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TWN Info on WTO and Trade Issues (Oct05/15)

18 October 2005
 

G33 submits proposal on indicators for special products

The Group of 33 developing countries that operates in the WTO's agriculture negotiations has formally submitted a proposal on indicators
for the designation of special products.

The G33's paper has been long anticipated, as it is expected to catalyse discussions on the details of the treatment of special products (SPs) of developing countries in the agriculture negotiations.

The G33 and other developing countries have made the case that their "special products" (on which the countries and their farmers depend for food
security, livelihood security or rural development) should be provided special treatment, such as exemption from tariff reduction under the present negotiations.

Although the concept of special products and their more flexible treatment has been accepted, there is yet no agreement on what this flexible treatment entails. The G33 agreed to come up with a paper on indicators that would help determine which products can be designated as SPs.

Speaking at the meeting of the WTO's Trade Negotiations Committee on 13 October, Ambassador Gusmardi Bustami of Indonesia, which coordinates the G33, said the indicators were as a contribution to move the negotiations in agriculture forward. They would provide guidelines for developing countries on how to approach the designation of products, as SPs, based on the agreed criteria.

Below is a report of the G33 paper.

With best wishes
Martin Khor
TWN
-----------------------------

G33 submits proposal on indicators for special products

By Tetteh Hormeku (TWN Africa), Geneva 15 October 2005


The Group of 33 developing countries that operates in the WTO's agriculture negotiations has formally submitted a proposal on indicators for the designation of special products.

The G33's paper has been long anticipated, as it is expected to catalyse discussions on the details of the treatment of special products (SPs) of developing countries in the agriculture negotiations.

The G33 and other developing countries have made the case that their "special products" (on which the countries and their farmers depend for food security, livelihood security or rural development) should be provided special treatment, such as exemption from tariff reduction under the present negotiations.

Although the concept of special products and their more flexible treatment has been accepted, there is yet no agreement on what this flexible treatment entails. The G33 agreed to come up with a paper on indicators that would help determine which products can be designated as SPs.

Speaking at the meeting of the WTO's Trade Negotiations Committee on 13 October, Ambassador Gusmardi Bustami of Indonesia, which coordinates the G33, said the indicators were as a contribution to move the negotiations in agriculture forward. They would provide guidelines for developing countries on how to approach the designation of products, as SPs, based on the agreed criteria.

The Group of 33 developing countries that operates in the WTO's agriculture negotiations has formally submitted a proposal on indicators for the designation of special products.

The G33's paper has been long anticipated, as it is expected to catalyse discussions on the details of the treatment of special products (SPs) of developing countries in the agriculture negotiations.

The G33 and other developing countries have made the case that their "special products" (on which the countries and their farmers depend for food security, livelihood security or rural development) should be provided special treatment, such as exemption from tariff reduction under the present negotiations.

Although the concept of special products and their more flexible treatment has been accepted, there is yet no agreement on what this flexible treatment entails. The G33 agreed to come up with a paper on indicators that would help determine which products can be designated as SPs.

Speaking at the meeting of the WTO's Trade Negotiations Committee on 13 October, Ambassador Gusmardi Bustami of Indonesia, which coordinates the G33, said the indicators were as a contribution to move the negotiations in agriculture forward. They would provide guidelines for developing countries on how to approach the designation of products, as SPs, based on the agreed criteria.

The G33 paper referred to the mandate on Special Products in paragraph 41 of the July Framework, that developing countries have the flexibility to designate an appropriate number of products as Special Products (based on criteria of food security, livelihood security and rural development needs) which are eligible for more flexible treatment.

In line with this mandate, the paper "focuses on the issue of designation and discusses the approach being followed by the G33 in the specification of SPs based on the criteria of food security, livelihood security or rural development through a set of indicators, qualitative and quantitative, where possible, which uphold the conceptual underpinnings of these criteria".

Reflecting the "diversity in the agricultural systems and policy across developing countries", the paper has defined food security, livelihood security and rural development in terms of complex and multidimensional concepts, which are intertwined with each other and can be assessed at various levels.

The paper adds that a limited purpose of setting out the indicators is to contextualise the concepts of food security, livelihood security and rural development to the circumstances of each developing country.

The selection of a product, or its close substitute as SPs, must be informed by each developing country's policy framework and objectives. Thus, the exercise on indicators was neither meant to be prescriptive, exhaustive, nor develop a common set of indicators applicable to all developing countries.

The indicators appear under four categories - food security, livelihood security, rural development, and a cross-cutting indicator (relating to products receiving trade-distorting domestic subsidies and export subsidies by other countries).

Under food security, the paper states that "as defined by the World Food Summit, food security exists when all people at all times have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs for an active and healthy life". Thus, while both availability and access to food are emphasised in this definition, access to food has strong linkages with livelihood security.

Moreover, "these concepts lead to considerations of national assessments of food security, and beyond them to incorporate regional and household's and individual's access and guarantees to food. Conceptually, at a national level, food security would be the ability of a country to meet its food requirements under all circumstances, including any disruption in international supplies".

