PACER-PLUS AND FOOD SOVEREIGNTY

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PACER-PLUS AND FOOD SOVEREIGNTY

• Jagjit Plahe (Monash University)

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The Concept of Food Sovereignty

• Was first introduced by the world wide movement
  of peasants, small farmers, indigenous people and
  landless workers.
• It was introduced during a public session of the
  official World Food Summit in 1996.

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What does food sovereignty mean?

• Prioritising local agriculture
• Achieving self-sufficiency (through local inputs)
• The rights of farmers to produce food
• The rights of farmers to save and exchange seed
• It is not anti-trade, but pro-justice and seeks
  to safeguard the livelihoods of farmers

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How is the international trading system regulated?

• Multilateral trading system
• General Agreement on Tariffs and Trade
• World Trade Organisation - 1995
• Regional trade agreements
• North American Free Trade Area (NAFTA)
• ASEAN
• Bilateral trade agreements
• Australia- US Free Trade Agreement
• EU Economic Partnership Agreements with various
  developing countries
• PACERR-plus agreements

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The WTOs Agreement on Agriculture

• Historically the agricultural sector has been
  excluded from free trade arrangements for
  political, economic, social, cultural and even
  spiritual reasons.
• This however changed in 1995
• Formation of the World Trade Oraganisation (WTO)
• WTOs Agreement on Agriculture (AoA)
• Bilateral and regional FTAs
• Liberalisation of trade in agriculture is a
  relatively recent phenomena in the current wave
  of globalisation.

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The WTOs Agreement on Agriculture

• The AoAs stated long-term objective is to
  provide for substantial progressive reductions on
  agricultural support and protection sustained
  over an agreed period of time, resulting in
  correcting and preventing restrictions and
  distortions in world agricultural markets (WTO,
  1995).
• The neo-classical assumption behind this
  objective is that the market will address
  problems of food security.

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The WTOs Agreement on Agriculture and food
security

• Supporters of the AoA argue that liberalised
  trade in agriculture will enhance food security
  since global resources will be allocated more
  efficiently.
• They contend that free market conditions will
  create win-win situations for all, and those
  countries that gain from trade can fully
  compensate those that lose, and still be better
  off the total gain will be better than the total
  loss (FAO, 2003a).

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Food security implications of the AoA flawed
assumptions

• The neo classical model assumes that all
  countries will be better off under free trade.
• The model does not address the reality of
  declining terms of trade (the ratio of export
  prices to the ratio of import prices) for primary
  products.
• Countries that are chronically food insecure
  primarily export raw materials which increasingly
  face declining terms of trade in the world
  market.
• Unprocessed commodities like sugar, tea, coffee
  and cocoa beans for example, constitute a very
  small portion of the overall price of chocolates,
  sweet biscuits, processed tea and coffee.

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Food security implications of the AoA flawed
assumptions

• The model also assumes that buyers and sellers
  in different markets meet each other as
  independent agents (Kanji and Barrientos, 2002)
  and that a reduction in trade barriers will lead
  to more opportunities for all potential buyers
  and sellers.
• Freer trade does not automatically lead to market
  access. The integration of producers and
  exporters in developing countries is carefully
  managed by lead firms (Humphrey and Schmitz,
  2001). Eg. Coffee, tea, cocoa, horticultural
  products etc.

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The reality of the WTOs Agreement on Agriculture

• Created rules which allow rich countries, to
  continue to heavily protect their interests and
  at the same time oblige poorer countries to open
  up their markets.
• Created rules which allow rich countries to dump
  agricultural produce into the world market.
• Dumping is defined as the sale of products in the
  global market at less than the cost of
  production.
• Dumped agricultural produce in world markets
  leads to the widespread displacement of farmers
  from their own markets in the developing world.

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Dumping

• Farmers lose their livelihoods and become food
  insecure.
• Farmers in developing countries who are engaged
  in production for the export market suffer from
  severely depressed prices, due to the high levels
  of dumping in the world market.

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Rigged Rules example of how tariffs were reduced
under the AoA

• AoA required tariffs to be reduced in developed
  countries by 36 over a 6 year period.
• The rules did not require countries to reduce
  every tariff line (for each product) but rather
  required an average total reduction. In this way
  many countries managed to maintain high tariffs
  in certain product categories (Beierle).
• Tariff Reduction Percentage reduction
• 100 - 85 - 15
• 100 - 85 - 15
• 100 - 85 - 15
• 4 - 00 - 100
• a country with 100 percent tariffs on three
  products and 4 percent onthe remaining one could
  lower the former by 15 percent, eliminate the
  latter, and achieve (15 15 15 100)/4
  36.25 percent average reduction (Panagariya,
  2002).

