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Directing WTO Negotiations towards Sustainable Agriculture
and Rural Development
A WWF Discussion Paper, November 1999
1. Introduction
Agriculture accounts for one third of the world's land surface. In most
developing countries, agriculture represents a large share of Gross
Domestic Product. It accounts for 33 per cent of least developed
countries' GDP and 20 per cent in sub-Saharan Africa. It is a major
source of income and foreign exchange (27.3% of developing countries'
merchandise exports). Agriculture employs 50.4% of developing countries'
total population and supplies the bulk of basic food. Agricultural
practices also have a major impact on the use of natural resources,
ecosystems and biodiversity. Agricultural intensification and industrial
farming have led to environmental degradation in the form of water
pollution, species loss, and pesticide residues in natural habitats and
in our food. At the same time some farming systems are very important
for ecosystem conservation, providing a continuity and stability of
conditions in which plants and animals have adapted their life cycles.
Today, a number of species of high nature and conservation value depend
on certain extensive low input or traditional forms of agriculture to
maintain their habitats. The interactions between agricultural systems
and practices, economics, society and the environment are highly
complex.
There is increasing public concern that the current direction of trade
liberalisation under the Uruguay Round Agreement on Agriculture (AoA) is
detrimental to the environment, food security, consumer health and
safety and, in some WTO members, the very development it should be
encouraging. This discussion paper highlights some of the linkages
between agriculture, trade and sustainable development, which should be
further analysed and addressed in the forthcoming trade talks. It ends
with some preliminary policy recommendations developed with the
objective of ensuring that any new WTO Agreement on agriculture supports
sustainable agriculture and rural development (SARD).
2. WWF's objectives for the next round: sustainable agriculture and
rural development
The existing Agreement on Agriculture (AoA) has significant implications
for achieving sustainable agriculture and rural development by setting
an overarching framework for agricultural trade. WWF's objective is to
ensure that future WTO agreements on agriculture: · strengthen policies
toward sustainable development in the agri-food sector, rural areas and
communities; and · do not undermine environmental and nature
conservation interests in developed and developing countries, but
contribute to achieving sustainable development and greater food
security.
To achieve these objectives will require: (1) further analysis of the
linkages between trade, agriculture and sustainable development,
including food security and the environment; (2) defining appropriate
policies that need to be implemented both inside and outside the WTO for
sustainable agriculture and rural development.
This can only be achieved through cooperative approaches and innovative
alliance building. This must be done in a way that balances the
interests of different actors and is based on multi-stakeholder
analyses. Sound and comprehensive sustainability assessments of the
Agreement on Agriculture and of proposals for further agricultural trade
liberalisation are necessary. Such assessments will help identify and
refine appropriate policy interventions.
3. The linkages between trade, agriculture and sustainable development
Trade has had a profound impact on the pattern of agricultural
production throughout the world and has been a crucial factor in the
transformation of near subsistence forms of agriculture into highly
specialised and intensive production systems. Agricultural trade
liberalisation has allowed higher standards of living, created a
platform for economic development and improved diets in many countries.
However, it has also led to an inflow of cheap food imports in a number
of developing countries with negative impacts on domestic production,
the livelihood and survival of local farming communities. For countries
economically dependent on a narrow range of agricultural commodity
exports, the outcome of the next agricultural trade negotiations will be
particularly significant. The FAO lists 47 developing countries, 24 of
them in Africa, which depend entirely on agricultural exports for their
economic development. Many of these rely on exporting a single crop,
such as coffee, sugar, or cotton.
In purely environmental terms, trade as one of the motors of economic
development, has contributed substantially to the over exploitation of
natural resources and the degradation of habitats and ecosystems. The
negative environmental and social consequences of export subsidies have
been widely cited as evidence of the linkages between trade, or
distorted trade, and sustainable development. While it is possible to
derive some environmental benefits from a liberalisation strategy, an
entirely free market will fail to take account of environmental
externalities such as the over-exploitation of soil, water and
biodiversity, and of the role played by agriculture and farming in
maintaining natural habitats and ecosystems of high conservation value.
While flanking or accompanying policies such as agri-environment
measures can alleviate some of these problems at the national level,
many countries do not have the resources or institutional structures to
implement the necessary policy measures. At the international level,
multilateral environmental agreements (MEAs) such as the Convention on
Biological Diversity or the proposed Biosafety Protocol will also
contribute to greater environmental protection, sustainable agriculture
and rural development. They must not be undermined by trade
liberalisation and WTO rules.
