Developed countries are still using the WTO to squeeze small farmers in the developing world–and developing world governments are going along with the charade.During the national debate on whether the Philippines should join the World Trade Organization in 1994-95, proponents promised that joining the organization would help create some 500,000 new agriculture jobs a year. The Philippines, they said, would become a powerhouse exporter of high-value-added crops like broccoli, snow peas, and cut flowers.
In fact, over the next decade, the country was turned from a net agricultural exporter into a net agricultural importer, and employment in agriculture dropped drastically in absolute numbers, from 11.2 million in 1994 to 10.8 million in 2001. In one commodity after another, Filipino producers were driven out of business by cheap subsidized imports of grain, poultry, vegetables, and livestock.
The situation was pretty much the same for many developing countries after 1995, as they were turned from dynamic net agricultural exporters to troubled net agricultural importers. Becoming a party to the Agreement on Agriculture in order to join the WTO, in short, was a bad, bad move.
Carrot and Stick
I was reminded of the historic WTO debate by the negotiations over the so-called “Bali Package” at the recent World Trade Organization Ministerial meeting in Bali, Indonesia, which took place December 3-7.
The developed countries, led by the United States and the European Union, came to Bali with two proposals. The carrot was a “trade facilitation” initiative that would allegedly simplify customs procedures and thus increase global trade, they said, by a “trillion dollars.” The stick was a demand that developing countries get rid of significant support programs for farmers and consumers, like food stockpiling, in the next four years, or else be charged in a WTO court for exceeding their allowable subsidy levels of 10 percent of gross domestic product. This was the so-called “peace clause extension proposal.”