WTO threatens RI's rural poor<\/p>\n
Aileen Kwa, Geneva<\/p>\n
The draft framework which the World Trade Organization (WTO)
\nissued on July 16 is a threat to the poor in Indonesia,
\nespecially those already struggling to scrape a livelihood
\ntogether. The draft was released in preparation for a meeting of
\nWTO members this week (beginning 27th).<\/p>\n
Indonesia rejected the draft and should be congratulated. It
\nis not being deliberately intransigent or inflexible. The draft
\nwhich protects the interests of the European Union and U.S. puts
\nin place the legal framework for these two superpowers to
\ncontinue the dumping of their cheap agricultural produce on the
\ndeveloping world -- with detrimental consequences to the lives of
\nordinary people. And Indonesians have already had first hand
\nexperience of this.<\/p>\n
The sweeping liberalization policies Indonesia put in place in
\n1998 -- lowering tariffs as well as the deregulation of BULOG
\n(National Logistics Agency) -- provided what the major powers,
\nespecially the U.S. wanted -- a big market for its agricultural
\nsurpluses.<\/p>\n
Indonesia's applied tariff rates were brought down to 5
\npercent or less even on staple products. The tariff on soy and
\nrice were set at zero and on corn, it was 5 percent. Only after
\nsocial and political chaos and rioting was the rice tariff
\nadjusted to 30 percent.<\/p>\n
The results of liberalization on both these fronts have led to
\npandemonium. Imports have not stopped flooding into the country.
\nOvernight, rice imports tripled and has now stabilized at about
\n3.5 million tons per year (or close to 6 percent of domestic
\nconsumption). Sugar imports soared -- from 20 percent of domestic
\nconsumption to 50 percent. Soybean imports now also make up at
\nleast 50 percent of domestic consumption.<\/p>\n
The impact on rural employment is most apparent in soy. Where
\nthere were five million soy producers in 1996, by 2001, there
\nwere only 2.5 million. Taking one producer to be supporting a
\nfamily of four, 10 million people's lives have been affected.<\/p>\n
If the urban sector had jobs to offer, no one would be
\ncomplaining. If people had the stomach and reserves to undergo
\nthis \"structural adjustment\", again, complaints would be muted.
\nUnemployment or underemployment is a permanent reality. Half of
\nthe 220 million people still live hovering on the poverty line.<\/p>\n
The U.S. and EU each provide about US$80-90 billion of
\nsubsidies (domestic and export supports) to their producers a
\nyear. This is depressing world prices. Countries that have opened
\nup their markets, like Indonesia, find that their domestic
\nproducers are priced out even of their own local markets.<\/p>\n
Rice and soy are staple foods in Indonesia. In the U.S.,
\ngovernment subsidies for these crops have soared in recent years.
\nIn 2002, rice was produced in the U.S. at $18.26 \/ bushel and
\nexported at $11.8. The production price for soy was $7.34 \/
\nbushel. It was exported at $5.48 per bushel.<\/p>\n
U.S. supports on corn increased from $32 million in 1995 to
\n$2.8 billion in 2000. In soy, the corresponding figures were $16
\nmillion to $3.6 billion. In rice, where the U.S. is now emerging
\nas a leading exporter, supports increased from $11.6 million to
\n$763 million by 2001.<\/p>\n
The WTO's Draft Framework -- Implications for Indonesia<\/p>\n
Instead of rectifying the situation, the WTO's draft agreement
\nis reinforcing the distortions.<\/p>\n
1) U.S. and EU subsidies will be maintained and in contrast to
\nthe rhetoric of protecting the weak through fair rules, the WTO
\nis providing legal coverage for this injustice.<\/p>\n
2) Despite this dumping, developing countries are asked to
\nundertake a comprehensive round of tariff cuts to further open up
\ntheir markets.<\/p>\n
3) Embedded deep in the trade jargon of the draft text to be
\ndebated on this week is a sentence on State Trading Enterprises
\nand that \"the future use of monopoly powers will be subject to
\nfurther negotiation\". This could severely curtail even the
\ncurrent limited powers of BULOG.<\/p>\n
This would be a big blow for Indonesia since BULOG's role in
\nensuring food security and fair prices for producers before 1998
\nhad been critical. Tariffs are an important defense mechanism
\nagainst dumping.<\/p>\n
However, BULOG's control over import quantities were
\nextremely critical and are a more practical tool for the future.
\nThis is because tariffs can keep out imports but have the effect
\nof inflating domestic prices -- something the government tries to
\navoid given the history of rioting and political chaos when food
\nprices run amok.<\/p>\n
The Indonesian government has been at the forefront
\nchampioning the concept of \"special products\" (SP) -- that
\nproducts important for food security and rural livelihoods must
\nbe exempted from further tariff cuts. However, Indonesian
\ngovernment officials would be foolish to base their nation's
\nsovereignty and the lives of millions on the hope of having SP
\nendorsed for two main reasons:<\/p>\n
Firstly, the July draft is a good indication that the
\ndeveloped countries are not prepared to concede any ground. U.S.
\nand EU have not said yes, only that they would look into the
\nmatter.<\/p>\n
Secondly, all indications point to a very narrow SP that might
\nmaterialize -- eg. three to five products. SP products may also
\nhave to face tariff cuts, just by a smaller percentage. Real food
\nsecurity cannot be whittled down to a small number of items.<\/p>\n
Until Indonesian government negotiators can confidently claim
\nthat an agreement will bring equity to agricultural trade, it is
\nin the people's best interest that the negotiators reframe from
\nagreement this week. A bad agreement will consign many more
\nmillion people to misery and unemployment -- something the
\ncountry cannot afford.<\/p>\n
The writer is a researcher at Focus on the Global South.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/wto-threatens-ris-rural-poor-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }