RP, G-33 seek further cuts in farm subsidies

The Philippines and Indonesia will lead the Group of 33 (G-33) developing nations in blocking all attempts by developed countries to push for the further reduction of existing farm subsidies under the World Trade Organization (WTO).

Department of Agriculture (DA) Assistant Secretary Segfedo Serrano, who heads the Philippine Task Force on WTO Agricultural Agreement Renegotiations, said the G-33 has an outstanding covenant to thwart bids of rich countries led by the United States that called for the lowering and subsequent phase-out of domestic support for agriculture-dependent developing nations.

Currently, the WTO allows developing member countries to provide domestic support to their respective agricultural sector by as much as 10 percent of their gross value added (GVA) contribution to the country’s economy. Developed countries are allowed to provide their farm sector five percent of their GVA.

In the recent talks of the WTO that led to the agreement on the agricultural framework, the US proposed that developing countries be subjected to a reduction of domestic support similar to developed countries.

"This is unfair and a grossly mean tactic by the US to demand reductions on the domestic support of developing countries. Considering the lavish subsidies of developed countries‚ to their agriculture sector, even just a 0.1 percent reduction on their end will translate into a huge cut in farm support to our own agriculture sector," said Serrano.

Had the Philippine government been heeding the WTO measure meant to enhance developing nations’ agricultural global competitiveness, the DA should have gotten P51 billion in 1999, as the GVA contribution of the agri-fishery sector totaled P506 billion at that time. Instead, DA was allocated just P15 billion in 1999 which was only three percent of the farm sector’s GVA.

For 2004, the House of Representatives appropriated only P15.4 billion for the DA. This is 26 percent lower than the proposed budget of P20.9 billion. This year’s budget is also 35 percent lower than what the Agricultural Fisheries and Modernization Act (AFMA) provides for, and eight percent lower than the 2003 allocation.

Under the AFMA, an additional P25 billion must be appropriated over and above the regular appropriations of DA in its first year of implementation, and no less than P17 billion annually for the next years. This was never realized, and worse, Congress always lumped the DA budget with the allocation for AFMA. Since 1998, a year after AFMA became law, the regular DA budget was just P15.73 billion. If AFMA was strictly observed, DA should have gotten P35.73 billion.

Farmer groups are complaining that things will worsen for the agriculture sector if the country fails to ensure existing domestic support are maintained and even increased.

The Philippine Peasant Institute said the July framework on agriculture will force the Philippines to further open up its agricultural markets while failing to compel developing countries like the EU, US and Japan to abandon their trade-distorting farm subsidies.

Serrano admitted the talks, which resume in September, will be tougher because opposing camps will attempt to push for their own interpretation of the agreement.

He said however, that the G-33 is now a more dominant force than it was last year when the Philippines and Indonesia led 20 countries to frustrate the developed nations’ bid to continue imposing their trade-distorting farm support.

Part of G-33’s thrust in the forthcoming negotiations is to push for the listing of "special products" that will be protected and given preferential treatment based on food, livelihood security, rural development objectives and market access.

Initially, the Philippines’ traditionally sensitive products such as rice, corn and sugar are expected to be placed under the special products list.

Serrano said the G-33 will also push for the removal of existing special safeguard mechanisms (SSMs) for protected agricultural commodities of developed countries and replace these with rules that reflect new realities in the global market.

Serrano noted that the new SSMs have to be more relevant to specific needs of developing countries because they are more susceptible to inflation adjustments and fluctuations in the foreign exchange rates and markets.