Philippine contributions in the ongoing agri trade negotiations

(Part I)

Launched in the mid-1980s, the General Agreement on Tariffs and Trade-Uruguay Round (GATT-UR) remained stalema-ted mainly in agriculture until the infamous Blair House agree-ment between the United States and the European Communities, that in effect broke the impasse and sent the message to all nego-tiating parties to either join or be left behind. As it happened, the Philippines joined and acceded to the World Trade Organization (WTO) in 1995. Eight years into the implementation period and with barely two years to go, it is clear we also left behind. I intend to explain why this is so and what the department has done and is currently doing in the trade negotiations front to address the uneven playing field.

UR and Philippine agriculture: A cavalier attitude to the dark unknown

Together with many of the agriculture sector’s stakeholders, we then in the peasant sector had a lot of apprehensions about ac-cession. In the first place, the government was signing on to a deal that committed us to almost total exposure in the interna-tional markets against the hea-vily supported competition. It was a deal that was negotiated, crafted and understood only by textbook technocrats and never had the benefit of meaningful debate or consultations with, and understanding of, the most affected sectors – the farmers.

During the accession debates in the Senate and around the country at that time (1994), the government promised ‘safety nets’ of about P80 million over the life or implementation period (1995-2004) of the so-called WTO Agreement on Agriculture (AoA). Consisting of farm-to-market roads, postharvest faci-lities and other competitiveness-enhancing programs, I would rather refer to these as ‘physical safety nets.’

What were equally lacking at the time were what I would refer to as ‘legal safety nets’, or trade remedy measures necessary to shield our producers from illegal trade practices and import sur-ges. Of course, we had counter-vailing and anti-dumping laws, but they were too cumber some to be of any use to farmers and producers that need expeditious action against the flood of heavi-ly subsidized imports. We have a common saying: "Aanhin pa ang damo kung patay na ang kabayo?"

Laws on countervailing (against illegal subsidies), anti-dumping, general and special safeguards came five years late – just after our exuberant and often too optimistic trade liberalization policy had succeeded in making many small farmers and entire agriculture industries destitute; even the bigger survivors, in distress.

A GATT-related budget, in keeping with the promise of ‘safety nets’, was added to the Department of Agriculture (DA) budget but our estimates of compliance and delivery from 1995-1999 do not exceed half of government commitments to the stakeholders. The legal safety nets or trade remedy laws would only come six years later and are only being implemented this year.

The passage of the Agriculture and Fisheries Modernization Act (AFMA) in 1997 further commit-ted an initial P20 billion for the first year and P17 billion for the next six years over and above the re-gular budget of the DA, for a total of P120 billion over seven years for moderniza-tion and compe-titiveness of the sector. But the persisting budget deficit problem and se-ries of financial crises constrained the realization of this further commitment. As it happened, the GATT-related budget just morphed into what is now known as the AFMA budget with no real increases in budgetary resources.

Meanwhile, all products with the exception of rice, were tariffed. It is still a mystery to me how our negotiators arrived at the flat figure of 100 percent and 50 percent at starting and ending rates, respectively, for our sen-sitive agricultural products when other WTO members had an average of twice as much flex-ibility in tariff walls. While these other countries, inclusive of the developed countries, used their tariffs as de facto special safe-guards to protect their producers, ours had to contend with a boisterous liberalization policy without the corresponding do-mestic support or subsidies.

By 2000, the subsidies of the Organization for Economic Coo-peration and Development (OECD) group of developed countries had reached a new peak at about $1 billion per year. Most of these, in the form of domestic production support and export subsidies, are production- and trade-distorting. In plain and simple terms, these countries have artificially made their producers cost- and price-competitive, un-dercutting our unsubsidized pro-ducts in the international markets. Worse, they induced overproduction that wreaked havoc on the international markets, to the detriment of developing country producers and exports.

To compound our woes, we can barely export to developed coun-try markets because of their sophisticated and complicated sanitary and phytosanitary (SPS) measures, non-tariff and other technical barriers. The Uruguay Round formula also allowed them to continue maintaining high tariffs on ‘sensitive’ products, most of which are of export interest to developing countries.

