WTO, subsidies and "agbiotech"/WTO accord: Faulty frame, rude reality (7/8/2004)

The latest puff from those seeking economic and corporate development for the Saskatoon biotech community (item 1) links the World Trade Organization (WTO), subsidies and GMOs.

The Saskatoon bad-idea-virus marketers argue that GM crops are a necessity for agricultural efficiency in Europe now that the WTO has at last found its teeth, with "long-lasting implications for the future of AgBiotechnology".

That is because "AgBiotechnology... has been demonstrated in numerous studies to be the most efficient tool to streamline the efficiency of agricultural businesses", making it possible to remove subsidies from efficient farmers.

Presumably this is why since the introduction of GM crops into the US, farm subsidies have risen exponentially. And why West African cotton farmers are facing spiralling debts -- not because of huge US farm subsidies pushing down the price of cotton on the world market, but thanks to the efficiency of Bt cotton growers in the US who no longer require subsidies.

Even the WTO part of this faulty equation is bogus according to Devinder Sharma (item 2).

For more on the organisers of ABIC2004 see:

1.ABIC2004: Conference update
2.WTO accord: Faulty frame, rude reality

1.From: "ABIC 2004 Conference"
<[email protected]>
Sent: Wednesday, August 04, 2004 7:50 PM
Subject: ABIC2004: Conference update for August 4th

Dear Madam and Sir,

Six weeks before representatives from politics, science and industry will meet on occasion of ABIC2004, the WTO has set the benchmark for the coming years, eliminating subsidies of agriculture in industrialized nations.

The day, July 31, 2004, may go down in history as the day the World Trade Organization (WTO) found its teeth - a discovery that will have broad and long-lasting implications for the future of AgBiotechnology - not to mention farmers, industrialists, and consumers in both the industrialized and developing worlds.

It was on that date that the 147 nations that make up the WTO tentatively agreed that the governments of industrialized nations will slash the massive and distortive subsidies they pay to farmers in their countries if the governments of developing countries get out of the way of the free flow for industrial products and services in eliminating customs-duties. The agreement came about in no small part thanks to the emergence of the G20 group of developing countries as a viable counterbalance to the industrialized nations of the United States, Japan, and the European Union.

Subsidies can only be removed if European farmers become more efficient.

In order to meet the challenge of global competitiveness, Europe will have to reconsider its currently rather restrictive GM policy towards AgBiotechnology, which has been demonstrated in numerous studies to be the most efficient tool to streamline the efficiency of agricultural businesses.

This year's ABIC2004 will be the perfect time and place to get yourself first-hand information and valuable contacts in this powerfully emerging new market.

Register online under www.abic2004.org to meet people from all over the world. 34 nations from developing as well as developed countries are already enrolled.

Phytowelt GmbH
ABIC 2004 Conference Office
Nattermannallee 1 D-50829 Cologne
email: [email protected]
internet: www.abic2004.org
phone: + 49 221-49299-55
fax: + 49-221-49299-560

2.WTO accord: Faulty frame, rude reality
Devinder Sharma
The Hindu, August 5 2004

THERE is much brouhaha over the framework agreement reached by World Trade Organisation members in Geneva last week, with the developing countries in an exult over the concessions drawn from the developed nations. Nothing could be farther from reality.

Though the WTO Director-General, Dr Supachai Panitchpakdi, may not be even aware how the wool was pulled over the eyes of the developing nations, the US Trade Representative, Mr Robert Zoellick, and the outgoing European Union's Trade Commissioner, Mr Pascal Lamy, have sent them back with the empty promise of reducing the contentious monumental agricultural subsidies. Further, they have got the approval of the developing countries to increase subsidies.

A look at the political ramifications. Agricultural subsidies had been, and will remain, the bone of contention, with the developed countries refusing to cut the sops that run to $320 billion every year. So much so that the issue led to the collapse of the WTO Cancun Ministerial in September 2003. So what made the rich change their stand and so soon?

It is accepted that any move to significantly cut farm subsidies can be politically suicidal for the rich countries. The US President, Mr George Bush, would not even think of contesting after agreeing to chop subsidies for farmers. The European nations, especially France, Germany, and the Nordic countries, would have been in a turmoil if the framework agreement indeed means any drastic cut in subsidies.

The devil, as they say, is in the detail. Paragraph 7 of the Framework for Establishing Modalities in Agriculture (July 31 final draft) says: "As the first instalment of the overall cut, in the first year and throughout the implementation period, the sum of all trade-distorting support will not exceed 80 per cent of the sum of final bound total AMS (Aggregate Measurement of Support) plus permitted de minimis plus the Blue Box at the level determined in paragraph 15." Reading this together means that, first, far from removing the trade-distorting Blue Box, the mechanism stands strengthened. The developed countries can shift a chunk of its agricultural subsidies (under the Green and Amber Boxes) to the Blue Box. In other words, the advantage the developing countries had gained with the termination of the Peace Clause on December 31, 2003 (under which the developing countries could not challenge agricultural subsidies in the rich countries) has been negated. They will now be confronted by an equally detrimental Blue Box.

The framework actually provides a cushion to the US and the EU to raise farm subsidies. The draft makes it obvious that the first instalment of a cut in subsidies by 20 per cent is not based on the present level of subsidies but on a much higher level now authorised based on the three components — the final bound total AMS, plus permitted de minimis plus the Blue Box. For the EU, this should come to euro 95.76 billion and after applying the first cut, the subsidies that can be retained will be euro 76.63 billion. Adding all the components, as specified in the WTO framework, the EU subsidies now will total around (including the under-notified coupled support) euro 55.8 billion, far less than what it is supposed to reduce. In other words, the EU gets enough leverage to increase its subsidies. No wonder the so-called phase-out of subsidies has not snowballed into a political crisis in Europe.

Further, the EU has Blue Box subsidies of euro 14.31 billion. This is a large amount and, therefore, the framework states: "In cases where a Member has placed an exceptionally large percentage of its trade-distorting support in the Blue Box, some flexibility will be provided on a basis to be agreed to ensure that such a Member is not called upon to make a wholly disproportionate cut." The EU, therefore, has nothing to worry about cutting the Blue Box subsidies.

The US, on the other hand, wants to shift the counter-cyclic payments of $180 billion that it has provided to farmers under the notorious Farm Bill 2002 (70 per cent of this amount is to be spent in the first three years, before Mr George Bush goes to elections) to the Blue Box. Since the WTO will now specify the historical per

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