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Slow Trade – Sound FarmingA Multilateral Framework for Sustainable Markets in Agriculture

This document has been produced with the financial assistance of the European Union. The contents of this document are the sole responsibility of Misereor and Heinrich-Böll-Stiftung and can under no circumstances be regarded as reflecting the position of the European Union.

Slow Trade – Sound FarmingA Multilateral Framework for Sustainable Markets in Agriculture

Authors Wolfgang Sachs und Tilman Santarius

In collaboration with Souleymane Bassoum, Daniel De La Torre Ugarte, Gonzalo Fanjul Suárez, Anna Luiza Ferreira Pijnappel, Arze Glipo, Aileen Kwa, Hannes Lorenzen, Sophia Murphy, Oduor Ong’wen, Rita Schwentesius Rindermann

Published by Heinrich Böll Foundation and MISEREOR

Printed in Germany, April 2007

© Heinrich Böll FoundationBischöfliches Hilfswerk MISEREOR e.V.

Layout Michael Pickardt

Production MVG-Medien-Produktion Aachen

Edited by Johannah Bernstein

Project management by Jörg Haas, Silke Helfrich (Heinrich Böll Foundation), Alicia Kolmans, Mute Schimpf (MISEREOR), Tilman Santarius (Wuppertal Institute for Climate, Environment and Energy)

Available for download at www.ecofair-trade.org

The following publication does not necessarily represent the views ofthe publishers.

ISBN 978-3-88916-271-7

Photos Misereor (2/3, Cover), Erika Barahona Ede (9), dpa (14, 19), Maurice Oudet (75, Cover), KNA-Bild (26, 49)

MISEREOR Heinrich Böll FoundationMozartstr. 9 Rosenthalerstr. 40/41D-52064 Aachen D-10178 BerlinPhone +49 241442-168 Phone +49 30 28534-0Fax +49 241442-505 Fax +49 30 28534-109

[email protected] www.boell.de

Slow Trade – Sound FarmingA Multilateral Framework for Sustainable Markets in Agriculture

Written byWolfgang Sachs and Tilman Santarius

In collaboration with:Souleymane BassoumDaniel De La Torre UgarteGonzalo Fanjul SuárezAnna Luiza Ferreira PijnappelArze GlipoAileen KwaHannes LorenzenSophia MurphyOduor Ong’wenRita Schwentesius Rindermann

West African RegionalConsultation

Mbour, SenegalFebruary 2006

North American Regional Consultation

Washington D.C., USASeptember 2006

Mexico and CentralAmerican Regional Consultation

Teotihuacán, MexicoOctober 2006

European RegionalConsultation

Brussels, BelgiumNovember 2006

South AmericanRegional

Consultation

Curitiba, BrazilAugust 2006

THE

ECOFAIR TRADE DIALOGUENew Directions for Agricultural Trade Rules

Asian Regional Consultation

Chiang Mai, ThailandMay 2006

EcoFair Trade Dialoguepanel discussion

Hong KongDecember 2005

GermanRegionalConsultation

Berlin, GermanyOctober 2006

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Acknowledgements

This report is based on an extensive internationaldialogue, which drew upon a broad range ofideas, experiences and insights from a largenumber of stakeholders.

The international dialogue not only generatedprofound analysis around difficult and complexissues. But as well, it catalysed both intellectualtensions and disagreements about fundamentalpoints in the debate. We see this as a positive andessential part of developing a new perspective.With joint efforts such as these, not all differencescould be resolved. Therefore, the individualmembers of the Expert Panel reserve the right toassert their views where they may differ fromthose that are described in the report.

The report was compiled and written byWolfgang Sachs and Tilman Santarius, themoderators of the EcoFair Trade Dialogue, in closecollaboration with the members of the ExpertPanel: Souleymane Bassoum, Gonzalo FanjulSuárez, Arze Glipo, Aileen Kwa, Hannes Lorenzen,Sophia Murphy, Oduor Ong’wen, Anna LuizaFerreira Pijnappel, Rita Schwentesius Rinder-mann, and Daniel De La Torre Ugarte.

We also wish to acknowledge the role playedby Kamal Malhotra, who participated in many ofthe meetings of the Expert Panel in his individualcapacity and provided useful comments andadvice during the dialogue process.

