U.S. AGRICULTURAL TRADE POLICY:
A SUSTAINABLE EXPORT?

A presentation to the symposium
"Trade Policy and Sustainability: The Regional Approaches"

International Centre for Trade and Sustainable Development
Geneva, Switzerland
February 1-2, 1999

Institute for Agriculture and Trade Policy
2105 First Avenue South
Minneapolis, MN 55404-2505
Tel: 612-870-3413
Fax: 612-870-4846
Email: ssuppan@iatp.org or smurphy@iatp.org

Creating a fairer society is not the job of trade negotiators. Society as a whole must accept that responsibility – and the job begins at home. Society is not made fairer, nor the environment cleaner, by attempting to use trade agreements to impose labor or environmental standards on others.¹
– Ernest C. Micek, Chief Operating Officer, Cargill Incorporated

The Institute for Agriculture and Trade Policy (IATP) is pleased to address the issue of regional approaches to trade policy and sustainability in the agriculture sector. IATP has been monitoring trade, agriculture, bio-diversity and intellectual property policies since 1986, with regional monitoring foci directed chiefly towards Latin America and Europe.

This intervention attempts to respond to the guideline questions for this session by considering two key trade-related issues; 1) can U.S. agricultural trade policy proposals for the Free Trade Area of the Americas (FTAA) help make agriculture environmentally and economically sustainable in the Western Hemisphere?; 2) can U.S. proposals for a "WTO–plus" Intellectual Property Rights chapter of the FTAA² help protect agro-biodiversity in the Americas, widely acknowledged to be eroding?³ The paper’s emphasis on economic sustainability is due to our presumption that environmental sustainability cannot be achieved over the long term if low price trends for agriculture (and mineral) commodities in the Western Hemisphere continue to maintain unfavorable terms of trade.⁴ We recognize that policies and banking practices to completely liberalize capital and investment will eliminate comparative advantage arguments about agricultural trade and formally institute a reign of absolute advantage for the major financial and trade powers.⁵

We recognize that present prospects for sustainable development via current FTAA policy proposals are slight, given the opposition of the Business Forum of the Americas and many country delegations to studying the possibility of environmental and labor clauses in the FTAA.⁶ Furthermore, the refusal, thus far of FTAA Working Groups to address issues of concern to the Small Economies (21 of 34 mostly poor countries) among prospective FTAA members⁷ will inhibit the Small Economies’ willingness to negotiate policies towards sustainability in exchange for FTAA provisions to address their concerns.⁸ Recent concern among some government officials about challenges posed by the NAFTA investment chapter to environmental laws give some cause to hope that eventually environment, health, safety and labor issues in the FTAA will be given the negotiating priority previously reserved for trade and investment issues.⁹

A theme of U.S. communications to the FTAA Working Groups and trade ministerials is that prospective FTAA members must, at a minimum, fulfill World Trade Organization (WTO) commitments, and that proposals for the FTAA should go "beyond" the Uruguay Round agreements. The United States has reiterated its intent to bring prospective FTAA members into the upcoming WTO negotiations as a kind of voting bloc.¹⁰ Therefore, we will interpret U.S. proposals to the FTAA Agriculture and Intellectual Property Rights Working Groups as trial runs for the proposals that the United States will bring to the WTO, as well as proposals for what the United States hopes to attain regionally even if it cannot be obtained at the WTO. As Ambassador Néstor Osorio Londoño, President of the WTO Committee on Agriculture, has stated, decisions emerging from WTO agriculture negotiations by 2003 will antecede and "influence the course of FTAA negotiations."¹¹

It is a commonplace of U.S. agricultural free trade proponents to insist that per capita U.S. agriculture income can improve only through expanded trade. The U.S. Department of Agriculture has reported that the impacts for U.S. farm income in percentage terms on whether or not to join the FTAA "are the smallest in the hemisphere."¹² Given the extremely modest projected benefits for U.S. farmers and ranchers (without distributional indicators and only if they become more "efficient"), advocacy for agricultural trade liberalization in the FTAA appears to be based less on improving per capita incomes than on enhancing U.S. exports.

First, we will consider some possible implications of U.S. "WTO–plus" agriculture trade policy for sustainable development. These implications will be derived from a very rough empirical framework of the environmental and economic effects of WTO–plus U.S. agriculture legislation in effect since 1996. (WTO–plus legislation refers not only to new rules and disciplines "beyond" those of the Uruguay Round agreements, but also to legislation that "deepens" present WTO commitments, e.g. by cutting price supports more steeply than what is required by WTO Aggregate Measure of Support commitments.¹³) Then we will consider to what extent the present economic and ecological crisis of agriculture can be alleviated by the export of agro-biotechnological products that would be facilitated under the "WTO–plus" proposals of the FTAA Working Groups on Agriculture and Intellectual Property Rights. Finally, we will comment on IPR policy as it influences agro-biotechnology and sustainability.

To sketch a framework towards determining whether the WTO–plus proposals for the FTAA agriculture working group could facilitate environmentally and economically sustainable agriculture, we will review the present state of U.S. agriculture as one partly structured by the WTO–plus provisions of the Federal Agriculture Improvement and Reform Act of 1996 (FAIR). One advocate summarized a key argument made by many proponents for FAIR, colloquially known as Freedom to Farm: "Foreign markets are open and eager to buy US farm products. If we take the limits off what our farmers can grow, they can plant to meet market demands. There is nothing that we could do that would be more effective to raise farm income."¹⁴ Freedom to Farm was signed into law by President Bill Clinton on April 4, 1996, even though he acknowledged that it "fails to provide an adequate safety net for family farmers."¹⁵

Freedom to Farm advocates expected an export boom as a result of their "freeing" of farmers to buy increasing expensive agribusiness inputs to produce for agribusiness processors and exporters. For example, in May 1997, former U.S. Secretary of Agriculture and U.S. Trade Representative Clayton Yeutter contended that "[the] U.S. had $60 billion in agricultural exports in 1996 and we see no reason why that should not be $100 billion a few years from now."¹⁶ Nobody predicts achieving that export target any time soon. The present price collapse in most U.S. agricultural commodities has been attributed by Freedom to Farm proponents to three causes; 1) the loss of export markets projected to fuel export expansion, chiefly in Asia; 2) overproduction in anticipation of trade policy engineered market openings for U.S. products; 3) competition from fair and "unfair" trading partner practices.¹⁷ Well in advance of the crisis in Asia and other markets, skeptics argued that Freedom to Farm was not structured to enable farmers to survive the price and export volume collapses that have been a structural feature of U.S. agriculture history.¹⁸ Unfortunately, the skeptics have been proven right.

