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Agriculture and The World Trade Organisation

Gurdarshan Singh Bhalla
Jean-Luc Racine
Frédéric Landy

VI. After Seattle

16. A post-Seattle Updating: a French Perspective

Jacques Loyat

Texte intégral

1The failure of the Seattle conference emphasises major changes both in the comprehension of what is at stake in the negotiation and on the balance of power. Beyond the defence of pure commercial interests through liberalisation of markets, it conceals a more profound debate on the role of agriculture in the economy. In the first part, we will first recall some major events that have happened since the 1999 seminar. What European agriculture is aimed at is the question tackled in the second part. Some policy consequences are introduced in the third part.

Three major events with agricultural policy implications

The failure of the Seattle conference

2The ministerial conference of Seattle (from 30 November to 3 December 1999) should have adopted a declaration launching a new round of negotiations. Two elements have characterised this conference.

3The first one is the presence of the developing countries which consider that the Uruguay Round has not given to them the commercial benefits they expected, because of trade and non-trade barriers. Their demand of a reexamination of the agreements signed in Marrakech came up against a refusal by developed countries, especially the USA. It is likely that most of the 77 LDCs would not have accepted a mere agreement between the EU and the USA, as they did for the Uruguay Round agreement. The refusal of the industrialised countries to accept an exemption from duties for the products of the 48 less-developed countries is one of the reasons why negotiations broke down.

4But, the concern of what is now commonly called the civil society with respect to globalisation has certainly counted for much in the failure of the Seattle conference. This opposition to the WTO negotiation has not a unique signification. The effects of market liberalisation which reinforce the power of multinational companies; the effects on environment and health; the consequences on employment situation in developed countries were also matters of concern. What is at stake is the defence of environment and social standards in developed countries, which are considered as pure Western protectionists’ measures by less developed countries. In that respect, the opposition of India to the creation of a working group, proposed by the USA, on social standards during the WTO negotiation, reveals the will to benefit from comparative advantages due to low costs.

5If one can consider that protectionism lies behind the intentions of some protestors in Seattle and elsewhere against globalisation, one has also to think of a profound change in the behaviour of most people with respect to health care and food and more generally to the risks of food consumption. This can be illustrated by the consequences of the Biosafety Convention and the mad cow disease in Europe.

The mad cow disease and its ultimate consequences for agricultural policies in the EU

6In November 1986 a new disease, the bovine spongiform encephalopathy (BSE), is identified. The first cases appear in the United Kingdom between 1982 and 1985 and the development of the disease reaches its maximum in the nineties: more than 170 000 cases are registered in this country, but different European countries are hit, especially Portugal, Switzerland, France, Belgium, Ireland, and ultimately Germany, Spain, Denmark, the Netherlands and Italy.

7The spreading of the disease is due to the consumption by the cattle of powder produced from animal carcasses. This powder has been used as protein feed for intensive farming at low costs. A change in the process of transformation of this powder in the eighties has introduced the mad cow disease.

8The transmission of the disease to men has been proved in 1996 with the discovery of a new form of Creutzfeldt Jakob disease (a neuro-degenerative one). This was a proof that a crossing of species barriers was possible. Since then, important measures have been taken. It can be considered as the beginning of the importance given to the precautionary principle for public policies. The consumer requirement for safety measures and quality is not new, but it has taken a particular vigour since then. It has been aggravated these last years in the EU, especially in France, with the debate on GMOs and especially the insistence of the USA to impose on the EU, trade liberalisation of GMOs and exports of meat produced with growth hormones that are banned in the EU.

9Now the demand to farmers in Europe covers not only food security but also food safety. On January 9th 2001, the German ministers of Agriculture and Health were dismissed for not having taken the right measures during the BSE crisis. The new minister of Agriculture is member of the Green Party and she is in charge of not only the agricultural sector but also the protection of consumers.

10This is a sign that environment and health protection, which are demands of all the society, have become a major preoccupation for governments in the EU. In the future the agricultural policies must be defined to defend the interests of consumers and not only farmers.

The Convention on Biological Diversity and the Cartagena Protocol on Biosafety

11Here is another example of a change in the behaviour with respect to the market and trade liberalisation as unique ways of welfare.

