CEJA Communication
on WTO negotiations and free trade
Introduction
Agriculture is a crucial sector for human life which must be considered as a priority and treated as a special case in international trade negotiations.
While food demand and supply conditions have changed over the last years, the negotiations around global trade in agriculture have not taken this change into consideration. The Doha discussions do not tackle the major challenges facing the global food system, which include food security, climate change, exploitation of natural resources, the constant rise of oil prices, the lack of competition in world commodity markets and financial speculation. We believe that Europe, with its tradition of high quality, social and environmental standards, has to play a major role in proposing and implementing sustainable and fair approaches to global trade.
Trade Commissioner Mandelson’s recent concessions concerning agriculture in the WTO negotiations are dangerous for Europe while little was offered in return from developing countries such as Brazil, India and China on industrial goods or services. CEJA supports multilateral negotiations as such because we wish for an agreement on a global level, but better solutions need to be found. CEJA thinks that “No deal is better than a bad deal” and considers the outcome as more important than meeting deadlines.
New challenges and opportunities for the agricultural sector
Agriculture has never been simply a producer of food but also influences global tendencies in the areas of energy and climate change as well as other environmental, economical and social issues. Furthermore, farmers guarantee world food security, agriculture is the source of income for a majority of people living in rural areas and improving their living conditions. Half of the world’s population depends on agriculture as an income source, and, as was outlined in the latest World Bank report, the World Development Report 2008, it is the principal activity for eliminating poverty in the world. Last but not least, agriculture is fundamental for the management of natural resources: farmers are landscape managers that have a great influence on biodiversity and can contribute largely to environmental protection and the mitigation of climate change. These different functions carried out by agriculture cannot be left to the market alone. However, so far they are not even considered in the ongoing WTO negotiations and agriculture is used in the bargains for serving only the interests of the agro-exporting industries.
Agriculture cannot be left to the market alone
Today, economists with the most different backgrounds agree that liberalisation of agricultural markets will not lead to improvements for a more sustainable agricultural sector. Agriculture markets that are left to themselves are instable, chaotic, lead to speculative behaviour and risk aversion and therefore hinder investments instead of giving incentives to invest. A completely deregulated market does not respond to the new territorial, social and environmental needs and the new challenges that agriculture faces. The Doha Round will increase volatility of food
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and agriculture prices because it does not make sense to abandon tariffs at any cost without making sure that the corresponding markets follow a sustainable development strategy.
Market distortion through dominant agribusinesses and speculation
Farmers are confronted with the commercial system of agrifood multinationals that dominate the market and influence certain agriculture policies, as well as increasing speculation on food, that render agriculture markets even more unstable than they already are. Fluctuations in agricultural production add to an insecure situation and it is therefore essential that national and international agriculture policies facilitate the organisation of markets so that farmers and their families can enjoy a decent living from their work - “live in dignity” as it was recently expressed in the final declaration of an IFAP young farmers meeting in Poland.
An urgent need for more transparency in the market
International trade rules can no longer ignore the distorting levels of market power in the agribusiness sector. Young farmers from CEJA therefore ask for more transparency and clear competition rules. The role of multinational corporations in the agribusiness sector was even noted in the World Bank report which emphasized that the concentration of market power in the food chain is particularly important. Deregulated trade has left big gaps in competition law and created enormous opportunities for transnational agribusinesses. Since the creation of the WTO, multilateral trade rules have reinforced the position of dominant players in the food system at the expense of farmers and local business in developing countries. The Doha Round will further consolidate their power.
While market mechanisms may have a useful role to play, the harmful impact of speculation on food commodities must be addressed. The large influx of funds from financial investors into agricultural futures and options markets has raised concerns that this may have driven up prices and contributed to the volatility of prices. The Doha Round will not discipline financial speculation in commodity markets that has increased significantly these last years. Young farmers from CEJA consider it necessary to avoid exaggerated speculation on food that might lead to further food crisis.
Local and regional production needs to be supported
One of the reasons for the recent food crisis is that economic policies have shifted the focus from food self-sufficiency to free trade. The Doha Round as it is currently envisioned will intensify the crisis by making food prices more volatile, increasing developing countries’ dependence on imports, and strengthening the power of multinational agribusinesses in food and agriculture markets. This leads to increased dependence on international markets and decreased investment in local food production. CEJA underlines the importance of local and regional production, of linking products to the territory they were produced on. Local and regional production moreover keeps traditions and culture of rural areas alive and takes care of the landscape.