U.S. farmers and ranchers are receiving low and even record low prices for many of their commodities, prices that developing countries have experienced, for the most part, since the mid-seventies.¹⁹ (Of course, developing countries have suffered low prices without price supports and without the off farm income streams available to many OECD country farmers.) Since the passage of Freedom to Farm, per bushel prices on soybeans have dropped 39 %; corn 69%, wheat, 57% and milo, 67%.²⁰ Official agricultural economic indicators for livestock and major grain crops and the financial health of farm operations are in sharp decline. Few foresee a near term return to profitably before tens of thousands more U.S. farmers are forced out of farming.²¹

Hog farmers are the most brutally affected: [p]roducers are currently receiving about $10 per hundredweight [one hundred pounds] for hogs, while the average price in 1997 was $59 per hundred weight. The last time farmers received $10 per hundred weight was 1941. However, ten-dollar hogs are comparable to 50-cent hogs in 1941 dollars. Most producers consider $40 per hundredweight a break-even price."²² While 11 percent of hog farmers were forced out of business last year,²³ perhaps as many as 40 percent of U.S. hog farmers will be forced out of business in the coming year.²⁴ According to one corporate hog farm advocate, if the current prices continue without significant increase for two more months, most independent hog producers will either be forced out of business or forced into contracts with agribusiness.²⁵ In other words, "Freedom to Farm" will be reduced to the "freedom" to contract with an agribusiness on its terms, or not farm, as has already happened in the U.S. non-organic poultry industry.

Widely acknowledged, externalization of environmental and public health costs, including damaged water quality, air quality, farmer worker and community health have underwritten the expansion of corporate hog farming.²⁶ In our state of Minnesota, agribusiness executives contended that the industry over-expanded in anticipation of environmental regulation of and moratoria on its expansion.²⁷

The corporate hog industry model has produced a similar farmgate price collapse and environmental pollution in Europe and Canada, where farmers gave away their slaughtered hogs to food aid shelters, rather than sell them to agribusiness.²⁸ Mexican hog farmers have lobbied against below cost-of-production dumping of hogs from the United States, which has denied dumping, but accused Canada of dumping.²⁹ In a word, the corporate hog farm model of industrialized agriculture has produced an international farm crisis.

Because prices for food in the U.S. have remained constant, the heavily subsidized³⁰ and highly concentrated food retailing and agribusiness sectors are posting or will post record earnings.³¹ For example, retail prices remain at about $3 per pound for all pork cuts while hogs prices are currently between nine and thirteen cents a pound.³² Major media attention has focused on the chasm between farmgate and retail prices, particularly in the pork industry,³³ but little attention has been focused on one very important cause for the chasm: the food and agribusiness concentration enabled by non-enforcement of agribusiness competition law. Without cost of production prices plus a reasonable return, there is little long-term prospect for economic or environmental sustainability in agriculture.

Congressional and agribusiness advocates of Freedom to Farm and have rejected proposals to overhaul the legislation as unnecessary and too expensive.³⁴ In July 1998, the Republican majority of the U.S. Senate voted against increasing the de facto minimum price for agriculture commodities set under Freedom to Farm provisions for food and feed grains.³⁵ Instead of inducing agribusiness to pay prices closer to the cost of their production, U.S. government prefers to use taxpayer funds to subsidize farm operations under the rubrics of "emergency aid"; Freedom to Farm "transition" payments (i.e. a "transition" to elimination of production related supports scheduled for 2002); food aid to developing countries; and government procurement programs to take commodities out of the marketplace. Nonetheless, these combined payments, worth at least $7 billion, are well below the $19.8 billion of Aggregate Measure of Support the United States established for itself in the Uruguay Round negotiations.³⁶ While desperate U.S. farmers and ranchers have been grateful for any help at all from the government, most of them recognize that emergency aid is no substitute for above cost-of-production prices. One wheat producer wrote that "it is the responsibility of companies such as ADM, Cargill, Continental etc. to pay producers a reasonable price for the products they purchase from us. It should not be left up to the U.S. taxpayer to try to keep us afloat."³⁷

Critics of Freedom to Farm, particularly farmers and ranchers, have proposed numerous changes to the legislation, both to make it more responsive to price and production volatility, and to reduce disincentives to good environmental management.³⁸ Among their proposals are laws and regulatory measures to restore competition to agricultural markets, and to halt the trend towards replacing markets with production by contract on agribusiness terms. Proponents of these changes believe that by restoring competition to agriculture, commodity price trends will be better in general than those stipulated by agribusiness contracts.

The example of competition law enforcement in agribusiness is important for sustainability in the Americas, since trade lawyers say that only the U.S. and Canada have experience in enforcing competition laws, and imply that FTAA should look to them for competition policy models.³⁹ Yet the wholly inadequate enforcement of U.S. competition law, by the U.S. government’s own admission, hardly recommends the United States as a model for the FTAA. Consider, for example, statistics reported by U.S. Assistant Secretary of Agriculture Mike Dunn in response to questions about a March 1997 USDA Inspector General’s report. From October 1994 to September 1996, the USDA Grain Inspection and Stockyards and Packers Administration (GIPSA) reported that it had received over 2000 complaints of anti-competitive agribusiness practices. In GIPSA’s estimation, about 800 of the complaints pointed to clear violations of the U.S. law. Due to chronic GIPSA funding, staffing and training inadequacies, only 84 cases were investigated, of which three cases were forwarded to the Department of Justice for enforcement actions.⁴⁰ In response, the USDA announced that it would seek from Congress a very modest funding increase for GIPSA’s enforcement of competition law.⁴¹ More significant, however, is the USDA’s and the Congressional refusal to implement a proposed rule change to require mandatory price disclosure of purchases in the livestock industry, a change sought since 1989.⁴² The non-enforcement of U.S. anti-trust law in agribusiness not only has produced economically and environmentally unsustainable farm operations, but leads U.S. officials to propose that the only way to sustainability is via more trade in agro-biotechnology products.

