CBD To Assess, WTO To Expand Farm Trade Liberalisation

Parties to the Convention on Biological Diversity (CBD) are convening for their sixth meeting in The Hague on 7-19 April to discuss, inter alia, the impact of trade liberalisation on the conservation and use of agricultural biological diversity. At the same time, negotiations at the World Trade Organization (WTO) to further liberalise trade in agricultural products overcame a major hurdle when WTO Members on 26 March agreed on a work programme to establish the modalities for the negotiations.

Agro-biodiversity and trade liberalisation at COP-6

Based on a paper prepared by the CBD Executive Secretariat, Parties at COP-6 will debate the impacts of trade liberalisation on agricultural biodiversity in the context of the multi-year programme of activities, established at COP-3, which aims to promote the positive and mitigate the negative impacts of agricultural practices on biodiversity, while trying to promote the conservation and sustainable use of genetic resources of actual or potential value for food and agriculture as well as the fair and equitable sharing of benefits arising out of the use of genetic resources.

According to the Secretariat's paper, further removal of trade restrictions are likely to lead to an increase in world prices for agricultural products and consequently a shift in production location as countries use their comparative advantages, leading to a contraction of production in developed countries and an expansion in developing countries. These developments are expected, according to the paper, to result in changes in the abundance of natural habitats and new land cover types, and to changes in spatial patterns as well as in natural patterns of environmental variation. Additionally, a contraction of productive land could lead to the loss of species dependent on certain types of farmland. Assessing the effects of production intensification due to farm trade liberalisation, the report finds that this might result in greater genetic vulnerability as more homogeneous modern plant varieties are used. However, while production intensification is expected to have immediate negative impacts on agro-biodiversity, eg through ground and surface water pollution, the report also points out that a decrease in producer price support and other subsidies can reduce agrochemical use overall. Lastly, as transport costs decline and exports grow, the spread of alien invasive species would be facilitated, possibly leading to a loss of native species.

In its recommendations to COP-6 on trade and agriculture, IUCN - The World Conservation Union agrees with the findings of the Executive Secretariat, but further recommends that Parties should take into account that trade contributes to food security eg through bridging the gap between production and consumption needs as well as by rationalising the allocation of resources as more food is being produced in places benefiting from "positive comparative advantages". IUCN furthermore points out that investment into traditional crops, diversifying farming systems and promoting sustainable and organic agriculture are insufficient if they are not accompanied by appropriate policies and incentives, such as market access support or labelling schemes, to encourage investment.

Working Group 1 of COP-6 will discuss agricultural biodiversity in the afternoon of 9 April and on the morning of 10 April.

WTO Agriculture Committee agrees on work programme for negotiations

At the negotiating session on 26 March, the WTO Committee on Agriculture agreed on a work programme, which will establish the so-called "modalities" or targets for the final stage of the ongoing agriculture negotiations (31 March 2003 - 1 January 2005). According to the work programme, Members will address the three "pillars" of the Agreement on Agriculture (AoA), namely export subsidies, competition and restrictions on 17-20 June, market access on 2-4 September, and domestic support [i.e. farm subsidies other than those promoting export] on 23-27 September. Furthermore, Members plan to have a draft overview paper ready for circulation by 18 December, which would then be finalised in the follow-up process until the end of March 2003.

The 12-month work programme deals with one of the most critical phases in the agriculture talks as it will set targets -- including numerical targets -- for achieving the objectives set out in the Doha Declaration, i.e. significant reductions in tariffs, export subsidies and domestic support. This stage will therefore determine the shape of the negotiations' final outcome as the "modalities" will be used by Members for making their initial offers to negotiate new commitments. This practice of agreeing on "modalities" first and then negotiating specific commitments had already been used during the 1986-94 Uruguay Round.

WTO Members have been holding 'special' agriculture sessions since early 2000 as mandated by the Agreement on Agriculture (AoA), which provides for a continuation of the "fundamental reform" programme for the liberalisation of the world's farming sector through ongoing negotiations (Article 20). While the agriculture negotiations have so far been taking place independently of other talks in the WTO in line with the 'built-in agenda', they are now part of the single undertaking launched at the Fourth WTO Ministerial Conference in November, to be concluded by 1 January 2005 (see BRIDGES Weekly, 15 November 2001).

Agriculture and environment at the WTO

According to the preamble of the AoA and reiterated in the Doha Declaration, "the need to protect the environment" is one of the so-called "non-trade concerns" which should be taken into account. WTO Members, however, continue to disagree on how this should be done (see BRIDGES Trade BioRes, 6 December 2001). In general, farm subsidies are deemed to be trade-distortive and are only allowed under certain conditions listed in the AoA. For instance, Members can use the so-called "Green Box" to compensate farmers eg for environmental conservation or protection provided through their agricultural work. Payments under the Green Box, however, must be non- or at most minimally trade distorting. Thus, direct payments to farmers, for example, should be decoupled from production so as not to create an incentive for farmers to increase their production -- which would have a trade-distorting effect. Some WTO Members, such as the EU and Switzerland, would like to maintain the Green Box as it stands now, whereas others, such as the Cairns Group of agriculture exporting countries as well as various developing countries, have called for restricting its applicability. Some Members, notably Norway and Japan, would like to be allowed to address non-trade concerns such as rural development and environment outside the coverage of the Green Box, keeping the agreement structure intact, but allowing more flexibility for certain targeted measures that may be trade distorting but necessary to achieve specific domestic policy objectives.

Additional Resources

CBD Secretariat's paper on trade liberalisation and agro-biodiversity (UNEP/CBD/COP/6/INF/2)

IUCN Policy Recommendations Papers for COP-6, http://www.iucn.org/themes/biodiversity/cop6/index.html.

For further information on the ongoing agriculture negotiations at the WTO, see http://www.wto.org/english/tratop_e/agric_e/negs_bkgrnd00_contents_e.htm

ICTSD Internal Files.