Karen Lehman, Director of the Food and Agriculture Program

Institute for Agriculture and Trade Policy

Research for this article was provided by Dr. Steven Suppan, Research Director of the Institute for Agriculture and Trade Policy

Increased market access. Shifts in domestic agriculture support. Reduced export subsidies. These are the priorities the member governments of the Cairns Group are piling on the negotiating table for the next round of World Trade Organization agriculture trade talks in 1999. They would do well to consider one priority that didn't make their list: food security. For although the World Bank, the World Trade Organization, and countries like the U.S. argue that trade liberalization and food security are synonymous, real impacts of trade liberalization on farmers and consumers point to an erosion of food security across the globe.

The Uruguay Round of the GATT negotiations, which resulted in the creation of the World Trade Organization, was different from any of its predecessors in that it assumed control over the definition of agriculture policy that had up to that time been under the purview of nation states. The kinds of support to provide to farmers, the types of supply management programs to implement, the nature and scale of import restrictions, all of these were specified in the agreement. Barriers to trade, many of which were instituted by nations to protect domestic production for food security, were mandated to be quantified and reduced over six years. The agreement also required countries to accept minimum imports of commodities. While on the surface the amounts sound small-3 percent of 1986-1988 consumption, rising to 5 percent in 1999-they can be very disruptive of domestic agriculture systems. For countries like Japan, for example, which consume large quantities of a single commodity, rice, these mandated imports can flood the market, destroying outlets for local farmers.

The agreement also has far-reaching effects on domestic agriculture policy. Domestic support for agriculture, which is based on a complicated formula, must be reduced by 20 percent over six years in equal installments-unless countries change their policies to "delink" their agriculture support from production types or volumes in a policy called decoupling. This is the policy recently enacted in the 1996 FAIR act in the United States, ironically called "Freedom to Farm." Instead of receiving payments when prices are low to make up the cost of production, farmers receive fixed payments that decline over a seven year period. The effects of this policy on other countries were eerily outlined in 1985 by the bill's original sponsor, Senator Rudy Boschwitz who, with the support of staff on leave from Minnesota-based Cargill Corporation, first presented the radical new proposal ten years before it was successfully integrated as the core of the GATT agriculture agreement.

"Our bill phases down subsidies and makes those of other exporting nations potentially so expensive that they will have to consider more market-oriented policies or consider shutting down their export production. Furthermore, our bill gives the United States the moral high ground in the multilateral trade negotiations to cool the heated arena of world agriculture subsidies."

At its June 5 and 6 ministerial meeting in Rio de Janeiro, the Cairns group proposed to take this Reagan-era global deregulation agenda several giant steps farther. They applauded the FAIR act and urged the European Union to reform its Common Agriculture Policy along similar lines. They especially targeted the areas of domestic support, export subsidies and market access for further liberalization.

Here in North America, there is direct experience with the outcomes of these policies close at hand-just across the southern border of the U.S. in Mexico. During the negotiations of the North American Free Trade Agreement, Mexican agriculture policy underwent massive reforms including the implementation of decoupling in a program called PROCAMPO. Non-tariff barriers to trade, in this case, import licensing requirements, were eliminated and tariff-rate quotas were established.

Yet, in June 1996, an interagency task force coordinated by the Mexican Ministry of Commerce decided to import 7 million duty-free tonnes of corn, alleging that Mexican farmers could not supply Mexico due to drought. The Ministry of Commerce declined to collect the 189.2% tariff on the then-existing tariff rate quota tonnage. Farm organizations were not consulted about the decision, advocated by such U.S.-headquartered importers as Cargill, Continental, Purina and Pilgrimís pride, as well as national companies with direct ties to the government. The value of Mexican corn imports alone in 1996-nearly $1.1 billion-equaled the Mexican trade deficit for the agricultural and forestry sectors combined.

Between September and December 1996, corn farmers in the states of Chiapas, Michoacán, Jalisco, Guanajuato, Durango and Baja California organized protests to demand that the government close the border to corn imports, since Mexico had already exceeded the import quota negotiated under NAFTA by 99.4 percent.

By December 1996, Mexico had imported an unprecedented 12 million tonnes of basic grains (corn, soy, beans, rice, wheat sorghum and barley) half of which was corn, almost entirely from the United States. Not only were U.S.-headquartered agribusinesses dumping corn, but the Mexican government had helped to dump by importing at a subsidized price lower than what those importers would pay Mexican farmers. Mexican farmers have 4 million tonnes of white corn they cannot sell to make tortillas, because grain bins are full of 6 million tonnes of No. 2 yellow corn imports from the U.S., corn traditionally regarded by Mexicans as fit only for feeding animals.

In January 1997, Mexican government officials, without consulting affected farmers, formalized what they had done by eliminating the 15 year phase-out of the punitive tariffs-up to 250 percent, for example, of corn imports above 2.6 tonnes in 1996-that it had negotiated in NAFTA. The phase-out period was supposed to have made the peasant farmer adjustment to competition with transnational agribusiness exports politically palatable and technically plausible. By eliminating the phase out period, unsubsidized Mexican farmers will now go head to head with U.S. agribusiness, in what one analysis called an ìambitious and suicidal route."

Experiences like that of Mexico will increasingly be echoed across the world if the goal of trade liberalization is not tempered by a focus on food security. There is an unprecedented opportunity with the upcoming negotiations in 1999 to document the impacts of rapid trade liberalization on food security and to make food security a central element of the debate at the WTO negotiations.

To foster food security, governments need to reinstate anti-dumping measures for primary agricultural products. There should be a food security clause, or perhaps even an international food security convention to provide options for countries to protect key staple foods produced for local consumption. Finally, policymakers need to find ways to ensure that people are guaranteed the right to food, and not simply offered the privileges of the marketplace.