July 26, 2001

Attn: Gloria Blue, Executive Secretary
Trade Policy Staff Committee
Office of the U.S. Trade Representative
600 17^th Street NW
Washington, DC 20508

The Institute for Agriculture and Trade Policy (IATP) is pleased to submit comments concerning the built-in agenda at the WTO. The comments below are focused specifically on the Agreement on Agriculture and TRIPs. A more general note on the WTO negotiations is provided by way of introduction.

Almost two years after Seattle we are preparing for the 4^th Ministerial Conference, to be held in Doha, Qatar. Preparations are in a shambles, as they were in the summer of 1999. At that time, the confusion and disagreements proved an accurate forecast of the Seattle Ministerial itself, which collapsed in failure. In the immediate aftermath of that highly charged meeting, it seemed some lessons had been learned. There was some discussion of internal institutional reform, meeting the concerns of developing countries with regard to the implementation of the Uruguay Round, and promoting greater transparency with regard to the public.

Unfortunately, this energy has entirely dissipated, leaving all of these problems still to be addressed. The European, and more recently American, insistence on a broadly based round of trade negotiations with no regard to these basic questions reflects an alarming indifference to the future of the multilateral trading system. The built-in agenda provides an excellent, and adequate, framework for beginning to take action on the still very serious institutional issues undermining the WTO. It is strongly recommended that the widespread rejection of a trade round of new issues, and support for a period of assessment and consolidation, be better reflected in our government's position as the Doha Ministerial approaches.

The United States has not made available any of its positions on agriculture since the beginning of the second phase of negotiations on agriculture, which require governments to provide justification for their initial positions. This choice runs counter to the USTR's stated desire to increase the transparency of WTO negotiations in general. We hope that in the very near future all sectors of civil society will have access to negotiating documents and consultations.

The US proposal that is available, entitled Proposal for Comprehensive Long Term Agricultural Trade Reform and submitted to the WTO in June 2000, suggests that new rules for the Agreement on Agriculture distinguish between trade-distorting and non-trade-distorting subsidies for agriculture. We would be very interested to see analysis that supports this distinction. While economists discuss this concept at a theoretical level, considerable experience in the actual farm economy has shown the idea to be without useful application. Under current (historically low) prices, the vast majority of US farmers work one or more jobs off-farm to supplement their income. All support programs directed at agriculture affect production decisions, because for most farmers, the question of whether to stay in business at all is constantly in view.

Markets are not only distorted when crop choice is dictated by government payments. They are also distorted by non-implementation of anti-trust law, commodity prices that persist at below cost of production prices and by emergency and deficiency payments that overwhelming go to a small percentage of the wealthiest farmers and that directly flout the Agreement on Agriculture in spirit, if not in the narrowest interpretation of its law.

The US has also called on WTO members to gain "further deep reductions in support and protection, while encouraging non-trade distorting approaches for supporting farmers and the rural sector." We share the Administration's desire to reform policies and programs that encourage environmentally damaging expansion and intensification of production. At the same time, the Administration's agricultural trade policy can and must reflect the multiple environmental and social functions of agriculture. Support for environmentally responsible agriculture can help level the playing field for farmers who assume the costs of farming in such a way as to prevent negative impacts that production practices may have on the environment of their neighbors. Such fiscally, socially and environmentally responsible farmers cannot be put at a competitive disadvantage with so-called low cost producers who externalize the environmental costs of their production. Current policies to expand production for trade tend to award such subsidies to the least responsible stewards of the land and rural communities.

Government policy also should take into account the economic importance of a vibrant rural sector, and not subordinate U.S. agricultural policy to the needs of transnational corporations. Report after report from the USDA and others shows that while the concentration of all segments of the food system continues to erode market competition, whole towns are disappearing as the economics of farming have become ever less sustainable. The US has now in place a system whereby neither on the domestic nor on the international market do our agricultural products command even a cost of production price. The resulting and persistent dumping of commodities at below the cost of production continues to ruin or imperil most American farmers, and devastate most American rural communities. Allowing agribusiness to pay less than the cost of product prices for its raw materials in most years, and rely on myriad taxpayer subsidies to maintain the mirage of "cheap food" for U.S. consumers, has contributed to a food system with severe and persistent economic, environmental and food safety liabilities.

U.S. agribusiness dumping, supported by U.S. export credit, insurance and transportation subsidies to agribusiness, continues to drive farmers out of business in poorer countries. The food security of these countries is undermined as they use precious hard currency reserves to pay for foods that their farmers could grow and market if they did not have to compete with dumped products. We can only begin to address the near systemic distortions in agricultural trade if the U.S. government takes the initiative to table proposals at the WTO to phase out all forms of agricultural dumping.

The United States continues to maintain direct and indirect subsidies and protections that distort agricultural markets and threaten our environment, such as below-market pricing for water from government-funded projects and for grazing on public lands. The Administration should carry out a thorough review and restructuring of these policies and programs, and take them into account when notifying Aggregate Measure of Support commitments to the WTO Committee on Agriculture.

The WTO agricultural negotiations offer governments a chance to develop a multilateral understanding of which policies and programs should be reduced or phased out, and which should be permitted, on environmental, rural development and socio-economic grounds. Governments should also explore how to help developing countries implement such support programs, whether through multilateral financial and technical assistance or through some system of preferences. We urge the Administration to provide leadership on the issue of food security in these talks, a subject for negotiation under Article 20 of the Agreement on Agriculture. Governments must take into account the impact of dumping of food exports on the productive capacity of countries whose populations suffer from chronic hunger, and set trade rules to make such dumping illegal.

Agreement on Trade Related Aspects of Intellectual Property (TRIPS) IATP is emphatically opposed to patents on life. We support the proposal of the African Group, made at the third Ministerial Conference in Seattle, to prohibit all patents on life. With the support of a number of other developing countries, the African Group has proposed revisions to the TRIPs Agreement that clarify 'that plants and animals as well as microorganisms and all other living organisms and their parts cannot be patented, and that natural processes that produce plants, animals and other living organisms should also not be patentable.' We urge the US government to support this critical revision.

We also support amendments to TRIPS to expand the exceptions to patentability to include pharmaceutical drugs. Other countries have successfully developed life-saving drugs through process patents instead of product patents; this practice should be explicitly allowed under TRIPs. Parallel importing and compulsory licensing, likewise, should be explicitly allowed. (Presently, these latter practices are implicitly allowed -- although the U.S. government has challenged some governments that have sought to exercise this right. Such challenges are intolerable.)

IATP also supports developing countries' call for the full operationalization of the TRIPS Agreement's objectives in Articles 7 and 8; the implementation of the Article 66.2 obligation to ensure the transfer of technology to enable least-developed countries to create a sound technological base, and for the extension of transitional implementation arrangements.

Finally, amendments to TRIPS should ensure the protection of innovations of indigenous and local farming communities; the continuation of traditional farming processes, including the right to use, exchange and save seeds, and promote food security. Another amendment should clarify once and for all that the provisions of WTO agreements must be consistent with those of the United Nations Convention on Biological Diversity.

We look forward to your response to and questions about these comments. We would be pleased to meet with USTR officials to discuss these proposals further as the negotiations on the built-in agenda continue.

IATP also continues to request that USTR post all comments on its Web page so that interested parties outside of the Washington, DC area may read the comments of other parties in response to Federal Register notices without having to get to the USTR Reading Room to do so.

Respectfully submitted on behalf of IATP,

Sophia Murphy
Director, Trade Program
Institute for Agriculture and Trade Policy
2105 1^st Ave. S.
Minneapolis, MN, 55404, USA