Who Won, Who Lost: The Victory of the Agribusiness in the WTO Framework Agreement

On 16th August, Commerce Minister Kamal Nath informed the Rajya Sabha that India had made significant gains in the recently negotiated Framework Agreement in Geneva on the Doha Work Programme.

The Commerce Minister was particularly proud of his success in the Agriculture Negotiations which had been the reason for the collapse of the Cancun Ministerial. As he informed the Parliament “I am happy to announce to the Hon’ble Members that we have been able to achieve all our major objectives in this Framework Agreement. In the crucial area of Agriculture it has been agreed that :

a) All forms of export subsidies would be eliminated by an end date. This was a major demand of ours, since the developed countries are extending support of hundreds of billions of dollars every year to their farmers, resulting in artificially low prices for their agri exports. This commitment in the Agreement is therefore a positive achievement.

b) On trade distorting domestic support, it has been possible to ensure that an immediate commitment in the form of 20% reduction in overall trade distorting support would be made in the very first year itself. (Against this, during the entire implementation period of the Uruguay Round only 20% cut was effected in Domestic Support).

This is exactly the same language that was used by the office of the U.S Trade Representative’s office which in a fact sheet on the agreement had said “In thefirst year of implementation, each member’s total trade-distorting support will be cut by 20 percent from currently allowed levels, an amount equal to the cut of these subsidies during the entire Uruguay Round.”

Senate Minority Leader, Tom Daschle immediately made a statement that “the Bush administration’s trade representatives negotiated a drastic cut to the safety net enacted as part of the 2002 farm bill.”

The 2002 farm bill had increased domestic support to 200 billion dollar, inspite of the Uruguay Round Agreements to cut subsidies. When the debate in the U.S created by Daschle’s letter to Bush started to indicate that farm subsidies would be cut, Trade Representative Zoellick wrote to Daschle that the Framework Agreement on Agriculture reached by W.T.O members in Geneva will not require cuts in farm programmes.

As Zoellick wrote “Your letter asserts that the framework agreement will require cuts in current farm programs in the first year of the agreement. That is not the case.” Zoellick noted that “the 20 percent reduction in domestic support that you cite in your letter applies to all forms of trade-distorting domestic support, which is more than double our current $19.1 billion ceiling for one category of our domestic support. Therefore, this reduction will not weaken our ability to support our farmers, as you erroneously claim.”

If Zoellick is right, in stating that U.S has to make no cuts, then our Commerce Minister is misleading the Parliament and the Indian people.

In any case, the statement that the Blue Box will be capped at 5% is not true since para 15 on the Blue Box also states “in cases where a member has placed an exceptionally large percentage of its trade distorting support in the Blue Box, some flexibility will be provided on a basis to be agreed to ensure that such a member is not called upon to make a wholly disproportionate cut”. The 5% cap is therefore rendered meaningless.

The Blue Box is the main tool to bring down prices through decoupled income support. Prices, not volumes of production, are the main distortion in trade. The U.S has now an expanded Blue-Box facility to lower prices and dump their agricultural produce on our markets, driving more Indian farmers to suicide in despair.

In the Uruguay Round Agreement the Blue Box was covered under Act 6.5

(a) Direct payments under production-limiting programmes shall not be subject to the commitment to reduce domestic support if :

(i) such payments are based on fixed area and yields; or(ii) such payments are made on 85 per cent or less of the base level of production; or(iii) livestock payments are made on a fixed number of head

(b) The exemption from the reduction commitment for direct payments meeting the above criteria shall be reflected by the exclusion of the value of those direct payments in a Member’s calculation of its Current Total AMS.

Para 13 on the Blue Box in the Framework Agreement states – members recognize the role of the Blue Box in promoting agricultural reforms. In this light, Article 6.5 will be reviewed so that members may have recourse to the following measures :

Direct payment under production-limiting programmes if :-such payments are based on fixed and unchanging areas and yields; or-such payments are made on 85% or less of a fixed and unchanging base level of production; or-livestock payments are made on a fixed and unchanging number of head


Direct payments that do not require production if :-such payments are based on fixed and unchanging bases and yields; or-livestock payments made on a fixed and unchanging number of head; and-such payments are made on 85% or less of a fixed and unchanging base level of production

The exemption from reduction commitment in Act 6.5 has thus been maintained through a more convoluted wording. That is why Zoellick could state so categorically to the House Minority leader that no new reduction commitments have been made. The Blue Box based on direct payments is even more distorting than export subsidies because it removes the floor from farm prices. It allows agribusiness to drive down the prices.

This destroys the small farmers in the North and the South. Decoupled income support and direct payments were a Cargill innovation during the Uruguay Round of GATT to make super profits by buying cheap commodities from farmers. The CAP reform has also shifted to direct payments to farmers. By being price distorting, the Blue Box is the most trade distorting aspect of W.T.O. Yet not only have Blue Box measures not been reduced, they have expanded.

Price distortion will therefore get worse. Farmers North and South need fair and just prices, not the false prices that the Blue Box encourages. Industrial farming is not possible without subsidies since the capital intensive inputs that it requires – costly seeds, chemicals, machinery – can never be recovered from sale of farm commodities.

