Financial Daily from THE HINDU group of publications
Wednesday, Jan 07, 2004
Agri-Biz & Commodities - Insight
Columns - Down to Earth
Agreement on Agriculture Confrontation among superpowers
THE World Trade Organisation negotiations, particularly those relating to the Agreement on Agriculture, are not merely tussles between the poor countries, on the one hand, and the rich nations, on the other.
The Cancun Ministerial Conference brought out not only the divergence of interests between the G-21 and superpowers but also the conflict of interests amongst the poor countries. Latest events highlight the contradictions among the rich countries.
December 27, 2003 was the deadline set by the WTO for the US to repeal the substance of the Byrd Amendment, approved by the Congress four years back.
The deadline has come and gone. The US appears inclined simply to ignore the mandate of the international trade body.
The Congress is in recess and even when it resumes, there is little chance of the WTO decision being complied with as most Senators still remain stoutly pro-Byrd Amendment. A number of major trading countries are preparing to strike back.
A powerful coalition, that includes the 15-nation European Union, Canada, Mexico, Australia, Japan, South Korea, India, Indonesia, Thailand, Brazil and Chile, has been agitating against the Byrd Amendment right from the day it came into the statute book.
The coalition succeeded in getting a WTO decision countermanding the amendment and is preparing to act collectively and separately if Washington does not comply or persists with its delaying tactics. Brussels, Tokyo and Ottawa have not announced any measures till to-date.
Evidently, they are taking their own time and do not wish to precipitate any decision that could land a big blow to the WTO as did the abortive Cancun Ministerial Conference and the G-21-G-8 rift amongst its 146 strong membership.
The episode brings out two major flaws in the WTO system: First, its sluggishness. It has taken full four years to correct a transgression of the WTO rules in a matter where the infraction was, in a sense, deliberate. The amendment came before the Congress in the early days of the Bush Administration.
Some top trade officials of the Clinton Administration had clearly warned that the amendment was violative of the WTO rules.
The newly sworn-in Bush regime was very keen on showing the American public that it was doing better than the predecessor Clinton regime in the matter of defending American interests.
The situation was very similar to the pre-Cancun situation in India, when the principal objective of the National Democratic Alliance was to demonstrate that it was doing a better job in the Doha Round than its principal rival, the Congress(I), had done in the Uruguay Round.
Second, the impunity with which the US asserts that it is more than equal in a world trade system based on equality.
The WTO rules frown upon dumping selling home products in another country at prices lower than those prevailing in the domestic market. The rules are very elaborate and provide for an international dispute settlement mechanism.
In the US system, anti-dumping complaints from domestic producers are heard in the New York-based International Trade Court a strictly American body, its nomenclature notwithstanding.
Further, under the Byrd Amendment the proceeds of the anti-dumping duties adjudged by the court go not to the US treasury but to the plaintiff manufacturers that is, the American producers aggrieved at alleged dumping practice!
They are put at a double advantage. They do not have to face the complexities of arguing before an international forum.
Further, they benefit from a double remedy tariff-hikes that increase the prices of competitors' goods from across the national borders and direct pecuniary benefit as the proceeds of the additional tariffs are paid to them.
It may be recalled that some time back that the Government of India brushed aside, on the grounds that it violated the WTO rules, a proposal by the producers of oilseeds in India to hike the Customs duties on oils and oilseeds and to constitute, from the proceeds, a fund for improving the production and productivity of the edible oils sector.
The WTO judges had no hesitation in coming to the conclusion that the payment of the proceeds of tariffs amounted to non-permissible subsidies and that the practice should be abandoned before December 27, 2004.
The procrastinating tactics of the US have infuriated a powerful group of members, and the EU is preparing to slap massive tariff hikes on American goods amounting to $4 billion.
The US has its own worries too. Some 15 countries have banned import of American beef on detection of the first "mad cow" case with an alacrity that suggests that they were looking for an opportunity to give the US back in its own coin for the relish with which the Americans interdict goods from other countries for reasons of sanitary and phyto-sanitary controls.
This could deliver a devastating bow to the US cattle industry, which was just starting to recover from the problems caused by increasing health-awareness and the consequent fall in consumption of beef (89 pounds per capita in the mid-1970s to 73 pounds in the 1990s) and a five-year drought in the US Midwest just when the diet modes were swinging back in favour of fats rather than carbohydrates.
(The author is Founder, Shetkari Sanghatana, and can be contacted at email@example.com.)
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