Despite the failure thus far of Freedom to Farm to deliver on its promises of higher farmer and rancher incomes, the U.S. government continues to contend that long-term growth in farm incomes depends on "the extent to which we help producers take full advantage of a world of opportunity. Farm incomes will be linked to the integrity, size and strength of the global economy."⁴³ It is a commonplace of U.S. government officials and agribusiness executives to insist that the expansion of agricultural trade can be made environmentally sustainable only through the use of agro-biotechnology: "Without biotechnology, we will be forced to exploit highly erodible farm and forest land. Biotechnology holds out the promise of food security by improving disease and pest resistance, increasing tolerance to environmental stress, raising crops yields, and preserving plant and animal diversity."⁴⁴

Promising food security through agro-biotechnology exports is vital to U.S. agricultural trade negotiation strategy, since the WTO, as well as the Food and Agriculture Organization and the United Nations Conference on Trade and Development, have conceded that the food security of the vast majority of WTO members has not benefited by the WTO Agreement on Agriculture (AoA). The U.S. has endorsed the negotiation of a new Food Aid Convention, an AoA provision, to address food security problems for developing countries.⁴⁵ However, at least one former developing country AoA negotiator has dismissed AoA food security provisions as of little "operational significance", when compared to food security provisions proposed by developing countries but ignored by the United States and other major trading powers.⁴⁶ Rather than discuss why the old promise of food security through the AoA did not work, the United States prefers to offer the new promise of food security through agro-biotechnology in the form of new trade rules.

Working with biotechnology industry representatives, the United States has proposed that agro-biotechnology exports be on the agenda of the upcoming WTO agriculture negotiations: "Members should agree to pursue additional approaches that address market access issues for biotechnology products."⁴⁷ To the FTAA Agriculture Working Group, the United States has posed the question "[s]hould biotechnology issues be addressed under the SPS (Sanitary-Phytosanitary) work program?" The U.S. FTAA paper implies that it might offer Mutual Recognition Agreements (MRAs) of SPS inspection standards and practices to some countries in order to facilitate trade in agricultural products, including agro-biotechnology: "How do some members envision application of mutual recognition agreements?"⁴⁸ MRA’s were first formulated by the Transatlantic Business Dialogue (TABD), as a means to develop mutually recognized goods and service standards for facilitating greater trade between the United States and the European Union. The U.S. Department of Commerce, which initiated, staffed and provided seed money for TABD, has praised the MRAs as TABD’s most signal achievement.⁴⁹ From the viewpoint of the U.S. government and agro-biotechnology companies, MRAs would accelerate trade in agro-biotechnology products and thus enable those products to ensure food security and the aforementioned environmental benefits promised by agro-biotechnology proponents.

At least one NGO has charged that MRA’s may violate the U.S. Administrative Procedures Act, and other U.S. laws. In this view, the statutory responsibilities of agencies in charge of regulating health, safety and environment standards have been subordinated to the fundamental stated purpose of MRAs, that of facilitating trade.⁵⁰ However, if U.S. and/or European Union country courts rule that MRAs are legal, the effective implementation of MRAs in SPS matters alone, between countries of vastly unequal SPS inspection infrastructures and budgets, could prove to be impossible. For example, since the advent of World Bank and International Monetary Fund structural adjustment programs for Mexico, the SPS budget there has all but collapsed. The OECD report on Mexican agriculture for 1997 states that the Mexican federal budget for phyto-sanitary inspection declined from US$53 million in 1979 to US$5 million in 1995.⁵¹ It is probable that at least some of the larger prospective FTAA members, such as Brazil, have been or will be forced to reduce SPS budget and infrastructure in the austerity budgets resulting from structural adjustment.

If structural adjustment erodes SPS budgets and infrastructure, and the U.S. nonetheless negotiates MRAs with developing countries, such MRAs could not be operationalized absent extensive financial and technical assistance, discussion of which has been absent from FTAA negotiating proposals. Indeed, to judge by the criticism of the U.S. General Accounting Office of the inadequate SPS infrastructure and budget for trade with Mexico, the United States could use assistance itself.⁵² Despite these legal, infrastructural and financial difficulties, it seems likely, that at least some bilateral MRAs will be negotiated in SPS matters with prospective FTAA members. In addition to facilitating trade, such MRAs could serve as another legal instrument to assist the transnational agribusiness practice of introducing genetically modified organisms (GMOs) into countries lacking any regulation of GMOs, and then lobbying for legislation to protect GMO production, trade and intellectual protection privileges. Assuming that the United States will attempt to negotiate MRAs to facilitate trade in GMOs, we begin to analyze how WTO-plus proposals for GMO trade might affect farmer incomes, food security and agro-biodiversity in the Americas.

Towards assessing sustainable development impacts of a WTO-plus agriculture policy in the Americas, we will first summarize a simple model developed by the Institute for Agriculture and Trade Policy to understand the linkages between agriculture, trade and environment of Freedom to Farm.⁵³ The model is adapted from an Organization for Economic Co-operation and Development (OECD) Driving Force-State-Response (DRS) model⁵⁴ for analyzing agriculture policy and production impacts on the environment. The IATP version of DRS understands the WTO Agreement on Agriculture (AoA) to be the "Primary Driving Force", in OECD terms. Freedom to Farm is a "Secondary Driving Force" of agricultural production decisions with environmental consequences. According to this model, for example, AoA prohibitions against production-related supports, such as those for acreage reduction programs, "drove" Congress to eliminate annual acreage set-a-side programs. Among the farm management responses to this elimination would be withdrawal from the government’s Conservation Reserve Program, leading to greater soil compaction and possible water pollution on newly farmed acreage, due to runoff from fertilizers, pesticides, manure, etc.⁵⁵ This policy analysis model is avowedly a great simplification relative to the vastly more complicated empirical consequences of decisions made by farm managements in response to markets, myriad agriculture policies, and the state of their environmental resources. However, the model does have the virtue of serving as an analytic grid for determining how agricultural trade policies proposed for negotiation at the FTAA and WTO might affect sustainable development.

