PACER-PLUS AND FOOD
SOVEREIGNTY
Jagjit Plahe (Monash University)
The Concept of Food
Sovereignty
• Was first introduced by the world wide movement of
peasants, small farmers, indigenous people and landless
workers.
• It was introduced during a public session of the official
World Food Summit in 1996.
What does food sovereignty
mean?
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Prioritising local agriculture
Achieving self-sufficiency (through local inputs)
The rights of farmers to produce food
The rights of farmers to save and exchange
seed
• It is not anti-trade, but pro-justice and seeks to
safeguard the livelihoods of farmers
How is the international trading
system regulated?
• Multilateral trading system
– General Agreement on Tariffs and Trade
– World Trade Organisation - 1995
• Regional trade agreements
– North American Free Trade Area (NAFTA)
– ASEAN
• Bilateral trade agreements
– Australia- US Free Trade Agreement
– EU Economic Partnership Agreements with various
developing countries
– PACERR-plus agreements
The WTO’s Agreement on
Agriculture
• Historically the agricultural sector has been excluded from
free trade arrangements for political, economic, social, cultural
and even spiritual reasons.
• This however changed in 1995
– Formation of the World Trade Oraganisation (WTO)
– WTO’s Agreement on Agriculture (AoA)
– Bilateral and regional FTAs
• Liberalisation of trade in agriculture is a relatively recent
phenomena in the current wave of globalisation.
The WTO’s Agreement on
Agriculture
• The AoA’s stated long-term objective is “to provide for
substantial progressive reductions on agricultural
support and protection sustained over an agreed period
of time, resulting in correcting and preventing restrictions
and distortions in world agricultural markets” (WTO,
1995).
• The neo-classical assumption behind this objective is
that the market will address problems of food security.
The WTO’s Agreement on
Agriculture and food security
• Supporters of the AoA argue that liberalised trade in
agriculture will enhance food security since global
resources will be allocated more efficiently.
• They contend that free market conditions will create winwin situations for all, and “those [countries] that gain
from trade [can] fully compensate those that lose, and
still be better off: the total gain will be better than the
total loss” (FAO, 2003a).
Food security implications of the
AoA: flawed assumptions
• The neo classical model assumes that all countries will be better off
under free trade.
• The model does not address the reality of declining terms of trade
(the ratio of export prices to the ratio of import prices) for primary
products.
• Countries that are chronically food insecure primarily export raw
materials which increasingly face declining terms of trade in the
world market.
• Unprocessed commodities like sugar, tea, coffee and cocoa beans
for example, constitute a very small portion of the overall price of
chocolates, sweet biscuits, processed tea and coffee.
Food security implications of the
AoA: flawed assumptions
• The model also assumes that “buyers and sellers in
different markets meet each other as independent
agents” (Kanji and Barrientos, 2002) and that a reduction
in trade barriers will lead to more opportunities for all
potential buyers and sellers.
• Freer trade does not automatically lead to market
access. The integration of producers and exporters in
developing countries is carefully “managed” by lead firms
(Humphrey and Schmitz, 2001). Eg. Coffee, tea, cocoa,
horticultural products etc.
The reality of the WTO’s
Agreement on Agriculture
• Created rules which allow rich countries, to continue to heavily
protect their interests and at the same time oblige poorer
countries to open up their markets.
• Created rules which allow rich countries to dump agricultural
produce into the world market.
• Dumping is defined as the sale of products in the global market
at less than the cost of production.
• Dumped agricultural produce in world markets leads to the
widespread displacement of farmers from their own markets in
the developing world.
Dumping
• Farmers lose their livelihoods and become food
insecure.
• Farmers in developing countries who are
engaged in production for the export market
suffer from severely depressed prices, due to
the high levels of dumping in the world market.
Rigged Rules: example of how tariffs
were reduced under the AoA
• AoA required tariffs to be reduced in developed countries by 36% over a 6
year period.
• The rules did not require countries to reduce every tariff line (for each
product) but rather required an average total reduction. In this way many
countries managed to maintain high tariffs in certain product categories
(Beierle).
