Diapositive 1

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ROPPA
Reinforcing the leadership and the negotiating
capacities of the representatives of family
farmers' organisations of West Africa
Bamako, 12 to 15 April 2005
Introduction to the WTO Agreement on Agriculture
and the EPAs the challenges for West African
farmers
Jacques Berthelot, Solidarité (solidarite_at_ensat.fr
)
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PLAN
Introduction from GATT to WTO
I Origin and justifications of the
liberalisation of agricultural policies
II The impact of agricultural liberalisation in
Sub-Saharan Africa
III Analysis of the WTO's Agreement on
Agriculture
IV The mecanisms at work beyond Northern
subsidies the role of prices and supply
management
V The EPAs between the EU and ACP countries are
criminal and their negotiation should be stopped
VI Strategy and calendart to rebuild
agricultural policies, notably in West Africa,
and the AoA on food sovereignty
4
From the GATT to the WTO (World trade
Organization)
Close to the end of the 39-45 war, which
had killed 50 million people on the 5 continents,
the Allies met in Bretton Woods (North-East of
the USA) in 1944 to lay the foundations of
institutions in charge of regulating the
international economic relations, convinced that
this conflict had largely been caused by the
protectionist moves of Western countries in the
1930s in order to face the strong rise in
unemployment generated by the great crisis
triggered by the Wall Street krach of 1929.
5
From the GATT to the WTO (World trade
Organization)
They have therefore created the IMF to
lend strong currencies to countries unable to
import, the World Bank to finance on the medium
and long run the reconstruction of countries
devas- tated by the war then the developing
countries' needs, but they did not yet agree to
create an International Trade Organisation
(ITO). After a preparatory meeting by 23
countries in October 1947 in Geneva, an
international conference has gathered in 1948
more than 50 countries in Cuba which have signed
the Havana Chart creating the ITO.
6
From the GATT to the WTO (World trade
Organization)
But the US Congress has refused to ratify it,
because it foresaw a coordination of
interven- tion mechanisms on the prices of raw
mate- rials, which would have worked against the
"free play of market forces", and therefore the
other countries did not ratify it either. But
the 23 countries (mostly from the West) which
had signed the chapter 4 of the Chart in
Geneva, related to a General Agreement on Tariffs
and Trade (GATT) have become the
Contracting Parties of a mere intergovernmental
Agreement and not of a constraining Treaty.
7
From the GATT to the WTO (World trade
Organization)
The GATT contains the principles leading to free
trade, by reducing tariffs progressively, during
periodical trade rounds. Already 8 of them where
negotiated before the Doha Round.
It was at the end of the Uruguay Round
nego- tiations (1986-93) that the WTO has been
created the 15 Avril 2004 in Marrakech, in order
to coordinate the trade in goods and services
and to judge the trade disputes arising among
its Members States.
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From the GATT to the WTO (World trade
Organization)
The WTO has been created to coordinate the good
working of the 21 multilateral Agreements signed
in Marrakech of which the Agreement on
Agriculture (AoA), the Agree- ment on Sanitary
and Phytosanitary Measures (SPM) and the
Agreement on Trade Related Intellectual Property
Rights linked to trade (TRIPS) and this
through the Dispute Settle- ment Body (DSB) which
runs the complaints between Members through
panels. The minis- terial conference meets every
other year and the General Council according to
needs.
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I Origin and justifications of the
agricultural policies liberalisation
Up to 1995 with the implementation of the
WTO's Agreement on Agriculture (AoA) , the
agricultural price and market policies remained
a purely national concern since the GATT,
created in 1947 to liberalize the trade in
goods, admitted of exceptions for agriculture,
notably the right to impose quantitative
restrictions which was positive but also to
subsidize exports, which was not !
10
I Origin and justifications of the
agricultural policies liberalisation
As long as protecting agriculture met the US
interests, international organizations (OECD,
WB, IMF, GATT) and the mainstream econo- mic
theory put up very well with it, in the name of
the agriculture specificity
In the mid 80s the US interests, whose
agri-food exports had shrunk due to a too strong
, converged with those of the EU to launch a new
trade Round (the Uruguay Round) in order to
integrate into the GATT agriculture (for the USA)
and the services linked to trade (for the EU)
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I Origin and justifications of the
agricultural policies liberalisation
The liberalisation of agricultural policies has
been fostered under the pressures of large
agri- food corporations (of agro-industries and
large food chains), with the main objective of a
conti- nuous slump in the prices of agricultural
products, which constitute their raw materials
The priority has been given to the slump in the
prices of feedstuffs (COP cereals, oilseeds and
pulses) in order to reduce the production cost
of animal products (meats, eggs and dairy)
12
I Origin and justifications of the
agricultural policies liberalisation
The international institutions and neo-liberal
economists will then accentuate their
propa- ganda on the benefits of free-trade for
agri-food products and predicted a high increase
of world agricultural prices. To such an extent
that a "Decision on measures concerning the
possible negative effects of the reform programme
on least-developed and net food-importing
countries" was adopted at Marrakech the 15 April
1994 which foresaw the obligation for developed
countries to compensate these prices increases
for poor and net food DCs.
13
I Origin and justifications of the
agricultural policies liberalisation
The increased liberalisation of agri-food trade
has been a disaster for family farmers worlwide
since agri-food products are not ordinary goods
and their markets do not self-regulate.
Facing a stable demand in the short run, agri-
cultural production fluctuates along with clima-
tic vagaries, and even more agricultural prices
and incomes and consumers prices. That is why all
countries since the Pharaohs have had
agricultural policies to regulate the supply at
the import level and through public stocks.
14
I Origin and justifications of the
agricultural policies liberalisation
Agri-food corporations have been very cunning,
avoiding to push themselves forward and arguing
that this would benefit consumers first and
foremost.
Agricultural prices have collapsed without any
transmission to consumers prices which have
continued to increase, at least in developed
countries, and the profits of agri-food
corporations have increased greatly.
15
I Origin and justifications of the
agricultural policies liberalisation
Whereas coffee and cocoa prices had reached their
lowest level, Nestlé, the 1st world corporation
in agri-food, has realized a net return of 21 on
its 15.5 billion of shareholders' equity in 2000
and 2001, 22 in 2002 and 17 in 2003
Kraft Foods, 2nd world corporation in agri-food,
has got a net return of 15.2 on its
25.8 billion of shareholders' equity in 2002
16
The earlier and larger agricultural
liberalisation imposed to DCs since the 80s
98 of farmers are living to-day in DCs
In DCs the liberalisation of agriculture has
been imposed in the early 80s by the structural
adjustment policies (SAPs) of the IMF and World
Bank to increase the competitiveness of their
products in order to reimburse their foreign
debts by exporting more and importing less
reducing import protection and subsidies to
farmers and consumers, devaluation, priva-
tising marketing boards and products chains.
17
The quasi-religious brainwashing on agri- tural
liberalisation IMF and World Bank
The dogma if the liberalisation of agriculture
has not fulfilled all the promises made at the
time of signing the WTO in 1994 notably higher
world agricultural prices , it is because it has
not be sufficient and we should therefore brought
it quickly to completion
The high-priests the WB and IMF are
dominating more and more the WTO, with an annual
meeting of its General Council on the coherence
of their policies, and being observers in all
WTO Commit- tees, notably the Committee on
agriculture.
18
The quasi-religious brainwashing on agri- tural
liberalisation IMF and World Bank
The WB at the Committee on agriculture the
15/11/04 "Unfortunately... the concept of food
security has been used in the Doha negotia-tions
primarily to suggest that developing countries
should be allowed to maintain high barriers to
imports of food products as a means of increasing
national production, under the rubric of 'special
products' or as a compo-nent of the 'development
box' This kind of policy is likely to have only
very limited short-term benefits to farmers - and
to be counter-productive to the objective of
long-run structural food security."
19
The earlier and larger agricultural
liberalisation imposed to DCs since the 80s
Whereas the Agreement on Agriculture (AoA) had
been negotiated pratically between the EU and USA
according to their interests, DCs have been
obliged to sign it even if they did not want
Indeed WTO negotiations are concluded by
the obligation to sign all Agreements (the
'single undertaking') or to get out of WTO, which
has become impossible since it regulates now
practically all international economic
relations. Besides being a WTO Member is a
requirement of developed countries and the WB
and IMF.
20
The EU and USA have imposed complemen- tary
bilateral free-trade agreements to DCs
The EU and USA have negotiated since 1995 many
free-trade agreements with DCs. Notably the EPAs
(Economic partnership agreements) decided by the
Cotonou Agreement (2000) for the 1st January 2008
with ACP countries (see further on).
To show she is a model WTO Member, the EU has
adopted the Decision "Everything but arms" in
2001 for LDCs, but the incentive to export rather
than protect the domestic market would have
detrimental effects on LDCs.
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The Everything but arms initiative