Here is one theory that eloquently summarizes the causes for the long term inability of new farm technology, including biotechnology, to produce economic sustainability in agriculture: "The aggressive, innovative farmer is on the treadmill with regard to the adoption of new and improved technologies on his farm. As he rushes to adopt a new and improved technology when it first becomes available, he at first reaps a[n economic] gain. But as the others run after him to adopt the technology, the treadmill speeds up and grinds out an increased supply of the product. The increased supply of the product drives the price of the product down to where the early adopters and his fellow adopters are back in a no-profit situation. Farm technological advance in a free market situation forces the participants to run on a treadmill."⁵⁶ Given present U.S. agriculture and agricultural trade policy and given wholly inadequate enforcement of anti-competitive agribusiness practices, there is no reason to believe that biotechnology will enable farmers to move off the treadmill.

Agribusiness and the U.S. government claim that biotechnology will develop "value-added" products that will enable farmers to receive economically sustainable prices for their products.⁵⁷ Indeed, U.S. agriculture trade legislation and policy is built ostensibly upon this premise.⁵⁸ Yet, ongoing IATP studies of commodity price trends in Minnesota counties show no appreciable difference in income trends for "value-added" vs. traditional commodity products.⁵⁹ Furthermore, since free trade agriculture proponents such as Daniel Amstutz, former U.S. trade negotiator of the WTO AoA, claim that GMO grains cannot be segregated from conventionally grown grains, it is difficult to imagine how the claim of higher prices could be substantiated.

Using the U.S. example again, the environmental sustainability of agro-biotechnology presents many unknowns. First, several GMO corn and soybean seed "numbers" were approved in advance of determining whether the Pest Resistance Management (PRM) plan proposed for them as a condition of their approval by U.S. regulatory agencies would work in an actual production situation, as opposed to a laboratory field. The PRMs required that a certain percentage (4-20% depending on which plan) of acreage be set aside as "refuge" for the pests. If the PRMs fail, a new generation of "super-bugs" resistant to the pesticide generating GMO seeds could result that would devastate crops.⁶⁰ U.S. regulatory agencies have also streamlined the approval system for GMOs so that GMO products can be granted "non-regulatory status."⁶¹ In the present U.S. agriculture economic environment, the temptation not to set aside acreage for pest refuges and thereby increase revenue, must be very strong.

I leave it to my Latin American colleagues on this panel to describe further some of the many difficulties and possibilities for biotic invasion and pollution that could result from the introductions of GMOs developed originally for U.S. Midwest grains, then adapted and introduced to Latin American and Caribbean ecosystems. The literature on the environmental risks of GMOs is extensive.⁶² Rather than leave you with a laundry list of risks to agro-biodiversity of GMOs, let me offer a diplomatic remark from Colombia’s negotiator to the Biosafety Protocol of the Convention on Biological Diversity: "Scientific information available today on the effect of LMOs [Living Modified Organisms] on biological diversity comes from risk assessments carried out in countries which produce LMOs (temperate regions, with homogenous farming systems), which means that this information is still insufficient for responsible decision-making in countries with high diversity and highly diverse farming systems. During this negotiating process we have seen the tendency to promote the position that it is essentially or even solely existing scientific information which is grounds for decision-making on the import of an LMO. This clearly jeopardizes the application of the precautionary principle as a central organizing thrust for this Protocol."⁶³ As this diplomat notes, the present concept of risk assessment is inadequate to assessing whether the risks of GMO trade are manageable. At least one insurance company says that it cannot calculate the risks, which it says range from none to catastrophic.⁶⁴ U.S. agribusiness and government opposition to a liability clause in the Biosafety Protocol, in the event of GMO environmental damage, is presumably because neither the U.S. government nor U.S. agribusiness wish to absorb the potentially huge liability costs. Whether GMO-importing countries are willing to accept liability or not will be seen later this month as the Biosafety Protocol is finalized in Cartagena, Colombia.

With or without a precautionary Biosafety Protocol, the U.S. will undoubtedly seek to utilize the next talks at the WTO to facilitate the export of GMOs. U.S. Secretary of Agriculture Dan Glickman in a speech to the Commodities Club in 1997, characterized overcoming resistance to GMOs and the patenting of life as "the battle royale of the 21^st century.⁶⁵ The U.S. has listed among its objectives for the upcoming renegotiation of the Uruguay Round Agreement on Agriculture that "Members should agree to pursue additional multilateral approaches for implementing commitments (for example, in the Agreements on the Application of Sanitary and Phytosanitary Standards and on Technical Barriers to Trade) to bring more predictability and discipline to measures affecting agricultural products while protecting health and the environment," and – more directly – that "Members should agree to pursue additional approaches that address market access issues for biotechnology products."⁶⁶

The WTO TRIPS agreement presently requires member states to provide patents for GMOs, although it permits exclusions from patent protection for "plants and animals, except micro-organisms."⁶⁷ Many non-governmental organizations and developing countries are seeking, at a minimum, to maintain the present exclusion.⁶⁸ Most of these NGOs and some developing countries would prefer to negotiate biodiversity-related rights under the aegis of the United Nations Convention on Biological Diversity. Some NGOs are seeking a "[f]ull exclusion from intellectual property protection of all biodiversity-related products and processes under TRIPS (no patents on life)."⁶⁹ The U.S. government, at the behest of the biotechnology industry, will likely seek elimination in the TRIPS review of the allowable exclusions in Article 27. 3 (b).⁷⁰ However, it is worth noting that even the legal counsel to the Biotechnology Industry Organization (BIO) has admitted that there is no legal consensus in U.S. courts on what life forms can be patented.⁷¹