Food security is intimately linked with agriculture and trade. Trade
liberalisation can contribute to food security though narrowing the
difference between production and consumption needs, reducing supply
variability, fostering economic growth and making more efficient use of
global resources. However, the precarious food supply situation of Net
Food Importing Developing Countries (NFIDCs) and Least Developed
Countries (LDCs) suggests that the volatility and instability of world
food prices, the deteriorating terms of exchange, and the increasing
concentration of agricultural markets in the hands of a few
multinational companies have not provided an appropriate framework for
achieving food security.
WWF studies in the Philippines and Mexico on the social and
environmental effects of agricultural trade liberalisation show how
important transitional policies are to ensure a shift from protected to
more liberalised domestic markets that maintain sustainability. This is
especially true given the large numbers of people employed in that
sector, including in subsistence farming and the contribution that local
agriculture makes to meeting food security needs.
4. The upcoming WTO trade talks in agriculture: issues and priorities.
Agriculture will be a high profile issue at the WTO. However,
discussions remain dominated by fights between the US and the EU, and
between the CAIRNs group and the EU. Developing countries find it
difficult to get many of their concerns on the agenda. The following
three issues deserve specific attention:
1. Opportunities where further trade liberalisation through the
elimination of trade distortions will lead to increased market access
for developing countries and at the same time reduce pressure on the
environment.
Obvious examples of the gains for developing countries and the
environment include the elimination of export subsidies used by
industrialised countries, and tighter restrictions on tariff escalation.
This practice forces developing countries to export unprocessed,
lower-value products with prices that are currently falling on world
markets, while increasing their dependency on food imports.
This is not to say that all agricultural subsidies should necessarily be
removed, or that trade liberalisation will never conflict with
environmental protection and sustainable development. In this respect,
some form of public support is generally needed to achieve specific
environmental, social and food security objectives. It is therefore
vital to develop the debate over agricultural subsidies beyond the
argument of eliminating or keeping subsidies, and focus the actual
impact of subsidies on desired policy objectives. There should be
differentiation between 'negative' subsidies that stimulate over
production and lead to food dumping and environmental degradation, and
'positive' incentives that support the transition to sustainable
development.
2. The social and environmental effects of domestic support measures
need to be assessed and the negotiations directed to ensure positive
outcomes from subsidy reform.
While the issue of domestic support measures is one that mostly pertains
to developed countries, it nonetheless has significant effects on
developing countries' agriculture. The following questions should be
used to structure discussion about domestic support measures: (1) What
are the impacts of current domestic support on rural communities and the
environment? (2) How can domestic support be reformed to encourage
sustainable agriculture and rural development?
Domestic support needs to be redesigned to achieve environmental and
social objectives given that current prices and market structures fail
to reflect, or undervalue these goals and outputs. Domestic support
measures should be assessed to determine whether they lead to
sustainable management of natural resources, biodiversity conservation
and poverty alleviation. Policy recommendations stemming from such
assessments should ensure that support measures direct farmers to more
sustainable agricultural practices and cannot be abused for trade
protectionist purposes.
3. Maintaining policy flexibility for developing countries to achieve
food security should be one of the central objectives of future
agricultural talks.
The question to be addressed by trade talks is: what measures and policy
options are most appropriate to ensure food security for developing
countries? In this regard, the following elements should be considered:
- subsidisation is often not an option for developing countries given
their lack of financial resources relative to developed countries.
Therefore, they need other tools such as import controls to protect the
livelihood of rural populations.
- LDCs and the poorer developing countries should be allowed to protect
local and domestic agricultural markets of staple foods, for example by
exempting them from the WTO demands of minimum market access, reductions
in domestic support for agricultural products and requirements of
tariffication.
- the potentially negative consequences from rising prices following
export subsidies removal should be addressed. In this respect, the
Marrakech Ministerial Decision for NFIDCs and LDCs should be made
effectively operational.
The preliminary policy recommendations developed in section 5 have been
constructed with the following issues in mind: increasing developing
countries market access; ensuring that domestic support has positive and
not negative social and environmental effects; and ensuring that food
security and the environment are not threatened by trade liberalisation.
