Last week the sixth meeting of Asian farmers’ cooperatives gave a clear message that it is not acceptable to the developing countries to open up their markets unless the developed countries susbstantially reduce their support to the farm sector.

The message is justified. Many developing countries have already effected substantial reduction in tariff and also removed quantitative restrictions (QRs) on imports, while the developed countries continue to increase their subsidies to the farm sector. Some of the developing countries have become victims of the prevailing unfair rules of trade. Countries like The Philippines, Malaysia and Sri Lanka which were earlier net exporters of rice have become importers.

Paul Q Montemayor, national business manager, Federation of Free Farmers Cooperatives of The Philippines said that his country’s “annual agricultural trade deficit has swollen to billion dollars in recent years as against a positive surplus prior to GATT-Uruguay Round and even before local tariffs had completed their reduction schedule under the Uruguay Round.”

He alleged that that there is no clear correlation between the level of subsidies extended by a developed country to its producers and exporters and the degree of tariff protection it is allowed to retain. Conversely, the tariff rates that developing countries are allowed to retain do not have any direct proportionality with the extent of distortion and unfair competition imposed by subsidising products entering their borders. He said that at the last WTO general council meeting, The Philippines government proposed to correct this defect by allowing countries to impose countervailing tariffs equivalent to the degree of subsidisation, but this was unfortunately not adopted in the agreement.

Montemayor also disclosed: “Negotiations are still ongoing for retention of the country’s quantitative import restrictions on rice and if this is unsuccessful, rice will surely be placed under special products category and be shielded from any major tariff rate or tariff quota change. A similar pattern can be adopted for other sensitive products like corn, meat, sugar and vegetables.” He, however, lauded the inclusion of special safeguard mechanism (SSM), special product (SP) and other other trade remedy measures in the Oshima-Supachai draft and said these may provide enough tools to mitigate risks to a certain extent if properly negotiated.

He said that the timetable for full elimination of direct export subsidies, estimated to have a residual value of over $14 billion based on Uruguay Round reduction commitments has yet to be defined. At the same time other forms of export subsidies like export credits and disguised food aid will be subjected to disciplines only when the negotiations on Doha Round reopens. That means that during this period, the farmers in the developing world will have to bear the burden of legalised dumping from the developed countries.

On the proposed expansion of the Blue Box in the Oshima-Supachai draft, Montemayor was clear in saying that this will US, which did not aggressively use this provision till now, “to find additional leeway to reconfigure and rechannel support for favoured export commodities.” These Blue Box allowances are in addition to current trade-distorting amber box measures, which although subject to reduction timetables, will nevertheless not be eliminated totally nor immediately, he said.

He said that it is also very likely that direct payments provided under Green Box will continue to be allowed without any limits. “When added all up, these domestic subsidies can have the equivalent, if not more pernicious effect of export subsidies once the supported products are sold to developing countries. At the same time, these can act as import barriers since they can enable subsidised farmers to ward off and compete with nominally cheaper imports from other countries.”

Yaakob Bin Jusoh of Malaysia said that his country can benefit from increased exports of palm oil to EU and US if tariff barriers are reduced. Also cocoa, rubber and pepper exports will rise marginally. He said that Malaysia like other ASEAN countries need not reduce their tariffs as they are already low. The problem will rise when Malaysia will be asked to reduce its subsidies on paddy cultivation.

UG Dayananda, general manager, Sri Lanka Cooperative Marketing Federation pointed out the folly committed by his government in liberalising imports, dismantling the system of of paddy procurement and subsidised rice distribution to the poor which sounded the death knell for paddy farmers and consumers. However, the system of grain procurement and distribution was restored in a new form through a cooperative network. Rice imports are now being channelised through cooperatives.

The Asian Farmers’ Group of Cooperatives (AFGC) is a small group consisting of representatives from nine Asian monsoon countries only. The AFGC is floated at the initiative of The Japanese apex farm cooperative Ja Zenchu. There is need to include other countries in this group for creating an effective voice.

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