The United States government and the biotechnology industry strategy for the TRIPS review is replicated at the FTAA. In the "Draft Objectives and Principles for FTAA" resulting from an October 28-30, 1997 meeting, among the many principles left in brackets to be contested was "principles of intellectual property applicable by thematic area."⁷² One of the areas that many Latin American governments wanted to leave open for discussion by thematic area was that of biotechnology. However, in the "General Principles and Objectives" annex to the FTAA Ministerial Declaration of San José of March 19, 1998, this principle concerning "thematic area" had been eradicated.⁷³ Crucial to the U.S. ability to impose its will in the FTAA negotiating objectives and principles is its constant threat of unilateral trade sanctions for those countries, such as Ecuador, that insist on their sovereign right to legislate measures to protect their genetic resources in conformity with TRIPS, and to prevent patenting of their cultivars illegally taken from their territory.⁷⁴ Perhaps not coincidentally, Ecuador was selected as the Vice-Chair of the FTAA IPR Working Group until October 1999.⁷⁵ Another successful U.S. pressure tactic has been, in the case of Colombia, to condition the negotiation of a Bilateral Investment Agreement on conformity to the U.S. WTO plus position on IPR.⁷⁶ One might well imagine that this tactic could be applied to most Hemispheric countries in most FTAA Working Groups.

Unlike the WTO, the FTAA currently does not permit preferential and differentiated treatment for developing countries, despite the "great irregularity and disequilibrium in levels of development, and, thus, in the needs for protection or aspirations for liberalization. This is sure to be an area where difficult conflicts will arise."⁷⁷ The U.S. refusal to admit preferential and differential treatment in trade rules in the FTAA likely is an evolution of the U.S. policy of pressuring developing countries to assume their WTO obligations in advance of their commitments, and despite the preferential and differentiated treatment proviso.⁷⁸ Even supporters of neo-liberal trade policy have recognized that such treatment is necessary: "What different countries want, need, and should have in a system of intellectual property rights is very different depending on their level of economic development. National systems, such as that of the United States, are not going to evolve into de facto world standards."⁷⁹ Nonetheless, it is precisely this evolution that the United States plans to negotiate in the FTAA; to do so, the Quad countries (U.S., Canada, Japan and the European Union) must first impose their will on IPR at the upcoming WTO review.

Now we will outline some simple speculations on what might happen to the economic and environmental sustainability of agriculture if the U.S. position on IPR in agro-biotechnology prevails at the WTO TRIPS review and then at the FTAA. The speculation framework is in terms of the IATP adapted model of Primary Driving Force/Secondary Driving/ (Farm Management and NGO) Response/ Environmental (and Economic) State (of Sustainability).

Let us assume that FTAA prospective members accept the U.S. proposal on IPR and agree, regardless of their level of development, to finance and implement: 1) public campaigns concerning the "economic, social and legal costs" of IPR law violations; 2) IPR border enforcement systems for customs authority and procedures; and 3) enforcement capability including special police, prosecutors and judges to prosecute IPR violators, and other IPR disciplines.⁸⁰ Let us further assume that all FTAA members institute laws which allow agro-biotechnology companies, such as Monsanto to demand that farmers violating IPR contracts either burn their IPR disciplined crops or pay fines in amounts that would endanger the financial viability of the farm, as presently happens in the United States. Finally let us assume that the United States negotiates Mutual Recognition Agreements (MRAs) with at least the larger economies of the FTAA. These MRAs not only enable the United States to export its genetically modified products to FTAA members without any national SPS inspection or review, but also allow U.S. investors to receive national treatment in FTAA members to produce and market such products in MRA countries.

Given the aforementioned assumptions, what might happen to the economic sustainability of agriculture? Again the U.S. example is instructive, since U.S. farmers are the first to employ agro-biotechnology on a wide spread basis. Present crop earnings data is not segregated, as transnational agribusiness officials insist that it is technically impossible to segregate GMO and non-GMO products. However, historical trends in U.S. agriculture suggest that the farmer’s share of the agricultural dollar, relative to the share taken by inputs (e.g. fertilizers, pesticides, genetically altered seeds) and marketing (e.g. processors, traders, wholesale and retail sales) will continue to shrink.⁸¹

NGO responses to U.S. IPR and agriculture proposals in the FTAA context have not been discussed, much less implemented by U.S. negotiators. Therefore, it would be idle to suggest what impacts such responses might have on economic and environmental sustainability in the Americas. Several environmental NGOs drafted an admirable statement of principles for the FTAA Ministerial in March 1998 in San José, Costa Rica. At least one passage of that declaration pertains to the FTAA Negotiating Group on Intellectual Property Rights: "We further call on governments to. . . [e]nsure that the Negotiating Group on Intellectual Property Rights provides guarantees that rights, access and benefits are shared in an equitable manner."⁸² This passage alludes to the just compensation and informed prior consent clauses now under negotiation in the Biosafety Protocol. Another passage invokes language from the proposed liability clause to the Protocol. Other NGO documents resulting from the Peoples’ Summit process begun at an NGO meeting during the Summit of the Americas in April 1998 have also address IPR and biodiversity issues.⁸³

However, currently, the only group in civil society with effective access to the negotiators is the transnational business sector, which has demanded and been granted separate and privileged access for itself in future FTAA negotiations.⁸⁴ Given this fact, I joined a few other NGOs at the Intellectual Property Rights Workshop of the Fourth Business Forum of the Americas, just prior to the FTAA Ministerial in Costa Rica. If I may be allowed to close this paper on a personal note, it may give a concrete insight to the trade policy formulation obstacles to sustainable development in the FTAA.

During two intense and long days of discussion, the Workshop reviewed about 200 policy recommendations and proposals for business facilitation measures.⁸⁵ On the third day, recommendations that had been agreed upon were presented to the trade ministers who listened for about three hours during the reporting of each Workshop.⁸⁶ IATP attempted to discuss three recommendations it presented to curb the patenting of bio-pirated genetic resources in the Hemisphere. Among them, IATP recommended that the ministers instruct the FTAA Technical Secretariat to consult with the Consultative Group on International Agriculture Research (CGIAR), which had recently called for a moratorium on the patenting of genetic material in CGIAR research centers because of the prevalence of bio-piracy and the breadth of IPR claims on plant genetic resources that make it difficult for CGIAR to carry out its mandate.⁸⁷ Both the President and Rapporteur of the Workshop called the recommendation out of order ("ajeno al tema"). After ruling that discussion of bio-piracy was not germane to the Workshop, the President and Rapporteur then guided debate about the next recommendation, one concerning trademark piracy. (They later attempted, over the protests of several Latin American business groups, to classify NGOs as observers without right of intervention. Only diplomatic action by the host organizing committee allowed NGOs to continue participating, although only to provide points of information and clarification. One corporate affairs vice president of a major U.S.-based transnational corporation told IATP that he would see to it that we would never again be allowed to intervene in a Business Forum.)

If you see irony, as I do, in arguing that consideration of trademark piracy is relevant to regional trade policy while biopiracy is not, you may also appreciate the arguments threaded throughout this paper. In sum: IATP finds that U.S. proposals for agricultural trade policy – in the Americas and anywhere else – will not make a positive contribution to economic and environmental sustainability, nor will they help protect agro-biodiversity. To the contrary, the United States’ negotiating objectives for the FTAA and the next talks of the WTO would, if adopted, accelerate present trends towards intensive industrial agriculture systems and the cohort of profoundly destructive social and ecological impacts: depressed commodity prices forcing farmers out of production and further jeopardizing food security; increased use of chemical and energy inputs resulting in increased pollution and threats of climate change; monocultural cropping and intensive livestock operations with resulting problems with pests and disease, waste management and ozone depletion; and broadscale experimentation with GMOs in both the food supply and the ecosystem with potentially catastrophic risks and no assignment of liability.

We hope that our presentation on economic and environmental sustainability of agriculture in an FTAA context will provoke the much needed discussion thus far absent from the Business Forum and among the FTAA trade negotiators. We look forward to your questions and dialogue during this seminar. IATP thanks you once again for offering us the opportunity to present our research and experience on this vital topic.

References

1 Ernest C. Micek, "Freer trade can be a means to a fair end", THE CARGILL BULLETIN, Vol. 6, No. 1 (February 1998), 8. (Daniel Amstutz, a former Cargill executive, drafted the U.S. proposal for agriculture negotiations during the Uruguay Round while serving as U.S. agriculture trade negotiator.)

2 "U.S. Proposal for FTAA IPR Work Group", INSIDE U.S. Trade, February 21, 1997.

3 The State of the World’s Plant Genetic Resources for Food and Agriculture (Rome, 1996; Food and Agriculture Organization of the United Nations), 7-8 and Lori Ann Thrupp, "Linking Biodiversity and Agriculture: Challenges and Opportunities for Sustainable Food Security", WRI ISSUES AND IDEAS (World Resources Institute, Washington, DC; March 1997).

4 Gustavo Gonzalez, "Crisis Exposes Dependency on Commodity Exports", InterPress Service, September 20, 1998.

5 Herman E. Daly, "Globalization versus Internationalization – Some Implications", INTERNATIONAL SOCIETY FOR ECOLOGICAL ECONOMICS (Santiago de Chile, November 1998).

6 E.g. Kevin G. Hall, "Mexico adamant about keeping environment out of trade talks", JOURNAL OF COMMERCE, January 11, 1998; "FTAA Negotiators Reach Few Agreements on Business Measures", AMERICAS TRADE, December 10, 1998; and "Final Recommendations by Workshops of the IV Business Forum of the Americas", March 18, 1998, http://www.insidetrade.com.

7 "FTAA Groups Neglecting Small Economies, Consultative Group Says", AMERICAS TRADE, October 15, 1998.

8 "Developing Countries and the issue of Inserting Environmental Concerns into International Trade Policy Making", INTERNATIONAL CENTRE FOR TRADE AND SUSTAINABLE DEVELOPMENT, December 1998.

9 "Canada Seeks to Limit Investor-State Provisions in NAFTA Review", INSIDE U.S. TRADE, December 18, 1998.

10 For a recent iteration of the U.S. view of the relation between the WTO and the FTAA, see "FTAA Talks are way to aid U.S. Cause in WTO, USTR officials say", AMERICAS TRADE, December 24, 1998.

11 Néstor Osorio Londoño, "The Agreement on Agriculture and the Work at the WTO Committee on Agriculture", COMUNIICA (sic), Year 2, No.8, 1998, 18.

12 "Free Trade in the Americas" Situation and Outlook Series, U.S. Department of Agriculture (WRS-98-1, November 1998), 16.

13 Gigi DiGiacomo, "Agricultural Market Liberalization in the United States: What’s On the Horizon for Global Trade Negotiations?" INSTITUTE FOR AGRICULTURE AND TRADE POLICY, October 14, 1998, 24-29.

14 Statement made by Senator Larry Pressler in the final debate over the 1996 Federal Agricultural Improvement and Reform Act. "Exporters’ Programs Survive Farm Bills", JOURNAL OF COMMERCE, March 15, 1996.

15 "Clinton Signs Farm Bill With Reservations", FWN/UPI, April 4, 1996.

16 Clayton Yeutter, "Agriculture in a Global Context", AGRI-TRADE FORUM, International Policy Council on Agriculture, Food and Trade, Vol. 6, No. 2, (June 1997), 3.

17 E.g. former U.S. Secretary of Agriculture and board member of Archer Daniels Midland, John R. Block, "Hands off the farm law", JOURNAL OF COMMERCE, July 29, 1998.

18 George Anthan, "Freedom to farm – or is it freedom to fail?" DES MOINES REGISTER, January 21, 1996.

19 Alfred Maizels, COMMODITIES IN CRISIS: THE COMMODITIES CRISIS OF THE 1980s AND THE POLITICAL ECONOMY OF INTERNATIONAL COMMODITY POLICY (Oxford, UK: Clarendon Press, 1992), 10-14.