New challenges need new instruments
Young farmers from CEJA are ready to fully engage in the new opportunities listed above, as they are ready to face the new economic and environmental challenges. However, agriculture as a rather vulnerable economic sector that is dependent on weather conditions and threatened by pests and diseases needs to be provided with some sort of “safety net”. For meeting the new challenges of the 21st century, young farmers need new and innovative market instruments to manage risks and crisis in agriculture. Such instruments will contribute to assure regular European food supply in the common interests of consumers and producers.
It is furthermore important that products with PDO1 and PGI2 indications are protected since they are part of European food culture. Offering strong brands is the success of big companies. The
1 Protected Designation of Origin
2 Protected Geographical Indication
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strong brands that we as farmers have are the geographical indications and the traditionally used names for our unique products. For us, it is necessary to protect them. It is not right to allow producers of sparkling wine to use the name “Champagne”, nor is it correct to call cheese from New Zealand “Parmesan”.3 Last but not least, a long term goal for free trade should be that, in open markets, the same quality, environmental and social standards should be applied everywhere.
A different agricultural model needs to be developed
CEJA believes that we need a sustainable model of agriculture throughout the world that is able to meet the needs of a growing population, a model that puts development, employment and food security objectives at its centre. Real solutions need to be found that will stabilize food production and distribution to meet the global demand for healthy, adequate, and affordable food. European young farmers, as the next generation of European agriculture, strive for a long-term vision for agriculture that is taking the new challenges into account. This includes a greater emphasis on policies that support strategic food independence and self sufficiency, encourage local investment in local markets, support sustainable farming, safeguard local production from dumping, implement an efficient, balanced and modern agrarian reform, and allow trade instruments such as quotas and tariffs when needed. Trade should be used as a tool by governments and not as a substitute for investing in local markets because local production and jobs are necessary for development.
For meeting these challenges, governments and communities need to have a range of tools at their disposal to build resilient food and agricultural systems. Only if framework conditions on world markets are balanced can globalisation have positive effects on prosperity in all world regions. CEJA promotes fair and sustainable trade that supports products of high quality which are safe for the consumer and protect the environment while discriminating giant agri-food companies and countries with low social and environmental standards. Furthermore, fair trade rules respecting economic, social and environmental conditions and regulatory mechanisms would allow for the respect of regional identities and the recognition of typical products. It is only under these conditions that future generations of young farmers will enter agriculture and the farm population be maintained across the world.
The volatility of agricultural prices must be addressed through national and European policies and global actions to avert food crises. The CAP can hereby serve as a good example but it needs to make sure that public services linked to environmental concerns, animal welfare and public health are adequately remunerated. Well-managed public stocks need to be re-established. Such stocks provide an important buffer against price volatility and food insecurity. Addressing volatility also requires coordinated action to manage supply on an international level. Better coordination of global commodity markets provides a way to ensure a fairer deal for producers and a more reliable supply of higher quality agricultural goods for consumers. Transparently held stocks will also discourage hoarding and speculation on commodity markets.
Due to the reasons listed above, CEJA is convinced that a more coherent and global strategy is needed, especially in a trade round that carries the pretty name of “development round”.
3 Another concrete example where young farmers ask for changes in a production sector refers to sugar beet production because the Falconer’s draft modalities paper issued on May 19 contains proposals inconsistent with the European Sugar Reform. This paper represents a serious threat for the sustainability of the European Sugar-beet sector. As European young sugar-beet growers we are very concerned by the fact that sugar is on the list of tropical products and ask to remove sugar from this list. (The same is valid for rice as there is some production in Europe.) Furthermore, it is an absolute necessity that sugar tariff lines shall be eligible for the Special Agriculture Safeguard (SSG). The SSG must remain unchanged. Last but not least, in context with the tiered formula, it is absolutely necessary to obtain the lowest possible tariff cut to be applied for the highest band. The extensive restructuring process the European sugar-beet sector is currently undergoing needs to be taken into account during negotiations.
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TEL +32 (0) 2 230 4210 FAX +32 (0) 2 280 1805
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It is definitely more important to take time and find a good deal for everyone than to rush into a bad solution because of time pressure. CEJA agrees to the opinion of many organisations stating that “No deal is better than a bad deal” and considers the outcome as more important than meeting deadlines.
Only if stable common agriculture policies exist in the different countries and regions, a multilateral agreement on agriculture can be crowned with success. Taking into consideration the extreme diversity of conditions in the different WTO member countries makes it impossible to aim at an easy “one-fits-all” solution. A well-developed and efficient agricultural policy can only be complex and therefore needs time and the effort of all concerned actors in order to arrive at a satisfactory solution.