• Tariff %
Reduction
Percentage reduction
– 100 85 15%
– 100 85 15%
– 100 85 15%
–
400 100%
a country with 100 percent tariffs on three products and 4 percent onthe
remaining one could lower the former by 15 percent, eliminate the
latter, and achieve (15 + 15 + 15 + 100)/4 = 36.25 percent average
reduction (Panagariya, 2002).
Dumping
• The EU alone spends US$ 120 billion a year on
domestic support (Beierle, 2001).
• Half of the world’s maize is exported by the US alone.
However, the US export prices are one-fifth below the
cost of production.
• Similarly, the EU is the largest exporter of white
sugar, and the EU export price of sugar is onequarter of the actual production cost (Oxfam 2002).
Dumping
• Approximately 60 percent of domestic agricultural support
in OECD countries is exempt from rules of the AoA
(Oxfam).
• The three major users of domestic support - the EU, the US
and Japan - have met their AoA requirements despite the
fact that domestic support has in fact increased in these
countries since 1995, when the AoA came into effect.
The curtailed use of tariffs
• One of the main ways in which developing
countries protect their own markets from dumped
products is through the use of tariffs.
• However, they no longer have the automatic right
to use tariffs to address dumping: while AoA rules
permit dumping, they prevent developing countries
from using tariffs to block dumping.
• Special Safeguard Facility
Food security and food
sovereignty
• Food security is a “multifaceted concept, variously
defined and interpreted” (FAO, 2003a).
• In human rights literature, it is defined in the
context of the right to food.
• The United Nations Committee on Economic,
Social and Cultural Rights definition of food covers
both the availability of and the accessibility to
food.
The Right to Food and the Role
of the State
• The definition in the human rights literature focuses on
the role of the state in assuring food security.
• International human rights law requires States
obligations to respect, protect and fulfil this right, like any
other basic human right. “Thus, to ensure food security is
in fact the implementation of obligations under
international human rights law” (Zhang, 2004).
• Food sovereignty states that communities should have
the right to be included in making decisions about food
and agriculture.
The state of food insecurity in
the developing world
• The Food and Agricultural Organisation estimates
that 923 million people in the world are
undernourished, the majority from the developing
world.
• Developing countries therefore have a mammoth task
at hand to address food insecurity.
• These countries however also have the responsibility
to uphold their obligations under international trade
law.
The state of food insecurity in
the developing world
• Over a quarter of the WTO membership is comprised of
countries that suffer from food insecurity.
• Under international human rights law, these countries
are obliged to protect the right to food through every
means possible, including trade measures.
• Under international trade law they are required to abide
by the AoA, reduce agricultural tariffs and subsidies.
• All trade measures including those to protect food
security have to negotiated at the WTO level.
What would PACER-plus kinds
of agreements entail?
• Tariff Elimination
• Rules of origin
• The imposition of high sanitary and phytosanitary
standards
• Liberalisation of investment
• The liberalisation of services
• The imposition of strong intellectual property rules
Implications of PACER-Plus
• Agriculture
– Reduction of tariffs
• A loss of revenue from tariffs – suggestion that Aust and NZ
should establish a tariff loss fund – creates more dependency
– Reduction of domestic support to farmers
• Does a “Free Trade Agreement allow for subsidies for local
farmers, local agricultural businesses?
Implications of PACER-plus
– A flood of cheaper imports
– Investment in biofuels which could affect the price of local food
and lead to the displacement of communities from their land
• Already a lot of interest in developing biofuels from coconuts in PNG and
Vanuatu – again if large corporations are involved, then there may be
implications for land rights.
• (keep in mind FTAs between Aust and the US; Aust and Singapore; and the
current one being negotiated between Aust and China)
– Mining projects which could affect land rights
• (Australian corporations already active in searching for gold and
nickel in the Solomon Islands)
• Gas projects in PNG with corporations such as Esso and Exon
Mobil quite active and corporate Australia wanting to work with
these corporations.
More immediate problems
• Possibility of stronger intellectual property
rights regimes which could affect the
ability of farmers to save and exchange
seed
• Would attract more corporate investment
in agriculture (contract farming etc.)
Conclusion
• PACER-plus is being sold as a development
agreement but could have dire effects on small
economies.
• It is clear that the WTO Agreements have left the
smallest countries worse off.
• Food and agriculture should be off the table.