20 Al Krebs, "Where Goes the American Food Dollar? Guess?", THE AGRIBUSINESS EXAMINER, January 10, 1999. avkrebs@earthlink.net.

21 Dee DePass, "Farmers may struggle another seven years, ag economist warns", STAR TRIBUNE, November 12, 1998, and "Selected Agricultural Economic Indicators", THE AGRICULTURAL NEWSLETTER FROM THE FEDERAL RESERVE BANK OF CHICAGO, November 1998.

22 Krebs, "It’s Feeding Time (Again!!) For the Big Hogs", THE AGRIBUSINESS EXAMINER, January 10, 1999. avkrebs@earthlink.net.

23 ibid.

24 Alan Guebert, "Economic forecast calls for sub-zero year for agriculture", AGRI-NEWS, January 14, 1999.

25 Rod Smith, "Pork industry enters crisis stage", FEEDSTUFFS, December 28, 1998.

26 Kendall M. Thu, "Rural Health and Large-Scale Swine Operations" in MANURE MANAGEMENT: IN HARMONY WITH THE ENVIRONMENT AND SOCIETY (Social and Water Conservation Society; Ames, Iowa; February 10-12, 1998), 321-324.

27 Conrad deFiebre, "Panel is told that moratorium talk indirectly helped spur ‘pork crisis’", STAR TRIBUNE, January 8, 1999.

28 Ian Elliott, "Europe faces full-blown crisis in pork sector", FEEDSTUFFS, December 28 and "Message delivered through free pork", THE WESTERN PRODUCER, December 10, 1998 and Barry Wilson, "Farmers net incomes nosedive", THE WESTERN PRODUCER, June 4, 1998.

29 "Mexican farmers protest American hog dumping", THE WESTERN PRODUCER, December 10, 1998.

30 E.g., Donald L. Barlett and James B. Steele, "The Empire of the Pigs: A little-known company is a master as milking governments for welfare", TIME, November 30, 1998.

31 Krebs, "Where Goes the American Food Dollar? Guess?", THE AGRIBUSINESS EXAMINER, January 10, 1999.

32 "Companies, government targets of hog rally", AGRINEWS, January 7, 1999.

33 E.g. David Barboza, "The Great Pork Gap: Hog Prices Have Plummeted. Why Haven’t Store Prices?", THE NEW YORK TIMES, January 7, 1999.

34 "GOP defends farm bill after Democrats attack", Associated Press, rpt. in AGRINEWS, June 25, 1998.

35 Gene Lucht, "Senators’ efforts to raise farmer loan rates fail", IOWA FARMER TODAY, July 245, 1998. For a history of successful corporate lobbying to lower prices for agricultural commodities below the price of production and to subsidize farm operations with tax-payer funded programs, see Mark Ritchie and Kevin Ristau, "Crisis by Design: A Brief Review of U.S. Farm Policy", LEAGUE OF RURAL VOTERS EDUCATION PROJECT (Minneapolis, MN, 1987).

36 F.J. Nelson, "Measuring Domestic Support for U.S. Agriculture", Economic Research Service, U.S. Department of Agriculture, November 1997.

37 Jon Redlin, "Grain producers want fair prices", AGWEEK, August 24, 1998.

38 "A Time to Act: Time for a New Farm Bill" CENTER FOR RURAL AFFAIRS NEWSLETTER (December 1998), 3-4, and "A Time to Act: A Report of the USDA National Commission on Small Farms" (Washington, DC, January 1998).

39 "Administration Endorses Broad Section 301 Law for Farm Imports", INSIDE U.S. TRADE, November 7, 1997.

40 Kathleen Kelley, "Audit blasts Packers and Stock yards Administration", ROCKY MOUNTAIN UNION FARMER NEWS, March-April 1997 and Bruce Ingersoll, "Farm Unit Antitrust Watchdog Lags in Meatpacking, U.S. Says", WALL STREET JOURNAL, March 13, 1997.

41 "Glickman Announces $30 Million Beef Purchase; Other Actions to Assist Cattle Industry", USDA press release No. 0131.98, March 24, 1998.

42 John D. Smillie, "Concentration Chronology: Enforcement of the Packers and Stockyards Administration Act, 1989-1997", WESTERN ORGANIZING REVIEW, November 1997, http://www.worc.org and "Farm Appropriators Strike Meat, Produce Labeling Provisions", INSIDE U.S. TRADE, October 2, 1998.

43 Deputy USDA Secretary Richard Rominger, "Challenges of the New Millenium for Grain Markets", special Grains Conference of the International Grains Council (Buenos Aires, Argentina; December 2, 1998).

44 Ibid.

45 Ian Elliot, "Record shows food security worries are justified", FEEDSTUFFS, January 11, 1999.

46 Bhagirath Lai Das, "Implementing WTO Agreements: What’s Next?", THIRD WORLD ECONOMICS, No. 184-185 (May 1-31, 1998), 25.

47 "U.S. Seeks WTO Ban on Farm Export Subsidies, Cuts in Internal Support", INSIDE U.S. TRADE, November 27, 1998 and "Preparations for the 1999 Ministerial Conference: Communication from the United States", November 19, 1998 (WT/GC/W/115), 3.

48 "FTAA Negotiating Group on Agriculture: Submission by the United States for the September 3-4, 1998", AMERICAS TRADE, September 17, 1998, 10.

49 Prepared Statement of Ambassador David L. Aaron, Undersecretary of Commerce for International Trade Before the Subcommittee on Trade of the House Committee on Ways and Means (July 28, 1998).

50 Memo on Mutual Recognition Agreements, Rod Leonard, COMMUNITY NUTRITION INSTITUTE, December 17, 1998.

51 "Examen de las políticas agrícolas de México, ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (Paris, 1997), 97.

52 "NAFTA’s Broken Promises: Fast Track to Unsafe Food", PUBLIC CITIZEN press release, September 1997, referring to a May 1997 General Accounting Office report.