12The Convention on Biological Diversity (CBD), negotiated under the auspices of the United Nations Environment Programme, was adopted in 1992. Article 19.3 of the CBD provides for parties to consider the need for and modalities of a protocol setting out procedures in the field of the safe transfer, handling and use of Living Modified Organisms (LMOs) that may have an adverse effect on biodiversity and its components.

13After several years of debate, in January 2000 was adopted in Montreal the Cartagena Protocol on Biosafety (from the city in Colombia, Cartagena, which was in 1999 the seat of the first meeting on the prevention of biotechnological risks).

14The protocol addresses the safe transfer, handling and use of LMOs that may have adverse effect on biodiversity, taking into account human health, with a specific focus on transboundary movements. It establishes procedures for import of LMOs for international introduction into the environment and calls for information sharing for LMOs about food, feed, processing, and contained use of transit. It also incorporates the precautionary principle and mechanisms for risk assessment and risk management. The protocol establishes a biosafety clearing-house to facilitate information exchange, and contains provisions on capacity building and financial resources with special attention to developing countries and those without domestic regulatory systems.

15The first meeting of the Intergovernmental Committee for the Cartagena Protocol on Biosafety was held in Montpellier in December 2000. Six issues were discussed: capacity building, the roster of experts, decision-making procedures, handling, transport, packaging and identification, and compliance.

16The Cartagena Protocol stipulates that States have the right to take, in situations of scientific uncertainty, specific precautionary measures, in order to protect the long-term interests of their citizens in the context of globalisation. Such a protocol provides public policy with the right to conflict with the general rules of the WTO. Like trade, environment is now part of international law.

The CAP and the French Agricultural law: in defence of an EU agricultural model?

17After the Second World War, in Europe, farmers were asked to provide food security. This could be reached by increasing productivity in order to increase production and face food shortages. Research, development and education were focused on that objective. The CAP gave specific tools, such as intervention and guaranteed prices, to encourage production and productivity. The French agricultural laws (“lois d’orientation agricole”) were complementary to the CAP.

18The consequences are well known in terms of surpluses and subsidisation of exports. This has been partially corrected in 1992 through a drastic reform to face the Uruguay Round. But, in spite of some marginal measures, the environmental consequences of agricultural intensification were not really considered, while health and environment concerns became more and more a preoccupation of all the society.

Agenda 2000

19In 1999 the European Council of Berlin reached an agreement on “Agenda 2000”, the new framework for CAP. The Council wanted to promote a multifunctional, sustainable, competitive agriculture, spread all over the European Union territory, including the less favoured areas, able to look after landscapes, to contribute to rural development, able to come up to consumers’ demand in terms of quality and food safety, protection of environment and preservation of animal welfare.

20The agreement, which stabilises market expenditure over the next seven years, incorporates the multifunctional dimension of agriculture through two major trends:

  • it recognises the importance of rural development policy alongside market support policy, establishing it as “the second pillar of the Common Agricultural Policy”. Rural development is thus recognised as an integral and inseparable part of the CAP.
  • it sets up an aid modulation system. This system, which is optional, allows EC members to decrease the amount of aid paid to farmers within a global limit of 20%.

21But this reform does not really break with the previous CAP, from the point of view of distribution of payments and the need to transfer more payments into rural development and environment. These are precisely the measures which will in the near future be hotly discussed in view of the next reform of the CAP.

The French Agricultural Orientation Law and the “Land management Contracts”

22The French Agricultural Orientation Law, adopted in 1999, represents a big step towards a new agricultural policy. It has the ambition to become a model for the EU in order to help agriculture to get adapted to changes in society at large. Agricultural multifunctionality is clearly identified as a vision of agriculture in which the environment, animal welfare and product identification are no longer perceived as burdens on farming, but as advantages enabling value to be added to farm produce in national, Community and world markets.

23The Land Management Contract (contrat territorial d’exploitation: CTE) is a new tool to help farmers committed to implementing systems of production which are of social benefit but which cannot be fully remunerated by the market and require financial input from society in recognition of the commitments entered into.

24The goal is to increase complementarity between an agricultural system organised in channels (the Common Market Organisations) and the development of land. For each farm, the CTE is based on a comprehensive farming project that combines an economic approach designed to preserve and develop the added value of farming, whilst promoting employment, with a land-based approach designed to adapt the farming system to durable environmental management and to local contexts.

