of different aspects of trade policy. Sen portrayed production as one of four possible sources of food, the others being trade (producers' ability to sell their crop), labour and transfers (usually from government). Each of these sources is affected to some degree by aspects of the AoA:

Source of Food Security: Labour (both in domestic production and agroexports)

[For agricultural labour for domestic production, see production section above]

The table's focus on household food security does, however, have some shortcomings. It misses out on some wider issues, for example, whether a country generates sufficient foreign exchange to be able to guarantee access to food imports. It also fails to distinguish between production for the domestic market and production for export, and similarly between trade in local crops, and trade in imported crops, even though, as the following sections argue, these distinctions are important in pursuing food security.

In devising a framework and specific proposals for a Development Box, there are several key issues which need to be addressed:

Key Issue 1. Should the Development Box work at a national or a sub-national level? In particular, should it aim to enable governments to give special support to LI/RP farmers?

The debate in the WTO has at times glossed over the somewhat different concerns of developed and developing countries with both sets of players trying to squeeze in their specific problems under the general guise of 'food security'. Still less has the discussion focused on the specific problems of LI/RP farmers who often bear the brunt of the vulnerability of the agricultural sector.

LI/RP farmers are critically important to the economies of many developing countries, and yet they are frequently among the poorest groups in society. In many East and Southern African countries, for example, small-scale, often subsistence, farmers account for as much as 85 per cent of domestic food production, and for the majority of the rural poor. Small-scale farmers usually live in marginal and degraded lands, and lack access to assets such as production inputs, credit, technology and infrastructure, which inhibits their productivity and capacity to establish reasonable terms of trade. Such farmers have only small plots of land, and use human labour as the main source of power and transport. Female smallholders are particularly disadvantaged as they often face discrimination in access to land, credit and social services, as well as having less control over income from staple and cash crop production.

Historically, LI/RP farmers have been at the heart of many successful development experiences. For example, this 'farmer road to development' is one of the reasons why the US, with its initial equitable pattern of smallholder agriculture, developed more rapidly and evenly than Latin America, with its highly skewed pattern of land distribution. More recently, the post-war experiences of Japan, South Korea and Taiwan demonstrate the importance of smallholder agriculture in launching countries along equitable development paths. ^[16]

This paper, while looking at the broad problem of food security and rural livelihoods in developing countries, therefore explores the possibilities of ensuring that the AoA helps (or at least does not hinder) governments in supporting the weakest and most vulnerable players. Wherever possible, it suggests rules and provisions that target their concerns, and strengthen their productivity and livelihoods. It is important to try and separate out and give priority to the specific needs of LI/RP farmers, distinguishing them from those of large farmers or agribusiness interests which frequently dominate the agenda of global trade negotiations.

Key Issue 2. Significance of domestic food production (rather than reliance on food imports) for development and food security

The rapid rise of developing country dependence on food imports is a cause for concern. At some $458bn, the value of food trade was over five times greater in 1997 than 20 years earlier. Developing countries accounted for some 37% of total food imports in 1997, up from 28% in 1974. However over the same period, their share of total food exports had risen only to about 34% from 30%. As a result, their trade balance in food commodities has turned negative. Their net trade deficit in food came to $13bn in 1997. ^[17]

According to the FAO, developing countries over the last 30 years have seen their trade deficit in cereals rise from 17m tonnes to 104m tonnes. The FAO sees this as a 'precarious trend', since historically both developed and developing countries have achieved food security through enhanced domestic food production. ^[18]

Projections by the FAO and the International Food Policy Research Institute show that over the next 20 years, almost all of the increase in world food demand will take place in developing countries. ^[19] For poverty reduction and developmental reasons, it is vital that domestic producers, especially LI/RP farmers, supply as large a share as possible of this increased demand.

While many small developing economies may not reasonably be able to achieve total self sufficiency, even if that was desirable, there are compelling economic and political reasons for seeking to maximise the contribution of domestic food production to the overall domestic requirements of developing countries, including the following:

As Amartya Sen makes clear, poverty and food insecurity can spring from a range of different factors besides the ability to grow food. Most rural families are at the same time producers, consumers, sellers of labour and recipients of government transfers. There is understandable concern that the Development Box, by giving special treatment to small farmers, may harm other consumers, such as the urban poor, through higher food prices or taxes. However, in practice, liberalisation has not always led to a better deal for consumers. One literature review of case study material on the impact of trade liberalisation finds that

A recurrent theme in Burkina Faso, Central African Republic, Mali, Madagascar, Senegal and Nicaragua was the lack of government capacity in deregulating the economy in an efficient and effective manner. In almost all of sub-Saharan Africa, as a result of imperfect market conditions, domestic prices (both for producers and consumers) do not reflect trade liberalisation gains. In Burkina Faso ^[20], urban traders have kept control of the sector to a large extent. This is also the case in Cameroon and Mali. ^[21]

Some authors have argued that much more attention needs to be paid to the role of other actors in the food chain, notably food processors and traders. This could lead to proposals for introducing competition rules into the AoA. However, the authors have not been able to address these issues in the time available. ^[22]

Key Issue 4: Are general or specific proposals in the best interests of developing countries?

There are arguments for and against moving from the general text currently in the AoA towards the kind of detailed proposal for a Development Box sketched out in this paper. The current AoA makes vague reference to both food security and provides some limited forms of S&D for developing countries. Vagueness may provide developing country governments with more room to interpret the AoA in their development interests. Moreover, given the nature of the WTO, in moving from that to a more detailed proposal, developing countries will have to negotiate and make concessions in other areas.

However, the current negotiations are likely to lead to tighter limits on tariffs and domestic support, increasing the impact of the AoA, both positive and negative, on food security. There is therefore a clear case for ringfencing food security concerns more explicitly in the agreement. Moreover, the creation of a Development Box sends a clear signal to all WTO members that food security and development concerns are a priority, and will encourage developing country governments to put these interests first in their trade policies. This paper therefore opts for the course of detailed proposals.

As a solution to some of the problems associated with food security a group of developing countries have in the ongoing negotiations already suggested the creation of a 'development box', the provisions of which would be geared in a manner so as to provide developing countries the requisite flexibility to enhance domestic production for domestic consumption and to take such other measures which may be necessary to protect the livelihood of their farmers. This proposal builds on that initial work. ^[24]

Given the widespread confusion over terms such as food security and S&D, it is important to clearly define what are the objectives being sought by a 'development box'. Broadly, the endeavour is to suggest specific provisions which are at best minimally trade distorting and yet are able to provide developing countries with the flexibility they need to pursue policies aimed at reducing poverty and achieving sustainable development. This leads to the following broad parameters:

1. This proposal applies to developing countries only. Given the fundamental differences in the kinds of agriculture practiced and the role agriculture plays in developing and developed countries, there is a clear case for devising a development box whose provisions would apply only to developing countries. Arguments about multifunctionality may have merit, but they should not be confused or conflated with the concerns and specific problems of the rural poor of developing countries. For this reason, the proposal is termed a 'development box' rather than a 'food security box' which can be seen as including developed country interests.

2. Within developing countries, the main focus is on low income and resource poor (LI/RP) farmers. The key to poverty reduction and rural development is to defend and enhance the livelihoods of the world's LI/RP farmers. Although, in the actual implementation of any scheme, it is sometimes difficult to distinguish clearly between large and LI/RP farmers, a market access focus on those crops produced by the latter and greater flexibility for domestic support to LI/RP farmers would both build on existing articles in the AoA (article 6.2) and would offer a way forward in ensuring that the S&D provisions of the AoA benefit the poor. This approach should also allay any fears that S&D provisions might be misused to further the interests of agribusiness lobbies in developing countries, even though this has rarely been the case in the past.

While distinguishing between different kinds of producers in this way may carry an administrative burden, it is important to allow governments the flexibility within the WTO rules to weigh up for themselves the costs and benefits of supporting small producers as part of their national poverty reduction strategies.