• Implementation 5 Mars 2001
• Suppression of tariffs and import quotas in the
  EU for all products coming from the 49 LDCs,
  except for arms
• However progressive liberalisation for 3
  sensible products banana (01/01/06), rice
  (01/09/09), sugar (01/07/09)
• To compensate this transition delay immediate
  creation of tariff rate quotas at 0 tariff for
  LDCs' sugar and rice, with an increase of
  15/year during the transition period
• Objective of this transition period adaptation
  phase in the CAP for these 3 products

Source Les Mardi du BAME Avenir relations
commerciales agricoles UE-Afrique 02/13/03
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The large variations of world agricultural prices
World agricultural prices have no legitimacy and
it is absurd to consider them as the 'true'
prices (OECD) on which all domestic prices should
be aligned, since 1) They are highly volatile in
the short run along a declining trend in the long
run. 2) They are dumping prices, below the
production cost of practically all countries. 3)
They are manipulated by more and more
concentrated oligopolies but also by the EU and
USA which differentiate their export subsidies
and credits according to importing countries. 4)
They cover a tiny part of the world production
cereals (10.8), meats (7),dairy products (6.5)
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Source USDA (http//www.ers.usda.gov/publicatio
ns/tb1878/tb1878h.pdf)
26
Whereas the current prices are the same in 1987
and 2000 (114 /t), the price in constant dollar
has dropped by 35
27
Wheat price in Chicago in cents per bushel
28
Wheat price in Paris, in euros per tonne
29
Source d'après les données Banque mondiale et
Organisation internationale du café
30
Whereas the price in current dollar for 1961 (558
/t) was below its 2000 level (940 /t) by 41,
it was three times higher in constant dollars!
31
Coffee price in London, in per tonne
32
Evolution of the cotton price from 1990 to 2003
Source FAO 2003
33
Cotton price in New-York, in cents per pound
34
II The impact of the agricultural
liberalisation on Subsaharan Africa (SSA)
The growing food dependency of the SSA
The surplus in the agri-trade balance of the SSA
has shrunk since 1996 and has turned into a
deficit since 2001 imports have increased by
14 from 1995 to 2002 while exports have
decreased by 10.
35
Balance of the agri-food trade of the
Sub-Saharan Africa, in million dollars
36
The dramatic cereal dependency of the SSA
The volume of cereals and rice imports has
increased by 58 from 1995 to 2002, but they
represent an unchanged percentage of food
imports in value (about 42) because the prices
have collapsed
From 1996 to 2001 the volume of wheat imports
has increased by 72.7 but the import value has
only increased by 13.6.
37
Cereals imports of Sub-Saharan Africa, in
million dollars
38
Evolution of cereals imports in Sub-Saharan Africa
39
SSA's dependency in rice is also increasing
greatly
Despite the 46 rise in the imported volume of
rice from 1995 to 2002, the bill has decreased
by 5.5 since the price has dropped by 35.2.
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The SSA is a growing net importer of sugar
The SSA is at the same time an importer and
exporter of sugar (notably in the framework of
the EU-ACP sugar Protocol). The volume of net
imports (in raw sugar equivalent) has increased
by 148 from 1995 to 2002 but the value has
increased by 1862 (18.6 times more) since the
price of imported sugar has dropped by 40.
42
Evolution of imports and exports of sugar in
Sub-Saharan Africa
43
The explosion of poultry meat imports in SSA
The import volume of poultry meat have trebled
from 1995 to 2002 but the import bill has only
increased by 71.5 since the import price has
dropped by 42.1.
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III Analysis of the WTO Agreement on Agriculture
The mythology of boxes at the WTO
It makes a hierarchy of supports according their
degree of 'trade-distortion' or coupling to the
production or price of the current year

