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Asian Farmer-Coop Demanding an End to Farm Subsidies

In The Financial Express, India, Oct 18, 2004

Asian farmers urge developed countries to cut subsidies

Posted online: Monday, October 18, 2004 at 0000 hours IST

Last week the sixth meeting of Asian farmers? cooperatives gave a
clear message that it is not acceptable to the developing countries to
open up their markets unless the developed countries susbstantially
reduce their support to the farm sector.

The message is justified. Many developing countries have already
effected substantial reduction in tariff and also removed quantitative
restrictions (QRs) on imports, while the developed countries continue
to increase their subsidies to the farm sector. Some of the developing
countries have become victims of the prevailing unfair rules of trade.
Countries like The Philippines, Malaysia and Sri Lanka which were
earlier net exporters of rice have become importers.

Paul Q Montemayor, national business manager, Federation of Free
Farmers Cooperatives of The Philippines said that his country?s ?annual
agricultural trade deficit has swollen to billion dollars in recent
years as against a positive surplus prior to GATT-Uruguay Round and
even before local tariffs had completed their reduction schedule under
the Uruguay Round.?

He alleged that that there is no clear correlation between the
level of subsidies extended by a developed country to its producers and
exporters and the degree of tariff protection it is allowed to retain.
Conversely, the tariff rates that developing countries are allowed to
retain do not have any direct proportionality with the extent of
distortion and unfair competition imposed by subsidising products
entering their borders. He said that at the last WTO general council
meeting, The Philippines government proposed to correct this defect by
allowing countries to impose countervailing tariffs equivalent to the
degree of subsidisation, but this was unfortunately not adopted in the

Montemayor also disclosed: ?Negotiations are still ongoing for
retention of the country?s quantitative import restrictions on rice and
if this is unsuccessful, rice will surely be placed under special
products category and be shielded from any major tariff rate or tariff
quota change. A similar pattern can be adopted for other sensitive
products like corn, meat, sugar and vegetables.? He, however, lauded
the inclusion of special safeguard mechanism (SSM), special product
(SP) and other other trade remedy measures in the Oshima-Supachai draft
and said these may provide enough tools to mitigate risks to a certain
extent if properly negotiated.

He said that the timetable for full elimination of direct export
subsidies, estimated to have a residual value of over $14 billion based
on Uruguay Round reduction commitments has yet to be defined. At the
same time other forms of export subsidies like export credits and
disguised food aid will be subjected to disciplines only when the
negotiations on Doha Round reopens. That means that during this period,
the farmers in the developing world will have to bear the burden of
legalised dumping from the developed countries.

On the proposed expansion of the Blue Box in the Oshima-Supachai
draft, Montemayor was clear in saying that this will US, which did not
aggressively use this provision till now, ?to find additional leeway to
reconfigure and rechannel support for favoured export commodities.?
These Blue Box allowances are in addition to current trade-distorting
amber box measures, which although subject to reduction timetables,
will nevertheless not be eliminated totally nor immediately, he said.

He said that it is also very likely that direct payments provided
under Green Box will continue to be allowed without any limits. ?When
added all up, these domestic subsidies can have the equivalent, if not
more pernicious effect of export subsidies once the supported products
are sold to developing countries. At the same time, these can act as
import barriers since they can enable subsidised farmers to ward off
and compete with nominally cheaper imports from other countries.?

Yaakob Bin Jusoh of Malaysia said that his country can benefit
from increased exports of palm oil to EU and US if tariff barriers are
reduced. Also cocoa, rubber and pepper exports will rise marginally. He
said that Malaysia like other ASEAN countries need not reduce their
tariffs as they are already low. The problem will rise when Malaysia
will be asked to reduce its subsidies on paddy cultivation.

UG Dayananda, general manager, Sri Lanka Cooperative Marketing
Federation pointed out the folly committed by his government in
liberalising imports, dismantling the system of of paddy procurement
and subsidised rice distribution to the poor which sounded the death
knell for paddy farmers and consumers. However, the system of grain
procurement and distribution was restored in a new form through a
cooperative network. Rice imports are now being channelised through

The Asian Farmers? Group of Cooperatives (AFGC) is a small group
consisting of representatives from nine Asian monsoon countries only.
The AFGC is floated at the initiative of The Japanese apex farm
cooperative Ja Zenchu. There is need to include other countries in this
group for creating an effective voice.