Officials from six international organizations are rolling up their sleeves and getting to work on a low-profile — but nevertheless significant — mission that could affect the course of future farm trade liberalization negotiations.
The mission, mandated by the Geneva-based World Trade Organization’s ministers in Doha, Qatar, in early November, is to compile a report by the end of June on a proposed fund to help net food importers in the developing world in the event of a steep global surge in food prices.
The five other international organizations participating in the study are the World Bank, the International Monetary Fund, the United Nations Conference on Trade and Development, the Food and Agriculture Organization, and the International Grains Council.
In Doha, ministers from more than 140 WTO member countries managed to set an agenda for a new round of global trade liberalization negotiations, exactly two years after they failed to do so in Seattle. The agreement enabled the WTO to formally kick off the new three-year round early this year.
In Doha, the WTO ministers also set up a panel of experts from the WTO and five other international organizations to consider the proposed food-assistance fund for developing countries.
Eligible for assistance from the proposed fund would be developing countries that import more foods to feed their people than they export and that could suffer seriously in the case of a sharp rise in food prices due to a shortage of foreign exchange reserves necessary to buy food in the global marketplace.
The panel was set up in response to demands from many such poor net importers of foods in the developing world, which insist that food prices will rise — or at least fluctuate — sharply on the global marketplace if international farm trade is liberalized further and prices fall more under the sway of market forces.
Yoichi Suzuki, a deputy director general of the Foreign Ministry’s economic affairs bureau with much experience in WTO affairs, serves as the panel’s chairman, not in his capacity as a Japanese government official but as an individual.
The panel has so far met in Geneva twice, in March and April. It will meet twice more before compiling a report on its study results by the end of June.
The panel’s establishment itself dose not guarantee, however, that the fund will actually be set up.
In fact, the panel was established with an ambiguous mandate under a compromise reached between the industrialized countries, which insisted on letting the panel study the desirability of the fund, and the developing countries, which argued that the panel should work out the size and other details of the fund.
Suzuki said, “As the panel chairman, I cannot disclose in detail the contents of discussions we are having about the proposed fund or speculate on the conclusions we will make in our report to be submitted to the WTO members by the end of June.”
Suzuki acknowledged there are various opinions among the panel members about the proposed food-assistance fund.
“Some people dispute the theory that food prices will rise sharply if global farm trade is liberalized further, and other people believe that existing food-assistance mechanisms are enough to help the net food importers in the developing world,” he said.
In the new WTO-sponsored round of negotiations, Japan has drawn a barrage of criticism from major farm-exporting countries, like the United States and Australia, for its negative attitude toward further farm-trade liberalization.
Japan wants to protect its weak but politically sensitive rice and some other agricultural items from foreign competition. Tokyo insists that negotiations on farm trade liberalization be conducted while taking into account Japan’s concern about “food security.” Japan is the world’s largest importer of farm products.
At first glance, Japan and the net food importers in the developing world seem to have a lot in common at the WTO because they both want to ensure a stable supply of foods to their citizens.
But ironically, if the proposed food-assistance fund is set up, it may encourage those reluctant developing countries to participate more actively in farm trade-liberalization negotiations at the WTO.
As a result, Japan may stand out more conspicuously as a major country that is putting the brakes on farm trade liberalization.
Some government officials also fear that if the food-assistance fund is actually set up, Japan will face pressure to make financial contributions commensurate with its status as the world’s second largest economy, despite its severe fiscal condition brought about by the continued economic slump.
“If the major farm-exporting countries, like the U.S. and Australia, want to move forward liberalization negotiations at the WTO, they should chip in money for the proposed fund,” a government official said, requesting anonymity.
The Foreign Ministry’s Suzuki said, however, that he is taking a “neutral” stance in discussions on the proposed fund at the panel because he is serving as chairman as an individual. “I have to be even more careful not to raise doubts about my neutrality because of my affiliation with the Japanese government.”
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