• red box a) forbidden import supports other than
  tariffs
• b) coupled border supports tariffs and export
  subsidies

2) amber box domestic supports coupled to the
current price or production levels
3) blue box partially decoupled fixed domestic
subsidies
4) green box fully decoupled domestic subsidies
gold box ignored by the WTO non agricultural
subsidies
46
The distinction between support and subsidy
If any subsidy i.e. a public expense financed
by tax-payers is a support, the reverse is not
true support is a broader concept that subsidy
since it encompasses "the market price support",
which results first from the import protection
increasing the gap between the domestic and
world prices but also from other measures
limiting the production put on the domestic
market - export subsidies - intervention price
with public stockholding - set aside of
agricultural lands - externat and domestic food
aid - subsidies to private stockholding
47
The OECD's indicators of agricultural support
Since for OECD, 'think tank' of Western
countries which is promoting free-trade,
consumers are entitled to pay their food at the
world prices and since import protection prevent
them to do so, they are suffering a negative
consumers' surplus, measured by the gap between
the domestic and world prices, considered as a
trade distortion and as a "transfer from
consumers to producers", assi- milated to a
subsidy of consumers to producers.
48
The OECD's indicators of agricultural support
For OECD, the total support estimate (TSE) to
farmers of Western countries has reached 330
billion on average from 2001 to 2003, i.e. almost
1 billion per day, but the truth is 186
billion since the market price support (gap
between domestic and world prices) has been 148
billion.
The TSE is equal to the GSSE (general services
support estimate), which groups the collective
subsidies in kind, plus the PSE.
The PSE (producer support estimate) has
reached 241 billion from 2001 to 2003 but,
deducing the 148 billion of market price
support, actual indivi- dual subsidies to farmers
have reached 94 billion.
49
The distinction between support and subsidy

• The idea that consumers are deprived from their
• 'right' to pay their food at the world price is
  all the
• less founded that
• This world price is a dumping price, lower than
• the production cost of all countries.
• 2) The slump in world prices is generally not
• transmitted to consumers.
• 3) The drop in domestic agricultural prices is
  even
• less transmitted, as the experience has shown in
• the EU and USA, where farmers sell rarely
  directly
• to consumers but mainly to agri-food companies
• which have been able to increase their margins.

50
Coupled support or trade-distorting support
For the free-traders, any support linked to the
level of price or production of the current year
is a coupled support.
Therefore coupled supports group together 1) The
border supports import protection and export
subsidies. 2) The domestic coupled supports
administered (or intervention) prices triggering
public purchases and stocks subsidies linked to
production or prices (eg. LDP in the USA) and
subsidies on inputs and investment.
51
The red box of forbidden and border supports

• Forbidden supports import protec-
• tion other than through tariffs quotas,
• variable levies

52
The amber box of domestic coupled supports
3) de minimis as long as supports remain lower
than 5 of the production value (10 for DCs),
they are not taken into account in the product-
specific AMSs and the non product-specific AMS

• 1) Product specific supports
• market price support linked to admi-
• nistered prices they are meaningless !
• subsidies to production or prices

2) Non product specific subsidies subsidies on
inputs (feedstuffs, credit, insurances,
irrigation) and investment of farmers and
agri-food industries
53
Why product-specific AMSs linked to administered
prices are meaningless
Product-specific market price supports linked to
administered prices such as EU's inter- vention
prices represent 95 of its total AMS. However
they would not have any impact on domestic prices
without coexisting with much more determinant
market prices supports such as import
protection, export subsidies, production quotas,
set aside and foreign and domestic food aid.
54
Why product-specific AMSs linked to administered
prices are meaningless
The product-specific AMS linked to an
adminis- tered price (intervention price in the
EU) is com- puted as the gap between the present
adminis- tered price and the world reference
price of the 1986-88 base period, gap multiplied
by the present production. As long as this
administered price does not change, neither the
AMS does, although the actual price support
changes (through other measures) since the world
price is always changing. The AMS linked to an
administered price is therefore like a
thermometer remaining fixed along with the
temperature variations.
55
Why product-specific AMSs linked to administered
prices are meaningless
The 1st July 2002 the EU has eliminated
its intervention price on bovine meat (BM), which
has eliminated at the same time its BM AMS of
11.9 billion, reducing its total AMS by 30,
without any change in the domestic price nor in
the income of producers since the 1999 CAP
reform had increased largely their direct
payments. And, since there was no longer any BM
AMS, this elimination has triggered the de
minimis authorised level of coupled domestic
support at the 5 ceiling of the BM production
value. Therefore what is presented as a drop in
domestic support ends up in an increase!
56
The blue box of fixed partially decoupled
subsidies

• Subsidies based on programmes
• limiting production and
• Either on fixed areas and yields
• On at most 85 of the production
• level of the base period
• 3) Or on fixed bovine heads

57
Definition of the blue box AoA article 6.5

• " (a) Direct payments under production-limiting
• programmes shall not be subject to the commitment
• to reduce domestic support if
• such payments are based on fixed area and
• yields or
• (ii) such payments are made on 85 per cent or
  less
• of the base level of production or
• (iii) livestock payments are made on a fixed
  number
• of head.
• (b) The exemption from the reduction commitment
• for direct payments meeting the above criteria
  shall
• be reflected by the exclusion of the value of
  those
• direct payments in a Member's calculation of its
• Current Total AMS".

