WTO : Be careful that a smoke-sgreen agreement does not become a fool's agreement !
Remarks on the WTO negotiations in Hong Kong
«"You have put the Doha round back on track" Pascal Lamy declared when he announced the last-minute agreement made between the 149 member states on the agricultural dossier at the Hong Kong Summit. However, this agreement is a smoke-screen agreement, a “cut and paste” copy, both in form and content, of the framework of the agreement made on 1st August 2004, with just one difference, the acceptance by the European Union of a time-limit (2013) for the ending of export restitutions.
Also, the contents of the final agreement only cover a very small portion of the issues concerned in the negotiation. There is nothing about industry or services, and no progress has been made in the most important pillars of “domestic support” and “market access” in the agricultural dossier. The only notable development is on the issue of “export subsidies” but the terms are ambiguous.
What’s it all about? Abolish export subsidies by 2013 with substantial reductions by 2010. These commitments, which concern all the agricultural partners and export support programmes, are full of conditionality and parallelism clauses which are not easy to understand.
Beyond “official” export support and the role of the state monopoly on exports, or food aid, nothing has been said about essential issues: the system of income support set up by the Farm Bill which consists of marketing loans and countercyclical payments. Everybody knows, but nobody expresses it openly, that this system is the main springboard, admittedly indirect, but powerful, for the exporting of American agricultural products. Without it, American maize producers for example could not sell 45% of their production on the world market at two thirds of its cost price. The ambiguity, as the Doha round continues, is in the treatment of marketing loans which are included in the category of domestic support, and have not been addressed in current discussions on export subsidies. This is why this agreement can lose its substance if we do not insist, as a principle of parallelism, that marketing loans are part of “export measures with equivalent effect”. We must be very careful about this. It all depends on how strong Europe is and how far it can resist pressure from the USA and the Cairns group, so that intermediary negotiations in April and July 2006 do not result in the dismantling of European customs barriers and those of DCs, without preliminary negotiations on marketing loans. And does Europe at present, led by France and Germany, really want to gather counter-arguments and make this Hong Kong agreement an instrument to redress the balance in negotiations and show the deceptive character of the American system? This is doubtful, despite France’s strong position. Also, the American “mid-term” elections in November 2006 could be a real stalemate for President Bush between the executive and the legislative authorities, as the Farm Bill is to be revised in 2007. However, even if Congress finds that the cost of income support for farmers is high, American agricultural lobbies are also very powerful: the outcome is therefore uncertain but American pressure in the first semester is expected to be particularly vigorous, as a favourable outcome for the Unites States at the WTO would help the end of the presidential mandate and continue the marketing loans system. Unfailing European cohesion is therefore essential so that this smoke-screen agreement does not become a fool’s agreement. Consequently, if the European Union confirms its commitment in the spring to dismantle export restitutions without any real compensation apart from insufficient parallelism in state monopolies and food aid, the fool’s agreement will become a real “Munich” in agriculture, an admission of defeat they will not acknowledge. It is however high time to face up to this situation and to build the defence line that we need. WOAgri will provide information in a few weeks time on which negotiation strategies will be the most efficient to save European agriculture and to set up a real world governing body, instead of the dictatorship of international technocracy for which agriculture is merely an adjustment variable of industry and services. We are however convinced that Christine Lagarde and Dominique Bussereau, who showed their determination and courage in Hong Kong, will make sure that “agricultural products are treated as specific natural commodities and will consider strategic principles of independence, sanitary safety and regional development”, as stated in an article published in Le Monde on January 3rd 2006. Peter Mandelson firmly defended community interests during negotiations in Hong Kong and he continues to do so, even stating in his speech in Berlin on January 23rd 2006 that “the argument that the contribution of the Doha round to development depends on agriculture, or in more concrete terms on further concessions from the EU within its agricultural policy, is not convincing”. But we have to be even more determined to help them as various bodies try to convince them of the opposite.
Jacques Carles
General Delegate of WoAgri
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