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By Roderick T. de la Cruz,
Researcher
(First of four parts)
On September 10-14 the 146-member countries of
the World Trade Organization will clash in Cancun, Mexico, in a
struggle where the developing countries have the least chance of
winning. But it’s a fight that for developing countries like the
Philippines, retreat is not an option.
“Most of the countries want to be members. Why
do we have to back out?” asked Rolando Dy, head of the
agribusiness department of the University of Asia and the Pacific.
“If you move out of the WTO, you will have to negotiate with
individual country partners about market access. If there are trade
issues, you don’t have access to WTO resolutions.”
“We have no choice but to play the game,”
said Agriculture Secretary Luis P. Lorenzo Jr.
Lorenzo and Trade and Industry Secretary Manuel
A. Roxas II are only two among the hundreds of ministers from 146
countries that will play the game at the fifth ministerial
conference of the World Trade Organization (WTO) in the resort city
of Cancun.
On the road to Cancun, senior officials like
Assistant Agriculture Secretary Segfredo R. Serrano have been very
busy in exchanging tirades with negotiators from rich countries.
“One thing I learned about this negotiation is that it is not
about fairness, it is war,” said Serrano, who also heads the
Philippine Task Force on the WTO Agreement on Agriculture
Renegotiations.
The Cancun meet seeks to revive the stalled Doha
talks and carry on the tariff-reduction program spelled out in the
Uruguay Round of the General Agreement on Tariffs and Trade (GATT),
which the country signed in 1994. GATT is the predecessor of
the WTO that the Philippines acceded to the following year.
“It is in agriculture where the WTO
discussions will be very significant,” Serrano said.
What the country wants, he said, is to avert the
influx of cheap and subsidized agricultural imports from rich
countries that could jeopardize Philippine agriculture. A World Bank
study disclosed that the $235 billion the rich nations spent to
subsidize their farmers resulted in a $24-billion contraction in the
income of farmers in poor nations last year.
“The protectionism of the developed countries
is manifested in the form of subsidies, which extremely prejudice
the interest of Filipino farmers,” Serrano said. “These
countries are feeding on the blood of our people.”
Such a statement from a Filipino negotiator was
a turnaround from the early views of trade officials who negotiated
in behalf of the 80 million Filipinos for the country’s accession
to the WTO in 1995.
Militant groups said the Cancun summit would
spell disaster for 2.5 million Filipino rice farmers and more than
one million fishermen. At stake in Cancun is the removal of
the country’s quantitative restriction on rice imports and the
further reduction of tariff on fish.
Serrano, who has a Ph.D. in economics and was a
union organizer, admitted that if the rich nations would have their
way, the result would be “disastrous to the Philippine economy.”
“It will be a war out there,” Serrano said.
Although foreseeing that the country would have a “very slim
chance” in the war, he said he would not give up without a fight.
“Even if I have to seduce another country, I’ll do it whatever
it takes,” he said.
Explaining the government’s position on the
WTO negotiation, Lorenzo said: “Our position is very clear.
Our interest shall not be subservient to others.”
The WTO, however, is not about “national
interest” but about “globalization.” Its ultimate goal
is to transform the planet into one big market where goods and
services flow freely through national borders. This could be
achieved through tariff reduction, removal of trade-distorting
subsidies, and elimination of nontariff barriers like unreasonable
sanitary and phytosanitary (SPS) regulations.
Asked about any benefit that the country has
reaped from its eight-year participation in the WTO so far, Serrano
could only think of tropical fruit exports such as banana, mango and
pineapple. But he averred that rich countries were trying to
block these Philippine products by raising issues about quarantine
and SPS regulations.
Asked to name the industries that have been
adversely affected by the liberalization reforms initiated by the
WHO, Serrano said: “All of them.”
Shifting strategy
Serrano explained that the Cancun summit would
revolve on modalities—the detailed and specific means, methods and
formulas in determining countries’ schedules of commitments in all
areas of the negotiation. At stake in modalities on
agriculture are three major issues: enhancing market access by
substantial tariff reduction; reducing or phasing out all forms of
exports subsidies; and cutting domestic support that distorts free
trade.
Serrano said the Philippines’ strategy shifted
from offensive to defensive. “It is impossible for us to
take care of our offensive ambitions anymore,” he said. “We have
been frustrated and we are now relegated to protecting our defensive
interest.”
The Philippine position on the WTO has undergone
a complicated evolution dictated by alliance building and setbacks.
From espousing the maverick SND concept in 2001, the government’s
position mellowed down to a campaign for fair and balanced trade in
2002.
When the local vegetable and livestock
industries cried foul over the surge of imported products in 2002,
it took the Arroyo government more than a year to set the safeguards
in place. The country’s position reverted to a campaign for
SND for the poor economies in 2003.
Such a shift in the country’s position is
manifested in the increase in tariffs levied on imported
agricultural merchandise. Data from the Tariff Commission show
that although the weighted average tariff on food and agricultural
imports fell to 10.26 percent in 2002 from 11 percent in 2001 and
13.11 percent in 2000, this climbed to 10.57 percent in 2003.
The three-percent increase in tariff on food and
agricultural imports this year pushed the country’s average tariff
on all products to 3.60 percent in 2003 from last year’s 3.56
percent. The average tariff was 4.25 percent in 2001 and 4.44
percent in 2000. In particular, President Arroyo issued
Executive Order 164, which froze the tariff reduction for farm and
fishery products.