58
The green box of fully decoupled subsidies
Subsidies supposed without any effect on prices
or production or a minimal one

• Fully decoupled payments, without
• obligation for farmers to produce
• 2) Agri-environmental payments
• 3) Subsidies to farmers in deprived
• areas
• 4) Subsidies for natural disasters

59
The gold box ignored y WTO non agricultural
subsidies
It contains all present and past
non- agricultural subsidies

• efficient transport and communica-
• tion infrastructures
• general education and research
• health and pensions of farmers
• financed by the nation
• wealthy consumers able to pay fair
• prices for their agri-food products, etc.

60
Reductions of support according to countries
categories
61
Overwhelming domination of Western countries for
the various types of agricultural supports
62
That typology of boxes is theoretically
mystifying and a major political swindle
The false conception much too restrictive of
what protection actually means
The scandalous definition of dumping by the GATT
Decoupled subsidies are actually much more
protectionist than coupled supports
Why import protection is the least protectionist
type of agricultural support
The lack of control by the WTO has allowed the EU
and the USA to cheat massively
63
The false conception much too restrictive of
what protection actually means
For economists, any government measure which
increases the competitiveness of national
products relatively to foreign products is a
form of protection
64
The scandalous definition of dumping by the GATT
and the AoA
For economists and the man in the street there
is dumping if exports are made at a price lower
than the average production cost
For the GATT and the AoA, there is no dumping as
long as exports are made at the domestic price,
even if it is lower than the average production
cost
65
The scandalous definition of dumping by the GATT
and the AoA
Exporting at a price lower than the domestic
price is only possible in rich countries where
farmers are receiving direct payments authorized
by the WTO to complement their low prices
This has been the main reason of the CAP reforms
in 1992, 1999 and 2003-04 reducing by steps
agricultural prices to the world price level will
allow to export EU's agri- food products without
export subsidies
66
The scandalous definition of dumping by the GATT
and the AoA
This definition of dumping has also been the
main reason of the US Farm Bill in 1996 and 2002
since the world prices of grains are practically
aligned on the US domestic prices at the border,
reducing the later was a means to reduce the
former so as to eliminate the US competing
exporters, unable to compensate their farmers
through domestic subsidies as the US was able to
do without specific export subsidies
67
Why import protection is the least protectionist
type of agricultural support
"Free-trade is not anti-protectionism.
It is the protectionism of the mighty"
(Vandana Shiva, 1997)
68
Why import protection is the least protectionist
type of agricultural support
Import protection is the only support affordable
to poor countries, which do not have the means to
subsidize significantly their farmers, the more
so as their represent generally the majority of
the active popualtion (2/3 in Sub-Saharan Africa)
69
Why import protection is the least protectionist
type of agricultural support
All types of subsidies, even those of the green
box aimed at protecting the environment, are
reducing production cost and have a dumping
effect when the benefiting products are exported
70
Why import protection is the least protectionist
type of agricultural support
Only rich countries can use subsidies to protect
their domestic market from imports without using
specific measu- res at the import level by
compensa- ting through authorised subsidies (blue
and green boxes) the reduction of domestic
prices down to the world price level, the
agri-food corporations have no longer any
incentive to import
71
The import protection of agri-food products is
higher in the more industrialised countries
1) The exemple of the 19th century Europe
2) The exemple of emerging countries,
notably South Korea up to now, India up to the
end of the 90s and of Brazil up to the early 90s
3) The opposite exemple of Sub-Saharan Africa
where agriculture and the GDP have increased the
least in the last 25 years
72
The import protection of agri-food products is
higher in the more industrialised countries
4) Import protection remains, after the AsA
implementation, much higher in Western countries
than in developing countries
5) Western countries have cheated in the
conversion to tariffs of their import measures
('dirty tariffication') and have reserved for
themselves the Special safeguard clause
73
Comparison of tariffs in the EU and in WAEMU for
its most sensitive products
The WAEMU considers as its most sensitive
products, those benefiting from the TCI (import
tax linked to the economic climate) bovine
meat, condensed milk, rice, wheat flour, sugar,
crude and refined vegetal oil
It is therefore interesting to compare the
present levels of tariffs on these products in
the EU and WAEMU
74
Comparison of tariffs in the EU and in WAEMU for
its most sensitive products
75
Comparison of tariffs in the EU and in WAEMU for
its most sensitive products
We see that, without considering some additional
duties applied by some WAEMU States on these
sensitive products, the average tariff applied
by the EU-15 to Western countries (concerned by
the MFN status, i.e. outside preferential
tariff quotas) is 3 to 8 times higher than the
WAEMU tariff, except for vegetal oil !
76
Why import protection is the least protectionist
type of agricultural supports
Decoupled subsidies of the green box being
authorized without any limit, they are even more
protectio- nist than export subsidies, more
transparent and authorising antidumping measures
when they exceed the authorized ceiling
77
Why import protection is the least protectionist
type of agricultural supports
Even export subsidies would not be a real issue
if every country could protect itself at the
import level. However, given that most DCs
cannot increase their import protection as a
consequence of the heavy IMF and WB pressures,
eliminating explicit and indirect export
subsidies remains a priority
78
Why import protection is the least protectionist
type of agricultural supports
Due to their limited budget, DCs proritize
coupled supports which have a more direct effect
on the production and price levels
Coupled supports may maintain domestic prices
above world prices and do not imply that the
country is exporting, but the blue and green
subsidies allow to reduce the domestic prices
below the production cost and have a dumping
effect if the products are exported
79
Why import protection is the least protectionist
type of agricultural supports
Import protection is the only means to rebuild
market oriented agricultural policies, where the
bulk of agricultural income is based on
remunerative prices, but on domestic prices, not
on the highly volatile and dumped world prices
because they are below the production cost of
all countries
80
The lack of control by the WTO has allowed the EU
and the USA to cheat massively
The cheatings on input subsidies
The cheatings on investments subsidies
The cheatings on export subsidies
81
The massive cheatings of the EU and USA on their
input subsidies
The AoA states first that input subsidies
are coupled for developed countries (Art. 6.2)
before stating that the fixed payments of the
blue box are exempted from reduction (Art. 6.5).
About 60 of the production of COP (cereals,
oilseeds, pulses) in the EU and USA are fed
to animals, hence are inputs for animal
products. Therefore 60 of direct payments are
coupled and subject to reductions but neither the
EU nor the USA have notified them in the amber box
82
The massive cheatings of the EU and USA on their
subsidies to feedstuffs
That has represented about 54 billion
in under-notifications in the amber box (AMS),
close to half the subsidies of the EU blue box
from 1995-96 to 2000-01!
83
The massive cheatings of the EU on their
subsidies to feedstuffs
The CAP reform of June 2003, which has transfered
about 80 of direct payments to COP from the blue
box to the green box (of the 'single farm
payment') will not change their status of input
subsidies, hence to be put in the amber box, as
long as 60 of COP will continue to be fed to EU
animals
84
The massive cheatings of the USA on their
subsidies to feedstuffs
Since about 63 of US maize and 50 of US
soybean are fed to animals within the USA, the
same proportions of 'contract flexibility
payments' (from 1996 to 2002) and of 'direct
payments' since 2002 should have been notified
in the amber box (in the product-specific AMS
for maize and soybean) but have been notified
in the green box !
85
The massive cheatings of the EU and USA on their
subsidies to other inputs

