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Food is Different: Why we must get the WTO out of Agriculture

March 14, 2008 (Un)Sustainable Farming, Environment, Reviews No Comments

Book Author: Peter M Rosset

Reviewed by Jonathan Latham (The Bioscience Resource Project)

Most people would probably agree that the world needs food and agricultural
systems that:
1) provide adequate, affordable, nutritious, tasty and culturally appropriate food,
2) offer rural people the opportunity for a living wage/income,
3) contribute to broad-based development and
4) conserve rural environments, cultural and culinary traditions

Food is Different

Why we must get the WTO out of agriculture

Over the last ten years however a rough consensus has emerged among a large number of family farm groups, academics, economists, trades unions and development organisations that trade liberalisation in the food sector (via the WTO and other free trade agreements) is achieving the precise opposite. Instead, such agreements are destroying rural economies, undermining sustainable development and destroying cultural traditions. And while this trend is most dramatically apparent in developing countries, it is also a feature of wealthier countries too. The purpose of this short book is to describe and explain this consensus and to briefly discuss ways forward.

Free trade agreements are based on a simple logic, that countries have certain ‘natural’ advantages which could allow them to produce certain products at lower cost than others. That they do not use these advantages is often explained by the existence of artificial barriers to trade. If these barriers could only be removed, businesses should benefit by being able to take advantage of low costs, workers should benefit because new jobs are created and consumers should benefit from increased competition.

Unfortunately, however, even if it is correct, this logic alone is insufficient. For the theoretical gains of free trade to actually be realised, a large number of preconditions must be fulfilled. Among these are that, either in establishing treaties or in negotiating particular agreements within them, there should not be significant disparities of negotiating power or expertise between negotiating parties. Yet such imbalances commonly occur between businesses and national governments or even between individual governments. Equally, corruption or democratic deficits should not undermine the ability of governments to represent the interests of those (such as small businesses, workers, farmers or women) who are typically underrepresented at international levels. Thirdly, the ‘natural’ advantages possessed by producing countries should arise from some natural and inexhaustible source (such as climate, location etc) rather than being assets whose advantage results from their easy depletion (such as fisheries, soil fertility or rainforests). Fourthly, that ‘natural’ advantages must be diverse and equally distributed (at least approximately) among nations and regions.

In practice, these criteria are never met, even in the best-run countries. In many cases, these criteria are so far out from equilibrium that negotiations are carried on in secret and only certain special interests are fully represented. Nowhere is this more true than in farming. As a result, and this also happens in the manufacturing sector, multinational corporations typically play against each other less-developed countries offering barely discernible combinations of low pay and freedom to operate and farmers with less than one acre have to compete against Dole, Monsanto and Cargill. And even this disparity of power does not do justice to the mismatch. Traders in international commodities, for example, can shop around for subsidised produce and commodities and with these displace from their markets farmers who are not subsidised.

Scenarios such as this are not supposed to occur and, in theory at least, WTO and other agreements include built-in safeguards and punitive measures, against subsidies for example. In practice however, these safeguards are often inadequate. For example, one tactic favoured by Europe and the US has been to evade anti-subsidy stipulations by constructing elaborate and costly (but usually legal) ways to support their farmers (and other industries) that are beyond the budget of most countries. And when infringements of the rules, such as dumping, do occur, they are often hard to prove and require lengthy and expensive legal actions to achieve redress. And if this were not enough, even were Bangladesh (say) able to prove a dumping incident had occurred, it is hard to imagine such a country ‘unleashing’ sanctions against the United States. Thus, even though they may superficially appear fair, trade agreements have for the most part benefited big countries at the expense of small ones and rich countries at the expense of poor ones.

Despite the fact that these problems are much more obvious in developing countries (where typically more than half the population are small farmers) many governments of less-developed countries have only recently started to negotiate harder for a better deal and consequently WTO negotiations have now stalled, principally because of agriculture-related issues.

The corporate angle

Exacerbating these realities however, is another issue that is especially important in farming: that the international food industry is dominated by large, often multinational corporations which operate in markets that are (to put it mildly) less than perfectly competitive. These monster organisations have been the main beneficiaries of free trade agreements in agriculture. Trade agreements have allowed them to exploit their regionally (and sometimes globally) dominant situations to expand their operations and also to capture the subsidies offered in developed countries. That multinationals have so effectively managed to garner the benefits of trade agreements should come as no surprise. Agriculture policy in the US and even in some developing countries is often devised by these same organisations. By acting in concert within and across nations, the multinational conglomerates have therefore had a decisive impact on ensuring heir own advantage.

The policy-making process has been therefore neither democratic nor inclusive but it has also, when measured statistically, been socially divisive. Though commodity prices and farm incomes have steadily declined in the last fifteen years, food prices have consistently risen, from which one can deduce that the multinationals that dominate the food supply chain have achieved their principal objective: to capture most of the ‘value’ in the chain.

Food is Different is not an academic book. It is a short and practical work intended to allow readers to understand why so many knowledgeable organisations active in development, farming and social justice issues oppose or dislike the WTO even though public sceptical analysis of the ‘Washington consensus’ has been muted and uncertain, paralysed by a timid or indifferent media and a compliant academy.
ISBN: 1552662012 Publisher: Zed books (2003)

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