53 Mark Ritchie and Gigi DiGiacomo, "Exploring Critical Linkages Between Agriculture, Trade and Environment: Decoupled U.S. Agriculture Subsidies", INSTITUTE FOR AGRICULTURE AND TRADE POLICY, 1997. For a summary of the extremely complex Freedom to Farm legislation, see Neil E. Harl "Federal Agriculture and Reform Act of 1996: Summary of provisions", (Iowa State University; April 14, 1996).

54 Kevin Parris, "Agriculture and the Environment: Developing a Set of Indicators for Use in Agricultural Policy Analysis", OECD, September 19, 1994.

55 Ritchie and DiGiacomo, "Exploring Critical Linkages Between Agriculture, Trade and Environment: Decoupled U.S. Agriculture Subsidies", 10, chart 4.

56 Willard W. Cochrane, THE DEVELOPMENT OF AMERICAN AGRICULTURE (1993), 429, cited in Ritchie and DiGiacomo, "Exploring Critical Linkages Between Agriculture, Trade and Environment: Decoupled U.S. Agriculture Subsidies", 13.

57 E.g. Richard Reason, "Biotechnology to bring crucial difference to agriculture", FEEDSTUFFS, December 1, 1997.

58 E.g. "S. 219 – The Value-Added Agricultural Products Market Access Act of 1997" presented by Senator Thomas Daschle, January 28, 1997.

59 Dick Levins, "Farmgate incomes in Swift and Meeker Counties" INSTITUTE FOR AGRICULTURE AND TRADE POLICY (unpublished), December 1998, charts.

60 Ann M. Thayer, "Betting the Transgenic Farm", C & EN (April 28, 1997), 15-19.

61 "Monsanto Corn Line No Longer Regulated Under U.S. Agriculture Department’s Laws", INTERNATIONAL ENVIRONMENT REPORTER (June 25, 1997), 613.

62 E.g. Miguel A. Altieri, "Riesgos ambientales de los cultivos transgenicos; una evaluación agroecológica", HOJA DE MAELA (Asunción, Paraguay) Año 8., No. 13 (noviembre 1998), 28-36.

63 Rodrigo Artunduaga, "Statement by the Delegation from Colombia", Plenary of the Biosafety Working Group, Convention on Biological Diversity (Montreal; August 17, 1998), translated by David Hathoway.

64 Kristin Dawkins, "Swiss Reinsurance Group explains the risks of genetic engineering: implications for biosafety negotiations evident", INSTITUTE FOR AGRICULTURE AND TRADE POLICY, December 9, 1998 (also published in SUNS).

65 Ian Elliott, "Confusion continues around GMO labeling," FEEDSTUFFS, July 28, 1997.

66 Communication from the United States: Preparations for the 1999 Ministerial Conference, WORLD TRADE ORGANIZATION WT/GC/W/115, 19 November 1998.

67 "Review of the provisions of Article 27.3 (b): Lifting of Reserve", Council for Trade-Related Aspects of Intellectual Property Rights, WORLD TRADE ORGANIZATION, December 16, 1998.

68 David R. Downes and Matthew Stilwell, "The Intellectual Property Rights Debate: The WTO Needs Citizens’ Advice on Patents over Life", BRIDGES, Vol. 2, No. 8 (International Centre for Trade and Sustainable Development, November-December 1998).

69 "Road Maps to a Peoples’ Sui Generis Rights Plan of Action", BIOTHAI/GRAIN INTERNATIONAL SEMINAR ON SUI GENERIS RIGHTS (Bangkok, December 1-6, 1997).

70 U.S. Firms to Push for More IPR Protection in WTO, FTAA Talks", INSIDE U.S. TRADE, August 28, 1998.

71 David Dickson, "Legal fight looms over patent bid on human/animal chimeras", NATURE (Vol. 392, April 1998), 423-424.

72 "Draft Objectives & Principles for FTAA", INSIDE U.S. TRADE SPECIAL REPORT, November 7, 1997, 7.

73 "FTAA General Principles and Objectives", AMERICAS TRADE SPECIAL REPORT, March 23, 1998, 10.

74 "EEUU amenaza con sanciones", HOY (Quito, Ecuador), May 16, 1997, and Mario Osavo, "Crackdown on Eco-Pirates", INTERPRESS SERVICE, August 14, 1997.

75 "FTAA General Principles and Objectives", 11.

76 "Colombia Asked By U.S. to Fully Implement WTO IPR Pact to Get BIT", AMERICAS TRADE, June 12, 1997.

77 Osorio Londoño, "The Agreement on Agriculture and the Work at the WTO Committee on Agriculture", 18-19.

78 "Quad Ministers Call on Advanced LDCs To Take On New Obligations", INSIDE U.S. TRADE, October 1, 1996.

79 Lester Thurrow, "Needed: A New System of Intellectual Property Rights", HARVARD BUSINESS REVIEW (September-October 1997), 100.

80 "U.S. Proposal for FTAA IPR Work Group", INSIDE U.S. Trade, February 21, 1997.

81 E.g. Steward Smith, "Is There Farming in Agriculture’s Future?: The Impacts of Biotechnology", Lecture to the College of Agriculture and Life Sciences, University of Vermont; November 14, 1991 (revised October 21, 1992), charts 2 and 2a.

82 "Environmental NGOs FTAA Declaration", AMERICAS TRADE, April 2, 1998, 19.

83 E.g. "Alternatives for the Americas: Building a Peoples’ Hemispheric Agreement", ALLIANCE FOR RESPONSIBLE TRADE et al., Discussion Draft No. 2 (November 1998), 38-39.

84 E.g. "Industry Says FTAA Civil Society Panel Should Not Replace Current Process", INSIDE U.S. TRADE, September 4, 1998.

85 "IV Workshop: Intellectual Property Rights", FOURTH BUSINESS FORUM (San José, Costa Rica; March 16-18).

86 "Final Recommendations by Workshops of the IV Business Forum of the Americas", March 18, 1998; http://www.insidetrade.com.

87 "Recommendations to the trade ministers", IV Business Forum of the Americas, INSTITUTE FOR AGRICULTURE AND TRADE POLICY, March 17, 1998; "Research against gene patents", THE WESTERN PRODUCER, February 19, 1998.