• Irrigation subsidies
• The USA has notified 300-380 million a year
• but the actual figure could exceed 10 billion.
• 2) The EU does not notify any although they are
• large in Spain Italy and reach 60 M in France.

• Subsidies to agricultural insurances
• The USA have under-notified them by
• an average of 867 M from 1995 to 2001.
• 2) The EU has notified them by 21-102 M,
• but they are much higher in Spain and Italy.

86
The massive cheatings of the EU and USA on their
subsidies to other inputs
Interest rates rebates on agricultural loans
Taxes rebates on agricultural fuel

• The USA have notified to OECD 2.3 billion
• per year but 0 to the WTO,
• not even in the green box

2) The EU does not notify any to the WTO but
they have been 984 M in France in 2000
87
The massive cheatings of the EU on subsidies to
agricultural investments
The EU has notified in the green box more than
5 billion per year since 1995-96, hence 30
billion from 1995-96 to 2000-01, in subsidies to
investments of farmers, agri-food industries
and for marketing. Thus violating AoA's
Articles 6.2, paragraph 4 of Annexe 4 and
paragraph 13 of Annexe 3.
88
The massive cheatings of the EU on its export
subsidies
The EU claims to have reduced sharply its export
subsidies, fallen from Ecus 9.5 billion in 1992
to 3.4 billion in 2002 and, for cereals, from
Ecus 2.16 billion to 121 M.
However, taking into account blue direct
pay- ments to exported cereals, which skyrocked
from Ecus 117 M in 1992 to 1.28 billion in
2002, and that exports have been halved (from
36.4 to 18.4 M tonnes), the total subsidy by
exported tonne has increased by 20 (from Ecus
62.5 to 75.1)
89
The massive cheatings of the EU on its export
subsidies
If export refunds on poultry exports have
dropped from ECU115.9 M in 1996 to 90.5 M in
2002, total subsidies taking into account the
cereals fed to the exported poultry meat have
increased from ECU 182.6 M to 194.4 M, even if
they have de- creased per tonne from ECU216 to
170 as a consequence of the sharp rise in the
volume of low cost cuts (legs, necks, etc.)!
90
The massive cheatings of the EU on its export
subsidies
All the same, if export subsidies to pork meat
have dropped from ECU71 M in 1997 to 20 M in
2002, total subsidies taking into account the
direct payments to the cereals included into the
exported pork meat have increased from ECU179
M to 182 M!
91
The massive cheatings of the USA on their
export subsidies
The same finding can be made for exports of US
animal products and is even higher for exports
of bovine meat and dairy produce since
production systems are much more intensive than
in the EU, hence much more dependent on
feedstuffs
92
The WTO does not check the veracity of its
Members' notifications
Having asked the WTO on this issue, Gabrielle
Marceau, of the Dispute Settlement Body,
replied "The WTO has neither the resources nor
the skills to act like "a regulator" of these
notifications. It is up to each Member to do
these verifications This is the very spirit of
the whole disputes settlement system of the
WTO every Member country acts as a guard- dog
of the system" (Answer on an internet forum the
27-02-2001).
93
Why the EU's blue box's direct payments are
coupled and should be in the amber box
The AoA's Article 6.5 is inconsistent twice
a) Because any measure limiting production is
coupled to production and price since it limits
also its reduction
b) The criteria of Article 6.5 (payments based
on fixed areas and yields or on fixed heads of
cattle) cannot limit production. The only means
to do it is to impose production quotas and
deterrent penalties for any excess, as in the EU
market organisation for dairy quotas.
94
Why the EU's blue box's direct payments are
coupled and should be in the amber box
The fact alone to grant blue payments on the
basis of fixed areas and yields did not prevent
the EU to increase them per tonne of cereals
from 54.34 (from 1995 to 1999) to 63 since
July 2001, as a result of the CAP reform of
March 1999
This increase has fostered a 11.9 rise in the
EU-15's production of cereals from 181 Mt in
1992 to 215 Mt in 2002, the yield having
increased by 1 tonne (from 4.72 to 5.67 t/ha).
95
Why the EU's blue box's direct payments are
coupled and should be in the amber box
Direct payments to producers of bovine meat have
increased even more although based on the 1992
number of cattle heads, the rate of pay- ment has
jumped after the 1999 CAP reform and new
subsidies were added (extensification premium
and slaughter premium).
However these increased subsidies were not
enough to raise the production because of other
brakes, first dairy quotas 60 of the EU's
bovine meat come from dairy cows but the yearly
increased yield of 70 kg of milk per cow reduces
the number of cows, hence the production of BM.
96
Why the EU's blue box's direct payments are
coupled and should be in the amber box
The large increase of the EU's blue direct
payments contradicts radically the purpose of
the AoA to fix them over time, although they
were based on fixed production factors.
97
Why the EU's blue box's direct payments are
coupled and should be in the amber box
As we have seen already, as long as the EU's
farmers will continue to grow COPs fed to
animals within the EU, the corresponding direct
payments will remain coupled input subsidies.
98
Why the 'single farm payment' (SFP) of the new
CAP is coupled
The EU has reformed its CAP in 2003 to transfer
its blue box direct payments that AoA's
Article 13 will no longer protect from
prosecutions at the WTO in 2004 to the green
box by not requiring that farmers will have to
produce to get them.
But the SFP is coupled since it does not abide
by the AoA's rules 1) it is based on the
amount of subsidies received from 2000 to 2002, a
crite- rion not admitted 2) it remains coupled
to eligi- ble hectares 3) many productions are
forbid- den 4) 60 of COP are still fed to
animal so that the SFP contains large input
subsidies.
99
DCs have been deceived by the Framework
for Establishing Modalities on Agriculture of
01-08-04
The WTO's Framework for Establishing Modalities
on Agriculture (FEMA) of 01-08-04 has been
hailed by DCs as a step forward in
reequilibrating North- South agricultural trade
relations, the North com- mitting itself to
eliminate its export subsidies and to reduce its
trade-distoring domestic subsidies.
But DCs have been deceived by the complex wording
of the FEMA since it would allow the EU to
increase its coupled domestic subsidies by 140
and the USA by 50, even after the 20 reduction
the 1st year of implementation.
100
DCs have been deceived by the Framework
for Establishing Modalities on Agriculture of
01-08-04