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Dumping

• The EU alone spends US 120 billion a year on
  domestic support (Beierle, 2001).
• Half of the worlds maize is exported by the US
  alone. However, the US export prices are
  one-fifth below the cost of production.
• Similarly, the EU is the largest exporter of
  white sugar, and the EU export price of sugar is
  one-quarter of the actual production cost (Oxfam
  2002).

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Dumping

• Approximately 60 percent of domestic agricultural
  support in OECD countries is exempt from rules of
  the AoA (Oxfam).
• The three major users of domestic support - the
  EU, the US and Japan - have met their AoA
  requirements despite the fact that domestic
  support has in fact increased in these countries
  since 1995, when the AoA came into effect.

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The curtailed use of tariffs

• One of the main ways in which developing
  countries protect their own markets from dumped
  products is through the use of tariffs.
• However, they no longer have the automatic right
  to use tariffs to address dumping while AoA
  rules permit dumping, they prevent developing
  countries from using tariffs to block dumping.
• Special Safeguard Facility

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Food security and food sovereignty

• Food security is a multifaceted concept,
  variously defined and interpreted (FAO, 2003a).
• In human rights literature, it is defined in the
  context of the right to food.
• The United Nations Committee on Economic, Social
  and Cultural Rights definition of food covers
  both the availability of and the accessibility to
  food.

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The Right to Food and the Role of the State

• The definition in the human rights literature
  focuses on the role of the state in assuring food
  security.
• International human rights law requires States
  obligations to respect, protect and fulfil this
  right, like any other basic human right. Thus,
  to ensure food security is in fact the
  implementation of obligations under international
  human rights law (Zhang, 2004).
• Food sovereignty states that communities should
  have the right to be included in making decisions
  about food and agriculture.

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The state of food insecurity in the developing
world

• The Food and Agricultural Organisation estimates
  that 923 million people in the world are
  undernourished, the majority from the developing
  world.
• Developing countries therefore have a mammoth
  task at hand to address food insecurity.
• These countries however also have the
  responsibility to uphold their obligations under
  international trade law.

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The state of food insecurity in the developing
world

• Over a quarter of the WTO membership is comprised
  of countries that suffer from food insecurity.
• Under international human rights law, these
  countries are obliged to protect the right to
  food through every means possible, including
  trade measures.
• Under international trade law they are required
  to abide by the AoA, reduce agricultural tariffs
  and subsidies.
• All trade measures including those to protect
  food security have to negotiated at the WTO
  level.

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What would PACER-plus kinds of agreements entail?

• Tariff Elimination
• Rules of origin
• The imposition of high sanitary and phytosanitary
  standards
• Liberalisation of investment
• The liberalisation of services
• The imposition of strong intellectual property
  rules

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Implications of PACER-Plus

• Agriculture
• Reduction of tariffs
• A loss of revenue from tariffs suggestion that
  Aust and NZ should establish a tariff loss fund
  creates more dependency
• Reduction of domestic support to farmers
• Does a Free Trade Agreement allow for subsidies
  for local farmers, local agricultural businesses?

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Implications of PACER-plus

• A flood of cheaper imports
• Investment in biofuels which could affect the
  price of local food and lead to the displacement
  of communities from their land
• Already a lot of interest in developing biofuels
  from coconuts in PNG and Vanuatu again if large
  corporations are involved, then there may be
  implications for land rights.
• (keep in mind FTAs between Aust and the US Aust
  and Singapore and the current one being
  negotiated between Aust and China)
• Mining projects which could affect land rights
• (Australian corporations already active in
  searching for gold and nickel in the Solomon
  Islands)
• Gas projects in PNG with corporations such as
  Esso and Exon Mobil quite active and corporate
  Australia wanting to work with these
  corporations.

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More immediate problems

• Possibility of stronger intellectual property
  rights regimes which could affect the ability of
  farmers to save and exchange seed
• Would attract more corporate investment in
  agriculture (contract farming etc.)

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Conclusion

• PACER-plus is being sold as a development
  agreement but could have dire effects on small
  economies.
• It is clear that the WTO Agreements have left the
  smallest countries worse off.
• Food and agriculture should be off the table.