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| | WTO Reform: Report by MEPs Illustrates Organization's Inability to "Govern" International Agricultural Markets |
In an April 3 report1 by the Committee on International Trade, the European Parliament continues and enriches the discussion opened by the 2004 Sutherland Report on reforming the World Trade Organization (WTO). Since the debate sparked by this report was not taken up within the organization, certain MEPs wished to return to the discussion of the changes to be implemented at the WTO, both at the organizational level and in terms of WTO strategy. This report comes during a "break with the past" marked by increasing doubt about the actions of the major organizations responsible for international governance. After the World Bank, FAO and UNCTAD, it is now the WTO whose approach to economic and social affairs is being called into question.
The continued debate on the WTO reform also demonstrates that the organization needs to adapt both its internal operations and strategy to the new economic and social realities. This adaptation is all the more urgent with the Doha Round negotiations at a deadlock, particularly on agriculture, leading to the dissatisfaction of all the parties concerned.
While the MEPs have reiterated the essential role of the WTO for world trade, they nonetheless point to the organization's flaws and shortfalls in responding to economic and social challenges, particularly in the agricultural arena. While echoing and adding to the criticism of the MEPs with regard to the WTO’s organization and strategy, momagri considers that it is now necessary to ask whether agriculture should remain within the scope of WTO jurisdiction.
According to the European Parliament, the WTO is an essential entity but cannot alone "govern" agricultural markets
Since the end of World War II, world trade has boomed, undeniably contributing to the overall well-being of the international community. While the Parliament's report notes the positive impact of increasing trade on world growth, it demonstrates the need to regulate world trade so that each Member State is subject to the same rules under a multilateral approach. This is one of the reasons that the WTO was created: to be both a "director" and a "policeman" for the international trade system.
However, as the MEPs stress, there is a growing gap between today's realities, the objectives of the international community and the WTO's strategy in its approach to economic affairs.
Indeed, while the international community is gradually realizing that trade cannot be treated separately from development and environmental issues, the WTO's mandate remains limited exclusively to trade. This is a major weakness for global governance and, according to the MEPs, justifies in and of itself the idea that the WTO integrate non-trade concerns into its rules, while strengthening cooperation with other major international organizations. Of course, this is a lofty and utopian vision that would not be well received by other international institutions, who would see it as an encroachment of their mandates, and which would go against the founding principles of the WTO. Nonetheless, it does have the merit of revealing the overly fragmented nature of the WTO's vision.
In addition to these criticisms are the criticisms of the WTO's internal operations: a democratic deficit due to the absence of parliamentary practices within the organization, a system of representation that is disadvantageous for certain developing countries and problems executing the decisions made under the dispute settlement procedure. In response to these problems with the organization's internal operations, proposals have been made in particular to intensify the activities of the Parliamentary Conference on the WTO, to incorporate sanctions into the dispute settlement procedure and to strengthen the WTO Secretariat – particularly technical assistance measures – to benefit developing countries.
This comprehensive observation has serious consequences, even more so for the current negotiations on agricultural issues, which we know are related to questions that go far beyond mere trade (development in developing countries, poverty reduction, food security, environmental protection, etc.).
It is, therefore, advisable to seriously question whether agriculture should be kept in the realm of international trade negotiations and to consider the possibility of establishing a type of governance and strategy commensurate with the challenges.
The WTO's limited approach to agriculture must, therefore, be overcome by creating a global body for agricultural governance.
The impasse of the different parties on agriculture at the current WTO negotiations reveals not only the inadequacy of the WTO strategy, but also the excessive "simplism" of the organization's approach to agricultural realities.
Agriculture is not merely the production of foodstuffs traded on a world market where capital is perfectly mobile and information is accessible to all players.
Indeed, agriculture is, above all, multi-functional. It is impossible to reduce agriculture merely to its function of satisfying food needs, as it participates directly in environmental protection, the development of the entire agribusiness industry, innovation and, particularly, the development of many developing countries. At the same time, the WTO only deals with the 10 percent of world agricultural production that is traded on international markets. As a result, the remaining 90 percent is not covered by the WTO mandate, even though it has a clear impact on growth, development and poverty reduction.
It is clear from these observations that the WTO's vertical, hermetic approach to agricultural realities must be replaced with a multidisciplinary approach encompassing the different issues, one that would not separate agricultural production and trade and that would take into account the interplay between agriculture and the other sectors of economic and social life.
Furthermore, the difficulties that the WTO faces in "governing" international agricultural markets are also due to the organization's lack of analysis tools and indicators adapted to today's agricultural realities. How can the WTO make good decisions knowing that it has not received statistics from Member States since 2001? This situation makes the WTO much more vulnerable to disinformation because it is unable to verify the source of different allegations from a given Member State. This is how, since 2006, the WTO has been spreading the false argument that the European Union's internal support for agriculture was twice the level of American subsidies (32% as opposed to 16%).2Likewise, lacking any simulation models, the WTO is unable to evaluate the probable consequences of a given decision or to establish an appropriate arena for disagreements, thereby giving free rein to potentially devastating disinformation and ideology.
Global agriculture is connected to a plethora of agricultural situations that require specific and differentiated treatment. However, the WTO considers different countries to be homogeneous, and refuses to see that, in agriculture, the same rules cannot be applied to an agriculture exporting country like Brazil and the Least Developed Countries of Sub-Saharan Africa. Likewise, the classification of domestic agricultural supports by colored "boxes" is poorly adapted to agricultural realities because certain supports have different effects and also act as disguised export subsidies or trade barriers.3
While it is essential that the WTO play the role of "policeman" and "director" for international trade, this description is still too narrow to encompass all agricultural issues. Consequently, seeking to make this institution the leading player in global agricultural governance is nonsensical both strategically and economically. It is, therefore, urgently necessary to recognize the "agricultural exception" and draw the consequences in terms of strategy and governance.
That is why momagri has been working since December 2005 to create a global agriculture organization that would take up these major issues under a new institutional framework, in cooperation with the major international institutions. Furthermore, the strategy of this world agriculture organization must be based on analysis tools that are adapted to agricultural realities. It is in this perspective that momagri designed the first economic model that takes into account the unique characteristics of agriculture – the momagri model – and that it is developing an international assessment and rating agency specifically for agriculture and related sectors. By informing decision makers on the conditions of agricultural markets and the effects of policies carried out in the area of agriculture, this agency will provide information that is today lacking, assuming the mission of regulation through the provision of information.
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Momagri is pleased that the MEPs have once again taken up the debate on the WTO reform and are encouraging the European Commission to make proposals on this issue. This report illustrates the dangers of a superficial agreement at the WTO, which we now know will have disastrous consequences for farmers throughout the world. Furthermore, it is necessary to draw the consequences at the European level, in the framework of a CAP Health Check that, until now, has ignored the unique characteristics of agriculture and its implications for food security.
momagri Editorial Department
| 1 European Parliament report: "Towards a reform of the World Trade Organisation," Committee on International Trade, report by Cristiana Muscardini, 04/03/08.
2 Based on the OECD PSE indicator. For more information on this subject, read the momagri article entitled "The OECD PSE (Producer Support Estimate) indicator: After the international agricultural models, misinformation continues..." dated 09/11/2006 in the Analyses and Comments section.
3 For more on this subject, read the momagri article "Doha: A strategy for the European Union to counter the United States?" dated 04/19/06 in the Analyses and Comments section.
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