• This sleight of hands can be explained by 4
  tricks
• The possible confusion between authorised and
• applied levels of support.
• 2) Not taking into account that most CAP payments
• will have been transfered from the amber and blue
• boxes to the green box in 2007.
• 3) Not taking into account the possibility to
  exempt
• twice from the amber box the de minimis supports
• not beyond 5 of the production value for the
  pro-
• duct-specific AMS (Agregate Measure of Support)
• and for the non product-specific AMS.
• 4) The possible confusion between subsidy and
• market price support.

101
DCs have been deceived by the Framework
for Establishing Modalities on Agriculture of
01-08-04
Since DCs did not realized that domestic
subsi- dies play the same role than export
subsidies (and import protection), they were
pleased that developed countries had agreed to
phase out "all forms of export subsidies".
In fact the biggest threat for net
food- importing DCs is the priority given by the
FEMA to "market access", to the reduction of
import protection for all countries (Articles 28
29), except for LDCs.
102
DCs have been deceived by the Framework
for Establishing Modalities on Agriculture of
01-08-04
WAEMU countries except Ivory Coast being LDCs,
they would not be subject to reduc- tions of
supports, but they are not authorized however to
increase their import protection beyond their
bound levels. Happily enough, these levels have
been bound at about 100 (from 65 in
Guinea-Bissau to 230 in Ivory Coast). What is at
stake is that, in ECOWAS' agricultural policy
(ECOWAP) the common tariff would not be aligned
and bound at the low WAEMU's level (20 at
most).
103
The 'special products' (SP) and the
'special safeguard mechanism' of the FEMA
DCs are placing all their hopes in the
possi- bility to maintain high protection rates
of their domestic market for 'special products'.
But this concept has been introduced in 2002
and discussed in the WTO's Committee on
agriculture and the Harbinson's report of 18
March 2003 proposed that the reduction rate of
tariffs for the SP be limited to 10 on average
instead of at least 20 for non LDCs DCs and 40
for developed countries.
104
The 'special products' (SP) and the
'special safeguard mechanism' of the FEMA
Therefore the 'special products' are only aiming
at allowing lower reductions of bound tariffs
for some agricultural products "based on
criteria of food security, livelihood security
and rural development needs".
The problem for net food importing DCs (the case
for South-Saharan Africa as a whole) is that
there are not only developed countries and the
IMF and WB which want to limit their import
protection but also the G-20.
105
IV The mechanisms at work beyond Nothern
sub- sidies the role of prices and supply
management
For farmers' organisations of Via Campesina, the
agri-food trade liberalisation promoted by the
WTO, the WB and IMF is not opposing Northern
farmers to Southern farmers but agri- cultural
policies and agricultural production systems
designed in the sole interest of agri- food
corporations and which are eliminating the small
family farmers, those of the South being the
most exposed and the most numerous.
106
The mechanisms at work beyond Nothern
subsi- dies the role of prices and supply
management
The main device used has been to implement a
sharp reduction of agricultural prices at the
national and international levels. Hence the
large increase in Northern agricultural
subsi- dies has been the result and not the cause
of the slump in prices, which is rooted in the
dis- mantling of all supply management measures
since the US Farm Bill of 1996 and, to a
lesser extent, since the CAP reforms of 1992
1999.
107
Why the world prices of agri-food products have
no economic meaning

• The world price concerns a minimal share of
• the world production 10.8 for cereals, 6.9
• for meats, 6.5 for dairy products (1995-2001).