3. The main focus is food security. This proposal focuses on what it terms 'food security crops', which it defines as 'crops ^[25] which are either staple foods in the country concerned, or other crops which are the main sources of livelihood for low-income and resource-poor (LI/RP) farmers.'

(i) protect LI/RP farmers, who are often engaged in subsistence farming of food security crops, from surges of cheap or unfairly subsidised imports

(ii) protect and enhance the efficiency of developing countries' domestic food production capacity, particularly in key staples

(iii) provide and sustain existing employment and livelihoods opportunities of the rural poor

Translating the above ideas into effective and implementable 'development box' provisions requires specific instruments designed to address particular problems. These must be built into the new agreement as instruments designed to address the various aspects of the food security concerns of developing countries, under the three pillars of the negotiations. Such instruments are outlined below:

Development Box Instruments

Market Access

1. In developing countries, the basic food security crops should be exempt from reduction commitments. Such an approach could be implemented through what is commonly termed a 'negative list' approach, whereby developing countries would be allowed to nominate a list of staple food security crops for exclusion from the reduction commitments. The precedent for distinguishing between staples and other crops is already established in Annex 5 (Special Treatment).

2. Low tariff bindings in developing countries should be allowed to be renegotiated in relation to food security crops.

3. Special Safeguard Clause: A revised SSG should be available to all developing countries as part of the AoA. This would allow the introduction of appropriate safety measures, including whatever instruments are necessary to respond to import surges in food security crops. There are several proposals already in circulation which could provide the basis for such a clause. ^[26] Consideration should also be given for extending the revised SSG to cover crops which have the potential to substitute for local food security crops – wheat may not be a domestic food security crop in Bangladesh, but a surge in wheat imports can threaten producers of other staples.

4. Those countries with total domestic support at or below the de minimis level should be allowed to maintain appropriate levels of tariff bindings as a special and differential measure, keeping in mind their developmental and food security needs and high distortions prevalent in the international markets so as to protect the livelihood of their very large percentage of population dependent on agriculture. The appropriate levels of tariff bindings should necessarily be linked to the trade distortions in the areas of market access, domestic support and export competition being practiced by the developed countries. Reduction commitments by developing countries should be made conditional on a down-payment by developed countries in the form of a reduction in trade-distorting support.

Domestic Support

1. Article 6.2 (exemptions for domestic support in developing countries) should be made permanent for developing country support to LI/RP farmers. Add the following categories of domestic support

'support to promote the integration of LI/RP producers, e.g. through subsidised credit or capacity building on marketing and other market cost reduction measures.'
'measures to increase domestic production of staple crops as a percentage of overall consumption'
current spending on transportation costs for food security crops from surplus to deficit parts of a country. (Annex 2, para 2(g) already gives exemption on capital spending on a range of infrastructure)

2. Negative product specific support should be allowed to be offset against positive non-product specific support

3. EITHER: If provided for food security purposes, product and non product specific support should be allowed to exceed existing de minimis levels.

a higher de minimis level in countries with low or zero AMS.

4. Annex 2, para 13 currently exempts regional assistance programmes from AMS calculations, but insists that all producers should be eligible for such assistance. This should be revised to allow governments to give greater assistance to LI/RP producers, if they consider this a necessary part of their national poverty reduction strategy.

5. Article 13 (the peace clause) should not be renewed, but measures taken by developing countries under Annex 2 (Green Box) and Article 6 (S&D) should be exempt from any action under the subsidies agreement.

6. Developing country governments should be able to purchase food security crops for public distribution at stable, not world, prices.

Export Subsidies

Appropriate flexibility should be provided to developing countries to be able to promote exports.