Industrial farming wipes out small producers but generates agribusiness profits both through selling costly inputs to farmers and buying cheap produce from them. This negative system cannot survive without subsidies. And Blue Box subsidies ensure that big farmers get the bulk of direct payments since these are related to land or livestock owned.

The artificially cheap products are then dumped on our markets. The forced removal of Q.R’s by W.T.O has proved genocidal for Indian farmers, 25000 of whom have taken their lives due to rising costs and falling prices resulting from trade liberalization in agriculture.

The Geneva Framework is flawed both in process and in content. It is flawed in content because while it is titled the “Doha Work Programme” it has left out the core of the programme as decided in the Doha Ministerial. If the core debate in Cancun was agriculture, the core debate in Doha was TRIPS. The Doha Ministerial had to issue a declaration on Public Health, to allow countries to have access to affordable medicines.

The Doha work programme included the review of TRIPS. The Review of TRIPS was the highest priority on Doha Ministerial Mandate. “Para 19 of the Doha Ministerial had stated “We instruct the Council for TRIPS, in pursuing its work programme including under the review of Article 27.3(b), the review of the implementation of the TRIPS Agreement under Article 71.1 and the work foreseen pursuant to paragraph 12 of this Declaration, to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by Members pursuant to Article 71.1.

In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension”.The TRIPS review does not figure in the Geneva Framework Agreement.

Since this forms the parameters of the next ministerial scheduled for Hongkong in December, 2005, India’s accepting a framework agreement without the mandated TRIPS review implies that more farmers will commit suicide due to seed monopolies, more people will die of preventable diseases because medicines will be beyond their reach and more industries will shut down.

India has given up its right to ensure that seeds do not go beyond the reach of farmers and medicines do not go beyond the reach of the those suffering from disease and ill health, and unemployment does not sky rocket with manufacturing units closing down.

The issues before the General Council were those in the Doha Mandate. Non Agricultural Market Access (NAMA) was not part of the mandate. The new Singapore issues were to be taken up only with an “explicit consensus” (Mr. Maran’s contribution). IN Cancun, developing countries had clearly rejected the Singapore issues. The Minister is misleading the house in stating these negotiations were “required to be made”.

NAMA should never have been agreed to since it was not part of the Doha Mandate. The Minister is misleading the house in stating the NAMA framework will increase our exports.

As Walden Bello and Aileen Kiwa report, NAMA is a recipe for deindustrialising countries like India. The U.S scored a big win in NAMA since the text is a detailed agenda for the radical liberalization that transnational corporations have long wanted.

As the U.S National Association of Manufactures saw it “This is a huge accomplishment, and a big win for the W.T.O, the U.S and the world economy. The really big accomplishment for industrial negotiations is that all countries have accepted the principle of big tariff cuts and sectoral tariff elimination”.

On services, the Commerce Minister cites gains in getting mode 4 (i.e Movement of Natural Persons) included in the Framework. However, Susan George has recently sounded an alert on the Bolkestein Directive – an EU directive which would introduce a new legal principle and allow firms to apply social and labour laws of the “country of origin” to workers in all European countries where the firms might do business.

The Bolkestein Directive (which George has named the Bolke / Franken-stein-like measures) neutralizes mode 4 and simultaneously dismantles the welfare states in Europe.

The services negotiations state that “members shall aim to achieve progressively higher levels of liberalization with no a priori exclusion of any service sector or mode of supply. “In effect, India has accepted to allow liberalization, globalisation, corporatisation of our vital sectors such as water (environmental services) health, education, financial services.

In content, the Geneva framework violates the Doha mandate and the fundamental rights of citizens of India and the world.

The distorted content was shaped by a distorted process. The Geneva process was driven by the exclusive non-group of five – the Five Interested Parties (FIP) – United States, the European Union, Australia, Brazil and India. This process was criticized by Switzerland, Canada, Japan, China, Indonesia, Mexico, Kenya and the Philippines.

They all said the unusual process would lead to bad precedents in the future. Besides being undemocratic, the FIP’s led process also broke the G-20 leadership by co-opting the leaders of G-20, India and Brazil, in the corporate dominated U.S / EU alliance. And this process has been used to undo the gains of Doha. It has allowed the General Council to replace the Ministerial. More than 100 trade Ministers of WTO member countries were absent in Geneva, only 40 were present.

The Geneva Framework should not be allowed to undo the Doha commitments on reform of TRIPS and global trade in agriculture. People and parliaments need to strengthen the movements against WTO and its fraudulent negotiations.

Commerce Minister Kamal Nath stated in Parliament “our approach to the negotiations will be dictated by our national interests, especially our concerns for the millions of farmers who are dependent for their livelihoods on agriculture.

For the national interest to guide the negotiations on international trade, it is essential to reclaim our sovereignty over vital areas like agriculture and intellectual property. For this, QR’s need to be reintroduced, as an instrument to protect our “special products”. The Third Amendment of the Patent Act must be stopped until the mandated TRIPS review of the Doha work programme is taken up and completed.

On 15th of August, Independence Day, farmers in different parts of India burned MNC seeds as symbols of a new slavery and as part of their commitments to secure real freedom.

The future of farming will be decided by such struggles of sovereign farmers, not by manipulations of texts in Geneva.

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