The World Trade Organisation - An Australian Guide
- 2006 Edition -
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WTO, Food & Farming

WTO & Agriculture

Around 70% of the world's poorest people live in rural areas and are dependent on agriculture for their income, food supply and livelihoods (37). Improving the global agricultural system would improve their lives as well as the lives of Australian farmers.

Unfortunately, the WTO's Agreement on Agriculture (AoA) has done the opposite, helping to promote the interests of the large corporations which control the vast majority of world agriculture, while destroying small family farms in the developed and developing world.

The AoA was introduced into the WTO in the Uruguay Round and came into effect at the beginning of 1995. It has reduced tariff protections for small farmers - a key source of income for developing countries - while allowing rich countries to pay their farmers massive subsidies which developing countries could never afford.

The AoA allows Europe and the US to spend $380 billion every year on agricultural subsidies alone. These subsidies go not to small farmers, but almost exclusively to big agribusiness - more than 70% of US agriculture subsidies go to 10% of producers, while in the EU half of all support goes to just 1% of producers (38). The effect of these subsidies is to flood global markets with below-cost commodities, depressing prices and undercutting producers in poor countries - a practice known as "dumping".

By forcing countries to lower tariffs and adopt export-led strategies, the logic of free trade in agriculture has forced many small farmers into production for export rather than for local food and other needs. This has exposed the rural majorities of most developing countries to volatile global commodity prices and put peoples' food security in danger. Cash crops are exported while people starve. You can read more about the impacts of free trade in agriculture on here.

WTO & Agriculture in China

Since China joined the WTO in 2001, trade and economic growth have soared, yet the Sixty percent of all Chinese - about 700 million people - who live in rural areas are actually getting poorer and their lives are getting worse. In 2005 the World Bank released a report which found that since China joined the WTO in 2001, the 700 million rural Chinese have on average lost about 1% of their total income. It also found that since 2001 "the poorest rural households . . . suffered a sharp 6-per-cent drop in their living standards . . . due to the combined effect of a drop in real wages and an increase in the prices of consumer goods," the report found (39). A 2004 report from the Chinese Academy of Social Sciences found that the number of Chinese farmers living in poverty rose by 800,000 in 2003 - the first rise since 1978. The gap between the rich urban minority and the poor rural majority is also widening, with that average urban incomes are over three times higher than rural incomes - the worst ratio in the world (40). And the state-owned China Daily has reported that "the number of people committing suicide has soared in China recently, rising to an estimated 250,000 a year. The number of unsuccessful suicide attempts stands at least 10 times that number, between 2.5 million and 3.5 million." Again, rural people were the worst off, with rural women recording a suicide rate of 30 in every 100,000 - one of the highest rates in the world (41).

WTO & Quarantine

Australia's quarantine policy plays a vitally important role in ensuring the protection of human, animal and plant health. Without such restrictive measures, Australia would have no way of safeguarding against exotic pests and disease that can be introduced by imported agricultural products. But in the eyes of the WTO Australia's strict quarantine barriers are a ‘technical trade barrier' used to keep out foreign competitors.

The WTO's agreement on "sanitary and phytosanitary standards" (SPS) came into effect in 1995, and aims to restrict the use of quarantine measures to allow a "free" flow of international trade. It has already allowed the WTO the power to override Australia's Quarantine policy. Under the SPS agreement the WTO sets constraints on government policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health (imported pests and diseases).

The SPS agreement gives the WTO the power to override Australia's use of the "precautionary principle" - a principle which allows countries to act on the side of caution if there is no scientific certainty about potential threats to human health and the environment. Unfortunately this "better safe than sorry" approach isn't enough to satisfy the WTO.

Under SPS rules, the burden of proof is on countries to demonstrate scientifically that something is dangerous before it can be regulated, even though scientists agree that it is impossible to predict all forms of damage posed by insects or pest plants. By eliminating the precautionary principle, an ecosystem would need to be devastated by some pest before any regulatory measures could be taken!

GM Labelling Illegal?

Genetically modified (GM) crops present a variety of health and environmental risks (43). In 1999, concerned about these risks, the European Union placed a de facto moratorium on GM food products. Opinion polls show that 70% of the European public don't want GM food and 94% want to be able to choose whether or not they eat it (44). The EU will also soon implement strict labelling laws for GM food, so that the public has the right to choose what it eats. Yet these actions could be ruled WTO-illegal, since they restrict trade.

The US – which grows as much as 80% of the world's GM crops – has used the SPS agreement to challenge the EU's laws, arguing they are "unjustifiable" and illegal under WTO rules (45). The WTO is due to decide the case in 2006. If it decides that the EU laws are illegal, the decision will also put in jeopardy the recently created Cartagena Biosafety Protocol - the first legally binding global agreement giving countries the right to reject GM organisms on the basis of the precautionary principle.

The Australian government has admitted that the WTO also threatens Australia's laws on GM foods, with the federal Department of Agriculture, Fisheries and Forestry arguing that "Australia's strict [GM] regulatory regime may work against it on the international stage with mandatory labelling rules and some state moratorium on GM crops providing other countries with the ammunition to take Australia to the WTO" (46).

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