*Issue*	*What the current AoA allows*	*What needs to change*
General levels of government spending on agriculture	De minimis ceiling for developing countries of 10% of AMS	If provided for food security purposes, product and non product specific support should be allowed to exceed existing de minimis levels. OR a higher de minimis level in countries with low or zero AMS.
Cheap and accessible credit to LI/RP farmers	Article 6.2 exempts such spending from AMS calculations in cases where 'investment subsidies are generally available to agriculture in developing countries'.	Exempt such spending from AMS calculations on a permanent basis when credit subsidies are given to LI/RP farmers
Subsidised inputs to farmers growing food security crops	Included in AMS (Annex 3, para 13), but exempted in the case of LI/RP farmers under article 6.2	Clarify and make permanent the exemptions for LI/RP farmers in article 6.2. Establish more liberal limits for input subsidies to lower production costs in countries where market prices are kept at low levels because of food security concerns. This could be achieved by giving credit in the form of non-product specific support in cases of negative product specific support.

*Issue*	*What the current AoA allows*	*What needs to change*
Price falls due to import surges	Tariffs can be raised up to the bound levels + limited eligibility for Special Safeguard (SSG) measures ^[15]	Extend SSG for staple/food security crops
Increased vulnerability due to inadvertent low tariff bindings	Can only raise tariffs up to the bound levels	Low tariff bindings should be renegotiated in relation to food security crops.
Threat of increased producer vulnerability due to further reduction commitments	Current rules apply to all crops	Introduce 'negative list' exemptions for staple/food security crops
Unfair competition from subsidised northern exports	Widespread bias favouring northern forms of agricultural support	Link tariff reductions in countries with low domestic support levels to removal of trade distorting support and market access measures in developed countries
Difficulties of getting produce to market	Annex 2, para 2, subpara (g) exempts capital spending on transport infrastructure from AMS calculations	Exempt from AMS calculations subsidization of current spending on transport of food security crops from food surplus to food deficit parts of the country
Support for marketing by LI/RP farmers	Annex 2 para 2 exempts from domestic support reduction commitments spending on 'marketing and promotion services', but Annex 3 para 13 specifies that 'marketing cost reduction measures' are non-exempt.	Annex 2 para 2 should override any other provisions in the agreement and Article 6.2 should be further strengthened.
Market access for exports of crops grown predominantly by LI/RP farmers	Developed countries can keep many barriers to developing country exports	Improved market access, reduction in tariff peaks and tariff escalation affecting developing country crops largely produced by LI/RP farmers
Developing countries' ability to challenge unfair northern trading practices	Article 13, known as the Peace Clause, prevents countries from launching challenges to a range of agricultural subsidies under the Agreement on Subsidies and Countervailing Measures. This Clause is due to expire at the end of 2003.	The peace clause should not be renewed, but measures taken by developing countries under Annex 2 (Green Box) and Article 6 (S&D) should be exempt from any action under the subsidies agreement.

*Issue*	*What the current AoA allows*	*What needs to change*
Food Prices	Tariff reductions should lead to cheaper food, but often don't due food processors and traders, who use their control of the supply chain to capture the benefits of liberalisation.	Examine the role of private actors in controlling the food chain and preventing the benefits of liberalisation reaching producers and consumers. Consider introducing competition rules into the AoA
Food Aid	Green box allows governments to maintain buffer stocks for food security purposes, provided they are purchased at world prices. If governments pay above world prices, the difference is included in their AMS figure (Annex 2, para 3)	Allow developing country governments to purchase food security crops for public distribution at stable, not world, prices

*Issue*	*What the current AoA allows*	*What needs to change*
Jobs and incomes in agro-export farming	High applied tariffs and other barriers to trade as well as high domestic support and export subsidies in developed countries, which limit developing country exports	Improved market access, reduction in tariff peaks and tariff escalation affecting developing country crops, especially those which are labour intensive

*Issue*	*What the current AoA allows*	*What needs to change*
Government feeding and regional assistance programmes and food for work schemes	Annex 2, para 4 excludes food aid from AMS calculations, but stipulates that food aid must be very strictly targeted.	Governments should be given greater flexibility in this regard and should be able to distinguish LI/RP producers in their regional assistance programmes.

Footnotes