Impact of GATT on World Hunger

Speech to the International Symposium of Food Self-Sufficiency, Tokyo, Japan, August 1988

By Mark Ritchie   
Published March 19, 2012

Food securityWorld Trade Organization (WTO)

IMPACT OF PAST GATT RULES ON FOOD SELF-RELIANCE

GATT, the General Agreement on Tariffs and Trade, was the first attempt by nation states to establish a ''code of conduct'' for regulating the activities of multinational trading enterprises. Its purpose was to establish specific rules for the companies engaged in importing and exporting, and to regulate government intervention in international trade. Founded in 1947, GATT was created to temper the chaos of unregulated world trade which existed before and after the First World War, chaos which contributed to the outbreak of World War II.

The original goal of GATT was to establish rules for world trade in order to increase its volume, an objective which would tend to decrease local food self-reliance in favor of increased global interdependence. However, a number of the negotiators who wrote the original GATT agreement, especially representati es from the U.S. Department of Agriculture (USDA), argued forcefully that the food security needs of each nation made the goal of unlimited expansion in world food trade not necessarily appropriate for agriculture. They were able to incorporate special provisions in the original GATT treaty to protect each member nation's domestic agricultural systems and food security.

Perhaps the most important of these special food security provisions was included in Article XI of the GATT treaty. This provision recognizes the right of each country to limit the quantity of imports of agricultural products. Without this authority to regulate imports, USDA negotiators argued, nations tending toward under-production would not be able to build up their own food producing capacity, while those nations who tend towards
over-production would be unable to balance supplies with demand. Without import controls, they argued, ''over-producing'' countries would build up ever larger surplus stocks, which would eventually have to be dumped onto world markets either as food aid or as heavily subsidized exports. The disastrous impacts of this food dumping, especially on food self-reliance in the Third World, has been documented for over a hundred years.

Unfortunately, those positive elements of Article XI have been far out-weighed by the negative elements of current GATT policies and practices.

First, the general operation of GATT, (as well as that of most other multilateral institutions such as the World Bank and the International Monetary Fund), has helped to create a highly monopolized world trading environment. For example, a dozen grain corporations now control over 90 percent of world grain trade, dangerously compromising the food self-reliance of all nations, both rich and poor.

Perhaps the most damaging GATT policy, however, has been participants' refusal to prohibit the exporting of agricultural products at prices below their cost of production, a predatory trading practice technically referred to as
''dumping.'' Although the dumping of manufactured goods is strictly prohibited under GATT, food exporting corporations are permitted to export grains, dairy products, and other food items at prices which are sometimes as low as half
the cost of production.

This dumping of surpluses onto world markets has been disastrous for all poor countries, especially those attempting to achieve food self-reliance.
 

Their farmers simply cannot compete in local markets flooded with heavily subsidized, food exports from the U.S., Europe, Canada, Australia or New Zealand. Unable to sell their crops for a reasonable price in local markets, these farmers cannot earn enough income to pay their bills. Those who cannot survive this kind of unfair competition eventually lose their land. Those who can survive often are unable to earn enough to reinvest to improve their long-term productivity. Some nations food production capacity has stagnated or declined through this process which the Washington Post has called "agricultural imperialism."
 

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