The WTO's Big Losers
Walden Bello
Far Eastern Economic Review, 24 June 1999
For many Asians, the stalemated candidacy of Thai Deputy Prime Minister Supachai Panitchpakdi for the post of director-general of the World Trade Organisation is yet another sign of the unwillingness of the United States and other traditional trading powers to seriously accomodate the interests of East Asia in the international trading system.
There is good historical basis for this view. One major reason the loose General Agreement on Tariffs and Trade was transformed into the powerful World Trade Organisation during the Uruguay Round of global trade talks was to contain the Asian economic challenge and prevent the diffusion of what was regarded as the mercantilist Asian development model.
Many Asians also regard the Gatt-WTO Agreement on Agriculture as a mechanism for dumping US grain surpluses in the region. The agreement will be the focus of global trade negotiations during the next few years. Whether or not a Millennium Round of comprehensive, multisectoral negotiations is launched, the 1994 Marrakesh Accord mandated the opening of new negotiations on agriculture at the end of this year.
On the eve of those talks, the countries of East Asia are divided on whether to support further liberalisation of agricultural markets. Northeast Asia, particularly Japan and South Korea, are opposed to mere liberalisation, fearing it would mean the extinction of their small rice farmers. Indeed, it is said that Japan is supporting the European Union's call for a new round of comprehensive negotiations to give it flexibility in defending agriculture.
Southeast Asian countries find themselves on the other side of the fence. They are part of the Cairns Group, an informal bloc of big and medium-sized developed and developing agricultural exporters. The Cairns Group supports the broader and faster liberalisation of agricultural markets via increased market access, an end to export subisidies and a decrease in production subsidies in the North.
Interestingly, Southeast Asian governments find themselves on the same side as the US, which has joined with the Cairns Group to push for market opening in Japan and South Korea and an end to direct income subsidies for EU farmers. In a classic instance of double standards, the US Department of Agriculture has stoutly defended forms of direct income subsidies for American farmers, but the Cairns Group seems unwilling to challenge Washington.
The position of Southeast Asian governments, however, serves mainly organised lobbies of cash-crop exporters and processors such as Malaysian palm.oil plantations, Philippine coconut-oil exporters and Bangkok-based Thai rice middlemen. The vast majority of unorganised small farmers in these countries are harmed by this position. The pro quo of more open markets for products such as palm oil and coconut oil in the North is even greater liberalisation of the rice and corn industries in Asia. Some agricultural experts warn the governments of the Association of Southeast Asian Nations are allowing themselves to be dragged by hardline Cairns Group countries such as New Zealand and Argentina into positions that will ultimately bring great harm to their small producers.
Rice farmers in Malaysia and rice and corn farmers in the Philippines already bear the brunt of the damaging effects of the Uruguay Round. Thai farmers are hardly benefiting; it's the Bangkok-based middlemen that are profiting from increased Thai rice exports. Further liberalisation that serves mainly the interests of the American agricultural-product dumping lobby and a small elite of Asian agro-exporters will drive the region's small farmers over the edge.
That's why it's important for Asean governments, small farmers and consumer groups to closely study the anti-liberalisation arguments of the Japanese and South Korean governments. They say small-farm agriculture in Asia, though it may seem inefficient in terms of unit cost, actually produces net gains because agriculture is multifunctional: It provides biodiversity, guarantees food security, promotes rural social development, is part of a nation's cultural heritage and enhances the regional landscape.
Agriculture is more than just an area of production. It is, for millions in both Northeast and Southeast Asia, as a way of life. The greatest threat to small-farm communities in Asia and throughout the world is further WTO-decreed liberalisation of agricultural markets. Free marketeers say greater openness will bring greater efficiency, though they fail to show how this squares with the fact that the main beneficiaries will be subsidised US and European farm interests. The likely outcome of such openness is the bankruptcy of small farmers and their transmogrification into marginalised masses pouring into Asia's big cities.
Like Asia as a whole in the WTO process, Asia's small farmers have been big losers in the global trade-liberalisation game. It's time to stop the bleeding.
Copyright 1999 Far Eastern Economic Review
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