Alliance-building
Serrano said the Cancun summit would be a game
of alliance building, dealing with pressures and watching out for
“sellouts” among the 146 members of the WTO. Despite the tough
talk, Serrano and other Filipino negotiators have already felt the
pressures and the pains of losing.
In 2003 the country’s position shifted back to
SND. As the country doubted the practicability of the Harbinson
Draft (named after Stuart Harbinson of Hong Kong, who serves as
chair of the WTO agriculture committee), Serrano and his task force
crafted the more sweeping interlinkage proposal early this year.
Serrano said that although the rhetoric of the
Harbinson draft is beautiful, the content couldn’t be carried out.
It also failed to get the backing of the US and the EU. It is
in the Harbinson draft, however, that the Philippines would later
pluck out the concepts of the strategic products (SP) and special
safeguard mechanism (SSM).
Under its own interlinkage proposal, the
Philippines wanted to quantify the amount of domestic support and
export subsidies dangled by rich countries before their local farm
sectors. In return, poor countries will try to make it fair by
slapping more tariffs, on top of the negotiated tariffs, on imported
items from rich countries that are equivalent to the
trade-distorting domestic support and export subsidies that these
rich countries perpetrate.
Rich countries subsidize their local industries
with food aid, export credits, export subsidies and other financial
support to the tune of $1 billion a day, or a third of the total
income of their farm sectors. At the least, domestic support and
export subsidies are considered trade distortions because they
empower the farmers in the rich nations to easily subdue farmers in
poor countries in the global competition.
Said Serrano: “We cannot compete in the world
market or even in our own domestic market when you have an
international trade environment that is so polluted and so full of
distortions.”
Although the Philippine contingent was able to
gain the support of 24 other developing countries behind the
interlinkage proposal, the US and the EU rejected it outright.
“It has not even been debated on the floor. The US and other
major players just ignored it,” Serrano said.
This forced the Philippines and Indonesia to
form a new group espousing the SP and SSM concepts. The
Alliance for SP and SSM eventually grew into a 17-member coalition
calling for flexibility among developing countries to adjust their
tariffs to protect their farmers against subsidized imports from
rich nations.
In the July 18 session of the WTO agriculture
committee, the Philippine-led alliance said, “No agreement in the
modalities of the agriculture negotiations can ever be viable
without these two elements together as a package in the market
access pillar.”
The SP concept seeks to grant minimal tariff
reductions on selected products that play a significant part to food
and livelihood security and rural development in developing
countries. Under the proposal, several products would be
designated SPs that are exempt from tariff cuts. The US and EU
oppose the SP concept.
With the SSM concept, the developing countries
will try to redress farm products bruised by the sudden surge of
price-weakening imports. This concept is said to be consistent
with Republic Act 8800, or the Safeguard Measures Act of the
Philippines.
While working to win more allies in pushing for
the SP and SSM concepts, the Philippines had to deal with pressures
from the US, EU, Japan and other developed countries. Serrano
said American and European trade representatives are trying to lure
the support of developing countries with food aid programs in order
to break the deadlock between rich and poor nations on the topic of
agriculture.
He admitted that several countries have already
given in to the pressure. “Countries that used to say
‘no’ in Doha shifted to ‘yes’ after meeting with the US and
EU,” he said.
Until a new alliance emerges, Serrano thinks
that the only little hope that developing nations have is the
Alliance for SP and SSM. Asked whether the group has a chance
against the US and EU, Serrano said: “There is, but very, very
slim.”
On August 24 the WTO General Council chair,
Carlos Perez del Castillo of Uruguay, issued the revised draft
ministerial declaration, which Lorenzo said included inputs from the
Philippines “for the first time since we joined the WTO in
1995.” The draft contained the SP and SSM concepts.
Although the Alliance for SP and SSM appreciated
the inclusion of the two concepts in the draft declaration that will
be tackled in Cancun, it criticized the text for defining a tariff
cap on products under SSM.
In its last-ditch attempt to gain more allies,
the Philippines joined a bigger group—the Brazil-led alliance of
20 developing countries (G-20) that make up nearly 65 percent of the
world’s farmers. The Philippines failed to bring along its closest
trade ally Indonesia, which carried on the fight for the strategic
products concept, which is not a part of the G-20 agenda.
The G-20 alliance seeks to counter the joint
US-EC (European Commission) Text, which it said wants further tariff
reduction among poor countries, without committing substantial cuts
in their subsidies and domestic support. Serrano believes that
the G-20 would have more leverage in the negotiation, because two of
its members alone, China and India, already make up one-third of the
world’s population.
Ultimate decision
According to Riza R. Bernabe, head of the
Philippine Peasant Institute’s Agriculture Trade Center, “The
future of the Filipino farmers and fisherfolk depends on the whims
of the president.”
According to Bernabe, the Philippines is worried
that a brief phone call from US President George W. Bush could
persuade President Arroyo to back the American interest in Cancun
and put Filipino farmers’ interest in jeopardy.
Serrano, it appears, is also in the dark about
whether he has the backing of the president. Nonetheless, he
hopes that the President would get the complete picture.
“What is paramount is our national interest,” he said.
While Roxas would head the Philippine delegation
to Cancun, Lorenzo is getting the spotlight because of his tough
stance in protecting Filipino farmers from the influx of subsidized
agricultural imports from rich countries.
Lorenzo’s position, however, is not yet
official and counters some of the liberalization policies espoused
by the trade department, where Arroyo served as an undersecretary
during the Aquino administration. At this writing, Roxas and
Lorenzo have yet to get their act together and win the nod of the
President before going to Cancun.
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