25CTEs allow agricultural policy to be more deeply rooted in an area - a region or local project. Support grants are awarded on this basis, after examination by a local commission made up of elected officials, farmers, environmental protection associations and consumers. It is also the first phase in rebalancing the various instruments of support, towards the effective acknowledgement of the various functions of agriculture, within a contractual framework. Therefore, the objectives assigned to the CTEs cover two categories, to be combined on the farms:

  • socio-economic objectives designed to create added value: they include operational objectives, the main ones being improvement of product quality, promotion of diversification, and the means to encourage employers to maintain jobs and create new ones
  • environmental and land-oriented objectives: they include operational land management terms, such as improved qualitative and quantitative management of water, better use of grass lands, actions in favour of biodiversity and wetlands, landscape management, protection of the natural and cultural heritage, and prevention of natural hazards and forest fires.

Economic interpretation and policy consequences

26During the Uruguay Round negotiation, the political priority of the governments to maintain agricultural policies entered in conflict with the recommendations of most economists. A way to justify policies was to argue on the peculiarity of the agricultural sector: its instability, its diversify, the use of fixed resources such as land, the importance of biological processes, the production of external effects and public goods. This situation has led to the emergence of a new concept: multifunctionality.

27The multifunctionality of the agricultural sector was mentioned for the first time in the international political debate of the Rio summit in 1992 (in the chapter dedicated to sustainable agriculture and rural development). During the Uruguay Round, and later within the framework of the WTO Committee discussions on trade and environment, the multifunctionality of agriculture was referred to several times, under the title “Non Trade Concerns” (NTC). Multifunctionality was mentioned again in the World Food Summit in 1996 and has been introduced in OECD vocabulary since 1998.

28The concept of multifunctionality of agriculture is the result of three major concerns:

  • the first underlines the fundamental link between agriculture, environment and sustainable rural development
  • the second pertains to the relationships between agriculture and food security
  • the third involves the relationships between agriculture and world trade.

29In that respect, agriculture produces not only tradable products, but also territorial development, use of marginal land, landscapes, food security and symbolic cultural aspects.

30The interpretative angle provided by multifunctionality combined with economic theory attempts partially to correct the inability of current economic models to fully account for the non-trade aspects of agriculture. The growing importance given to the non-productive functions is now leading economists to think about taking into account external influences and amenity production which generate public assets.

31In the WTO, the debates deal with the possible negative effects of uncontrolled liberalisation of the agricultural trade on food security, the environment and the rural economy in developed and developing countries, given the multifunctional aspect of agriculture. But there is also a debate on the risks inherent in a particular use of the concept to justify the payment of direct aid to farmers in certain developed countries. There is a need to develop an approach of governance in order to find an optimal balance between regulation and markets, and to internalise externalities in order to valorise public goods.

32In the EU, increasing productivity leads to more environmental and social damages while the subsidisation of intensive farming generates distortions and conflicts at an international level. The actual distribution of funds is mostly profitable to the most productive and richest farms. It creates a major disparity which is prejudicial both to the society as a whole and to the external commitments.

33The challenge of the EU governments lies in their capacity to face such problems and to respond to consumers’ demand. As far as the CAP is concerned, the question of its removal is in debate. Some would argue in favour of its disappearance, the CAP creating major market distortions and difficulties to fit with the next EU enlargement to Central and Eastern European Countries. Some would make the CAP accountable for the sanitary state of breeding (BSE, Classical Swine Fever, and the recent development of foot-and-mouth disease).

34The removal of the CAP would nevertheless have major negative consequences:

  • the end of a common policy and a risk of re-nationalisation of subsidies in agriculture, with greater disparities among Member States
  • the end of any market regulations with the impossibility of facing necessary supply and demand adjustments.

35Furthermore, the removal of the CAP and its regulation would lead to more land concentration among farms and the comparative advantage principle would play in favour of the most intensive farms. It would not guarantee more food safety, animal health and environmental protection as it is shown in the less subsidised sectors of pigs and poultry in Europe which are also the most integrated.

36Good governance in the EU should consist in reforming more deeply the CAP, in a way to fit both the international commitments (the WTO negotiations) and the national needs. The functions which require specific public funds in the EU are related to environment, land and landscapes, food safety and social matters. There is an urgent need of re-allocation of funds, especially direct payments. The negotiation will turn towards the cofinancing between national and EU funds, the upper limit per farm, the transfer to rural development and the environmental conditionality for payments.

© Éditions de la Maison des sciences de l’homme, 2002

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