According to the paper, food security, thus, has at least two components. The first is that a certain proportion of domestic consumption be met through domestic production. This also applies to broad food classes, such as carbohydrates, fats and proteins separately, since a balanced diet requires availability of all three.

The paper listed different ways in which different developing countries identify these products. They are identified either as part of the basic foods basket through administrative guidelines, legislation, statues, etc; or as the contribution of products to the balanced diet (the total domestic production of each food class vis-a-vis the total requirement of that food class) or to the calorie intake (e. g. share of calories/per capita/per day of product X out of total calorie/per capita/per day intake of the population); or as the share of income spent on a particular product (e. g. share of income spent on X/total income).

The second component of food security addresses three situations. These include the situation where "the consumption needs of a country for a particular product are too large for the world market to satisfy; or where the consumption pattern of a country for a specific type of a product is very limited or if there are only a limited number of sources of the product; or if the world trade volume is relatively small compared to world demand". In such cases imports which depress domestic production can lead to high vulnerability in case of any form of international disruption in supplies.

The paper states that this vulnerability is not limited to the country in question, but will affect all other developing countries which import the product, and is usually assessed as the ratio of the total world trade volume of the product and the total domestic consumption of the product.

For instance, if world trade volume is relatively small compared to the total consumption needs of a developing country, the impact of even a small reduction in domestic production due to the price depressing effect of imports can be substantial. Equally, any natural disruption in production in the dominant exporting country must also be assessed.

Livelihood security, the next category addressed in the paper, is defined as related to the adequate and sustainable access to resources or assets (i. e. education, land, capital, social networks, etc) by households and individuals to realize a means of living.

It also takes into account the fact that "alternative employment opportunities are simply not available to illiterate, aged and/or unskilled people, and agriculture presents almost the only option, including in developing countries with high levels of rural illiteracy as well as those which do not have adequate safety-nets. This situation becomes aggravated in the case of perennial crops as opposed to annual crops".

The paper adds that another crucial characteristic that defines livelihood security in developing countries is that their low income or resource poor, disadvantaged or uncompetitive farmers have very low risk thresholds, and it is not possible for them to shift from their traditional product to another easily since this involves both considerable resources as well as high levels of risk.

Therefore, it is not so much a question of the importance of a particular product in the total production structure in agriculture, but the characteristic of the farmers producing the product that drive agricultural policy in developing countries in this case.

In this context, a complement of different approaches has been used to assess the relative importance of a source of livelihood for the population. The first relates to a situation where the majority of the farmers producing a particular product (no matter how large or small the total production) are low income or resource poor and disadvantaged, and any disruption caused by imports will drive them to deprivation or even starvation. Thus, the share of total domestic production of a product grown on small farms or operational holdings indicates the importance of the product to livelihood security.

As far as indicators are concerned the paper states that in some developing countries, indicators that capture the relevance of particular products for income and employment generation (at national and regional levels) include the share of total domestic production of a product grown by farmers having low income to the total production of that product in the country.

Other indicators used are the share of agricultural labour force employed in a sector in the total agricultural labour force; or the income derived from a product in the total income; or the acreage planted of a product in total agricultural land.

Secondly, "in order to take into account the magnitude of displacement, including of the landless labour, that can take place by the disruption of production of a particular product, developing countries invariably assess the absolute number of people dependent on a product".

The third concept "concerns tribal communities, women, aged people, disadvantaged or uncompetitive farmers, and other vulnerable sections of the rural population that have the least alternatives available to them".

Finally, the paper identifies products grown in disadvantaged geographical regions as important because a number of constraints (such as lack of infrastructure, access to adequate technologies, including irrigation facilities, etc) limit the capacity of the population to diversify their livelihood strategies.

Further, the agro-ecological conditions in areas also limit the sectors in which the population can engage as a source of livelihood; for instance, dry lands, semiarid or hilly areas provide little or no prospects of diversification.

Under the category of rural development, the paper defines this as "the potential of an agricultural product to improve the living standards of the rural population, including both directly and through its forward linkages to non-farm rural economic activities".

Therefore, it is related to the capacity of countries to protect the existing resources and livelihood strategies of people in the rural areas based on particular products and establish mechanisms to boost their income and well-being through non-farm activities dependent on that product.

The paper states that it is "important to identify those products that can contribute to development by boosting the economic activity and income of the country as a whole and/or that of particular regions in the country".

Issues to be taken into account include: the potential for value addition; the extent to which production takes place in small and medium size farms; the proportion of a product processed in the country as compared to the world average; products which are of importance to handicrafts and cottage industries; specialty products which a certain rural community rely on for its rural development or any other form of rural value-addition.

The final indicator addressed by the paper is defined as cutting across the three criteria of food security, livelihood security and rural development. "Any product that receives product specific amber or blue box subsidies, as well as export subsidies provided by other countries, should automatically be eligible for SPs in developing countries".

In addition to the above indicators, the paper also argues for flexibility to substitute an SP with a product that is not SP without any other compensation. This flexibility will be incorporated in order to address changing circumstances in a developing country member, provided the product that is being substituted meets the criteria of food security, livelihood security and rural development needs.

 


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