2) The world price of agri-food products does not
exist it is often that of the so-called most
competitive country. Taking the New-Zealand
price of dairy products as the world price is
ab- surd 1) it produces only 2 of the world
milk 2) is is 'price taker', fixed below the
highly dum- ped EU's price, the EU being the 1st
exporter.
108
Why the world prices of agri-food products have
no economic meaning
3) World agricultural prices are highly volatile
within a declining trend, and futures markets
cannot put them right beyond few months and at a
high cost. Above all, interventions on futu- res
markets are incompatible with any policy aiming
at price regulation since the necessary speculator
s on those markets are only interes- ted to
intervene if there is a high price volatility.
109
Wheat prices CIF Rotterdam 1984-2000
Monthly variations of Nasdaq 1984-2000
Source Tancrède Voituriez Françoise Gérard
(CIRAD, 2001)
110
Why the world prices of agri-food products have
no economic meaning
4) Projections of higher agri-food prices in the
mid run are constantly contradicted by facts
but they play an obvious political role to
induce price drops, by letting producers expect
prices increases to induce them to raise
production.
5) Western basic agri-food products are exported
at highly dumped prices.
6) They incorporate an imprecise and broad array
of upstream subsidies.
111
Why the world prices of agri-food products have
no economic meaning
7) World agri-food prices are manipulated by
more and more consolidated agri-food
oligo- polies of transformation and large
distribution.
8) They are manipulated by State monopolies and
even by the EU and USA which differentiate
greatly their export subsidies (EU) or credit
gua- rantees (USA) according to importing
countries. Thus the EU claims that it is
granting higher export subsidies for exports to
ACPs.
112
Why the world prices of agri-food products have
no economic meaning
9) They are considered as the true prices since
they maximise economic welfare actually the
consumers' surplus does not exist since lower
farm prices are not transmitted to them.
10) They pretend to be the true prices since
they mirror the comparative advantage of
countries. But what could be the comparative
advantage of a Sahelian farmer growing 1 tonne of
millet vis-à -vis his French colleague producing
1000 tonnes of wheat, and which gets besides
about 57,000 in authorised blue or green
subsidies?
113
Why the world prices of agri-food products have
no economic meaning
11) They are presented as the true prices since
nominated in hard currencies, mostly in
dollars, an argument put forward mainly for
DCs, whose currency is not convertible.
12) They do not incorporate ('internalise')
market failures in the areas of social,
environ- ment, food security and food safety
issues.
114
The mechanisms at work in the slump of world
agricultural prices in the long run and their
high volatility in the short run
DCs and many NGOs (like Oxfam) charge the large
Western agricultural subsidies as the only reason
for the collapse of world agricultural prices
and demand consequently their quick phasing out,
without making any distinction between exported
products or not.
The collapse of tropical products prices since
1997 (with a temporary recovery in 2003-04)
con- firms that other mechanisms than subsidies
of the North since it does not produce them.
115
The mechanisms at work in the slump of world
agricultural prices in the long run and their
high volatility in the short run
The long run declining trend of agricultural
pri- ces can be partly explained by increases in
la- bour productivity and yields, at least for
tempe- rate products (cereals, meats, milk),
infinitely less for tropical products (coffee,
cocoa, etc.).
116
The mechanisms at work in the slump of world
agricultural prices in the long run and their
high volatility in the short run

• Daryll Ray Daniel de la Torre Ugarte (Uni-
• versity of Tennessee) have shown that
• The US prices of grains (cereals, rice, oil-
• seeds, pulses, cotton) make the world prices.
• 2) The US subsidies are not the cause of the
• slump in the world prices of grains since their
• elimination would not raise them signifi-
• cantly less than 1 for wheat and soybean,
• 2-3 for maize, 7-12 for cotton.

117
The mechanisms at work in the slump of world
agricultural prices in the long run and their
high volatility in the short run
This results from the specificity of agri-food
markets low reaction ('elasticity') of demand
and supply to lower prices. Consumers do not eat
more and producers do not reduce their
production when the price drops or the
subsi- dies disappear. Even if many family
farmers go bankrupt, their lands will be taken
over by more efficient farmers or the product
mix will change but the lands will go on
producing.
118
The mechanisms at work in the slump of world
agricultural prices in the long run and their
high volatility in the short run
A sharp drop in prices and subsidies would
generate a sharp drop in the price of land,
accounting for 40 of the production cost of
grains, thus fostering a concentration of lands
in larger farms which would make economies of
scale, particularly in mechanization.
The US agriculture would reproduce the model of
the huge farms of Brazil-Argentine with which
they could compete, but at high social and
environmental costs.
119
The mechanisms at work in the slump of world
agricultural prices in the long run and in
their high volatility in the short run
A 2000 University of Bonn report contemplates
the same for the EU "Only those farms, which
reach a minimum degree of international
com- petitiveness, will survive as commercial
full time farms in liberalised markets in the
long- term A key task of the CAP should be to
con- tribute to international competitiveness of
the core of commercial farms on suitable
locations in Europe. This is also a precondition
to attain frequently stated income goals in a
liberalised world" (http//europa.eu.int/comm/agr
iculture/publi/archive/index_en.htm)
120
US and EU agricultural subsidies are
never- theless the source of a massive dumping
of their agri-food products
It is not because the elimination of US and EU
agricultural subsidies would not have a
large impact on the recovery of world prices in
the medium to long run that they are not a
funda- mental condition of the dumping of their
agri-food products in the short run.
121
US and EU agricultural subsidies are
never- theless the source of a massive dumping
of their agri-food products
Indeed they have been the political
condition having allowed the reduction of the US
and EU agricultural prices below production
costs with- out challenging radically the
predominance of family farms, which would not
have accepted a drastic reduction of their income
without these compensatory subsidies. However, as
this com- pensation has not been total, this has
accelera- ted the elimination of small farms.
122
The EU is co-responsible of the slump in world
agricultural prices
The EU has also contributed highly to the slump
in the world prices of barley, rye and dairy
products of which it is the 1st exporter, and to
those of sugar and wheat of which it is the 2nd
exporter, without forgetting meats whose exports
are also made at prices much below their
production cost.
123
V The EPAs betwen the EU and ACP countries are
criminal their negotiations should be stopped
Outlook
The past and present situation and relations
between the EU and ACP countries
What are the EPAs and what would they change in
their economic situation?
To deny the right of ACPs to maintain a high
import protection is injust, illegal and absurd
124
The 79 ACP countries
125
The EPAs betwen the EU and ACP countries are
criminal their negotiations should be stopped
In a world dominated by superpowers (EU, USA),
financial markets and multinational cor-
porations more and more amalgamated, parti-
cularly in agribusiness, the regional
integra- tion of the tiny ACP's States is
imperative, not only to create simple common
markets but political entities able to implement
poli- cies of regional development and income
distribution among Member-States
unequally competitive, which is the case in
ECOWAS.
126
The EPAs betwen the EU and ACP countries
are criminal their negotiations should be stopped
However those eco-political spaces will not
become development spaces unless they implement
the recipe which has so well suc- ceeded in
developed countries but that they deny to-day to
DCs a high import protection of their domestic
market, particularly for agricultural products
and textiles-clothing.
127
The past and present situation and relations
between the EU and ACP countries
From Lomé Convention to Cotonou Agreement