5. Preliminary policy recommendations for reforming agricultural trade
There are no simple recipes for achieving locally appropriate patterns
of sustainable agriculture and rural development. It requires a mix of
policy measures at the local, national and international levels that are
likely to change over time. WWF will, therefore, take a selective
approach to issues on the AoA of the WTO agenda targeted to achieve
sustainable agriculture and rural development objectives. The
preliminary recommendations set out below represent a substantive
starting point for developing a balanced agricultural trade negotiating
agenda, which responds to the needs of both developed and developing
countries. Further analysis of the linkages between trade, agriculture
and environmental and social impacts is required. In addition,
refinement of these preliminary recommendations will be necessary as the
agricultural trade negotiations unfold and liberalisation proposals are
elaborated.
Overall policy objectives · WWF believes that public support of rural
areas is warranted in relation to their contribution to sustaining
biodiversity, guaranteeing food security and providing a pleasant
environment for recreation and living.
· Food security and environment must be identified as a key priority in
the coming WTO round. Special and Differential Treatment for Less
Developed Countries should be maintained and, where necessary, enhanced.
In addition, the Marrakech Ministerial Decision for NFIDCs and LDCs
should be made operational. Sustainability assessments of existing
policies and proposed liberalisation measures will be a prerequisite for
securing environmental benefits from the negotiations on agriculture.
Market access · WWF recognises the lack of progress in the Uruguay
Round on market access. We believe that this should be addressed
especially for less developed countries. Sudden large-scale increases in
market access can, however, be damaging in some sectors, both to the
importing country and to the exporting country. Safeguards and
appropriate policies developed to support SARD should be built into any
new WTO disciplines. Further study of this subject is essential to
better define these necessary policies.
Export subsidies · Export subsidies should be steadily eliminated,
starting from the products at the most primary level (arable crops),
which are not subject to distorted input prices. Export subsidies are
inefficient and are associated with excessive levels of production,
often with negative environmental impacts. Further binding reductions
should be negotiated to cover the total volume of exports, the overall
value of export subsidies and individual subsidies as appropriate.
· Export credits should also be subject to binding reductions. These
are a less direct mechanism for achieving the same ends as export
subsidies and can have the same negative social and environmental
impacts.
Domestic support · Aggregate Measures of Support (AMS) for OECD
countries should be further reduced providing that adequate measures to
support social and environmental objectives are in place. The full
implications for all WTO members need to be better understood.
· Blue box subsidies should be phased out over a three to five year
period. While blue box subsidies persist, these should be made
conditional on farmers meeting basic environmental standards.
· Green box measures should be reviewed and where necessary expanded to
meet sustainable development objectives as conventional production
related support is reduced. Whereas Annex 2 of the AoA could bear
review, adequate flexibility is needed for agri-environment and animal
welfare measures.
· Special consideration must be given to developing countries' food
security and environmental needs, and specifically the inclusion of
support measures that are practical options for countries with limited
financial resources.
Eo-labelling and SPS measures: · WTO rules should not prevent
appropriate labelling of agricultural products. To promote sustainable
development, consumers must be allowed to make an informed choice about
the food they eat, including its methods of production.
· The institutional structure for the development and application of
Sanitary and Phyto-sanitary (SPS) measures should be reviewed, including
to respect fully the Precautionary Principle. Current procedures and
measures are unsatisfactory for LDCs and in many cases for the
development of effective health and environmental standards. In
addition, they are also inappropriate for dealing with critical new
issues like genetically modified organisms (GMOs). New, more
participatory and democratic approaches should be introduced.
Multilateral Environmental Agreements · Multilateral environmental
agreements which contribute to sustainable agriculture and rural
development must not be undermined by WTO rules. Elements of the TRIPs
Agreement which conflict with the access and benefit sharing provisions
of the Convention on Biological Diversity should be revised in future
negotiations. WTO members should clarify that trade measures can be used
to implement MEAs, such as in the proposed Biosafety Protocol, without
fear of legal challenge in the WTO.
A sustainability assessment of WTO agricultural trade liberalisation,
concurrent with the negotiations, will be an essential aid to
understanding the complex interactions between agricultural trade,
economic change, social impacts and environmental quality. Such
assessments will help identify areas that deserve deeper analysis and
will also guide decision-makers in developing the necessary policy
interventions to support sustainable agriculture and rural development.
Sustainability assessments should therefore be a priority for WTO member
states throughout the entire negotiating process, and for the other
relevant intergovernmental organisations such as the FAO, UNEP and
UNCTAD.
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