I should perhaps correct myself when I said we were left behind: we were flat on our backs a couple of seconds into the first round. We entered the ring infirm and grossly underweight, both legs in cast and both arms tied behind our backs. The rules also provided that we can only hit in an area the size of a pinhead, and we are not allowed to duck or evade any punches.

All these imply that it may be too late at this stage to beat the count unless we do something fast and in a massive way.

Beyond consultations, real participation of stakeholders: Task Force WAR

Because of these urgent alarm signals and in view of the then forthcoming launch of a new WTO round in Seattle, the department constituted as early as September 1998 the Task Force on the WTO Agreement on Agriculture (Re)negotiations or TF WAR. Renegotiations, because we felt that those onerous terms and gross imbalances of the existing agreement need to be renegotiated under a different and fairer framework. WAR, for obvious reasons.

In a globalizing world, the physical violence of wars is gradually being replaced by the economic violence of international trade. The department has raised and enlisted its own volunteer army to fight for national interest in these wars.

TF WAR groups various industry and multisectoral organizations with government agencies as the primary interested stakeholders in the negotiations coordinated by the Office of the Assistant Secretary for Policy & Planning at DA. Among its active and prominent members are representatives from the poultry and livestock industry, onion growers, coffee farmers, sugar planters and millers, food processors; multi-sectoral groups such as the Philippine Institute, Sanduguan, MODE-NGO, PAKI-AMA, COIR, ACCI and FFF. The Task Force also counts as active members business groups like PCCI, PhilCon-Grains, PAMPI, PCFM, PhilExport and BBC. Mindanao is likewise represented by MEDCO and FCRAP.

TF WAR is admittedly heterogeneous. But active in the negotiations since 1998, its members speak the common language of the negotiations and the relevant WTO agreements. It is the only group in the country that has the most extensive knowledge and institutional memory on the Agriculture Agreement and the on-going negotiations.

Although members are en-couraged to be parochial and in constant consultations with their constituencies, it is the experience of the task force that consensus on a recommended national position can be arrived at, even if difficult, for as long as there is firm leader-ship and transparency. This in-vestment in time, effort and the tedious task of meaningful en-gagement with the private stake-holders, however, ensures the department of the benefit of useful inputs in strategy, positioning and instant feedback of their implications. More important, the Philippine position has the political support of its stakeholders.

Unlike in the UR negotia-tions, TF WAR actively engaged the private stakeholders in technical work, the crafting of official Philippine positions, advocacy and negotiating stra-tegy, and actual participation in the negotiations as official mem-bers of the Philippine delegation. The task force has also constitu-ted its own core group com-posed of full-time volunteer coordinators, each handling technical work on specific areas of the negotiations.

The task force is credited with the following submissions, among others, of positions and papers circulated in the WTO:

• Special and Differential Treatment for Developing Countries in World Agricultural Trade (ASEAN proposal authored by the Philippines, G/AG/NG/W/55)

• Food Security, Special and Differential Treatment and Advancing the Reform Process in World Agricultural Trade

•Integration and Interlinkage of Reforms in Export Compe-tition, Domestic Support and Market Access in World Agricul-tural Trade (commonly referred to as the "pillar interlinkage proposal"; a full-blown, detailed and comprehensive modalities or ‘rules of the game’ proposal with wide support among other developing countries, Job [02]111/Rev. 1)

•Developing Country Propo-sals on Special Safeguards, Spe-cial and Differential Counter-vailing Measure (SDCM) and Pillar Interlinkage: Putting the Development Dimension in the Doha Development Round

• Questions to the US and Other Developed Countries on their Response to Developing Country Proposals

These and other output contributions of the task force, arrived at through consensus (the same mode of decision-making in the WTO), have invariably been endorsed by the Office of the Secretary of Agriculture, then the Tariff and Related Matters Committee and the recently constituted Cabinet Agriculture and Fisheries Negotiations Group composed of the Secretaries of Agriculture (chairman), Trade & Industry, Economic and Development Planning, and Foreign Affairs. These were in turn presented and advocated in the Special Negotiating Sessions of the WTO Committee on Agriculture in Geneva by the Philippine team led by Assistant Secretary Segfredo R. Serrano. (To be continued)