• First Yaoundé Convention in 1963 between 18 ACPs
  and the EU-6
• First Lomé Convention in 1975 between 46 ACPs and
  the EU-9
• IVbis Lomé convention in 1995 between 70 ACPs and
  the EU-15
• On trade relations, recognition of the huge gap
  in development levels establishment of non
  reciprocal trade preferences
• Stabex compensate income shortfalls resulting
  from slumps in agricultural prices
• Protocols guaranteed preferential export quotas
  for sugar, bananas and bovine meat

128
EU-15 trade with ACP countries in the 90s
The agri-trade balance with the EU-15 has
increased for ACPs up to 1995 (when South Africa
joined ACP) but has almost stabilised since then.

129
EU-ACPs preferential trade relations
130
Distribution of ACPs' agricultural exports to the
EU according to products
131
Tariff status of ACPs' agri-food exports to the
EU-15 for 90 of these exports
132

EU's imports from ACPs according to the type of
products
End products 19
Raw materials 65
Semi-finished products 16
Slide n132
Source Delegation of the European Commission in
Senegal
133
(No Transcript)
134
The EU has reduced its agri-trade deficit with
ECOWAS countries Mauritania since 1995
For total trade, the EU-15 surplus has increased
greatly from 1995 to 2002 but has almost
disap- peared in 2003 (having shrunk from 2.1
billion in 2002 to 189 M in 2003) following the
rise in oil prices, a significant component of
ECOWAS' exports (Nigeria), in current or
constant euros.
For agri-food trade the EU-15 remains in
deficit by 1.5 billion in 2003 but this deficit
has de- creased by 3.6 in constant euros since
1995 because exports to ECOWASMauritania have
increased by 73.7 and imports only by 30.9.
135
Evolution of EU-15's total and agri-food imports
and exports with ECOWAS Mauritania 1995-2003
136
What are the EPAs and what would they change in
ACPs' economic situation?

• EPA trade framework of the Cotonou Agreement
  signed in 2000 to replace the Lomé Convention
• EU-ACPs relations are profoundly changed
  suppression of non reciprocal trade preferences
• which will be replaced the 1st January 2008
• by free-trade agreements, in line with the WTO
  rules (GATT article XXIV)
• but there is still a " Development Aid" part (9th
  EDF) as in the Lomé Convention

137
What are the EPAs and what would they change in
ACPs' economic situation?
Whereas the Lomé Conventions had granted unila-
terally a preferential access to the EU market
for ACPs' exports since the 70s, the 'partners'
ACPs have now to lower unilaterally their tariffs
and become competitive in 12 years (up to 2020).
Since the EU thinks that the pursuit of the
multi-lateral liberalisation is unavoidable and
even desirable for ACPs, it is urgent that she
recoups, through a free access to their markets,
part of her outlays in ACPs for the last 40
years, before other less generous countries the
USA with AGOA take advantage of it !
138
What are the EPAs and what would they change in
ACPs' economic situation?
Whereas EPAs claim to promote the
regional integration of ACP countries' groupings,
they will torpedo them since they are not
compe- titive with the EU, neither on agri-food
products nor on industrial products, nor on
services.
Claiming that the objective of EPAs is to
promo- te simultaneously the regional integration
and "the harmonious and progressive integration
of ACP economies into the world economy" is
to- tally contradictory because the first implies
a high import protection excluded by the second.
139
What are the EPAs and what would they change in
ACPs' economic situation?
Since the EU considers that the EPAs
should encompass at least 90 of trade without
exclu- ding any sector, ACPs could protect at
most 20 of their agri-food products if the EU
opens its market to 100 of ACPs exports. Thus
EPAs will put on the same playing field a
French farmer producing 1000 tonnes of wheat
with his Sahelian colleague producing 1 tonne of
millet, sorghum or maize, the first receiving
furthermore 57,000 in direct payments and the
second nothing.
140
What are the EPAs and what would they change in
ACPs' economic situation?
The EPAS will be as distressing for the industry
of ACPs and an evaluation (of the European
Commission?) concludes "The EPAs could lead to
the collapse of the industrial sector in West
Africa", already insignificant and not
competitive.
At least the WTO imposes only a
progressive reduction of tariffs, with a "special
and diffe- rential treatment" for DCs. With the
EPAs the phasing out of tariffs on EU's exports
to ACPs will reduce greatly their fiscal
resources.
141
What are the EPAs and what would they change in
ACPs' economic situation?

• The EU's demand of trade reciprocity is all the
  less
• justified that, despite EU's trade preferences,
• the gap in their development levels has
  exploded
• the drop in per capita GDP of most ACPs stems
• from their submission to the neo-colonial domina-
• tion of the EU (and Member-States) and the WB-
• IMF, which have hold up their regional
  integration
• the PDA (public development aid) of OECD
• countries has been reduced significantly
• the collapse of tropical products prices after
• the dismantlement of the economic measures of
• the International Agreements by product and
• also of the STABEX and SYSMIN since 2000.

142
What are the EPAs and what would they change in
ACPs' economic situation?
Besides, ACPs' exports to the EU will be less and
less profitable, even for LDCs despite the EU's
"Everything but arms" decision of 2002 to import
without any trade restriction all LDCs' products
(but arms), since the EU has continued to