We as well received a lot of written feedbackfrom members of the International ConsultativeBoard of the EcoFair Trade Dialogue, in particularfrom Mario Aguja, Brother David Andrews, JesúsAntón, Laura Carlsen, José María Alvarez Coque,

Biswajit Dhar, Bernward Geier, Christiane Grefe,Mark Halle, Benny Härlin, Ulrike Höfken, PanosKonandreas, Ibrahim Assane Mayaki, RobertTaylor and Bill Vorley. Helen Rupp made contribu-tions to the gender analysis in the project.

Furthermore, we wish to acknowledge theindividuals who offered their time, knowledgeand experience during the Regional Consulta-tions. Their contributions are deeply appreciatedand their names are listed in the appendix.

Colleagues from the Heinrich Böll Foundationand MISEREOR provided their support in thepreparation of the Regional Consultations as wellas useful comments and suggestions during thedrafting process. They included Wilhelm Theesand René Millogo, Heike Löschmann and HilkeKoegl, Thomas Fatheuer and Clarisse Castro,Liane Schalatek, Charly Poppe, Anne Kaiser, JorgeVillareal and Johanna Goetter, as well as AnjaMertineit and Heinz Oelers.

The team that managed the overall dialogueprocess and who comprised the editorial groupfrom the Heinrich Böll Foundation and MISEREORconsisted of: Jörg Haas, Silke Helfrich, AliciaKolmans and Mute Schimpf. They were supportedby Rita Hoppe, Silvia Cottin, Johanna van Bies-brock and Annette Maennel.

The final report was edited by JohannahBernstein and the layout was designed byMichael Pickardt.

We are very grateful for the contributions that allof these individuals and colleagues have made tothis important project.

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Content

Preface 7

For the hurried reader… 9

Introduction The EcoFair Trade Dialogue 14

Part 1 Principles 19

Multi-functionality 20Human Rights 20Environmental Integrity 21Democratic Sovereignty 22Extra-territorial Responsibility 23Economic Subsidiarity 23Trade Justice 24

Part 2 Problems 26

2.1 A business lens on agriculture 262.2 In disregard of livelihoods 312.3 Forgetful of nature 352.4 Leeway for corporations 492.5 Enduring asymmetries 44

Part 3 Solutions 49

3.1 Enlarging national policy space 493.2 Investing in multi-functionality 533.3 Stabilizing prices to protect farming livelihoods 573.4 Setting standards for quality trade 603.5 Democratizing the food chain 653.6 Redressing asymmetries 70

Conclusion Towards a post-WTO Architecture of Agricultural Trade 75

Endnotes 78

References 79

Participants of the regional consultations 84

EcoFair Trade Dialogue Discussion Papers 89

Expert Panel 90

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Preface

The publication of this proposal for a fundamentalreform of the international agricultural traderegime coincides with a period in which theproblems confronting the existing world marketsystem – especially with regard to agriculture –are becoming increasingly evident.

The World Trade Organization’s (WTO) DohaRound of multilateral trade negotiations is on thebrink of failure: it is being thwarted above all bythe refusal of the EU and the USA to make greaterconcessions to the developing countries in theagricultural sector and their simultaneousdemand for a far-reaching opening of markets inthe South. At the same time, a growing number ofprojection studies anticipate that only theindustrialised countries and a few exportingdeveloping countries will be the winners of theDoha Round, while the majority of the poorcountries will be among the losers. Moreover,above and beyond the level of nation states, it hasemerged that market liberalisation basically playsinto the hands of strong economic actors, reinfor-cing their market power to the detriment of theeconomically weak – both in the North and theSouth.

Actual experience gained to date with marketliberalisation within the framework of the WTO orregional trade agreements and structural adjust-ment programmes has demonstrated for sometime that particularly with respect to the agricul-tural sector economic globalisation bringssubstantial problems in its wake. These includeincreasing impoverishment of the rural popula-tion in developing countries and the loss of theiraccess to resources such as land, water and seedas well as to markets. Exposed to strong price andconcentration pressure, many families abandonfarming, in industrialised and developingcountries alike. The ensuing degradation of theenvironment and loss of biological and culturaldiversity are equally alarming. Furthermore,current agricultural trade rules largely turn a blindeye to the challenges facing global agriculture inthe 21st century, such as Peak Oil or the problemof climate change.

But what form must the international agricul-tural trade regime take in order to contribute

towards greater social justice and sustainabledevelopment throughout the world? How must itbe designed to cope with the new challenges ofthe future?

These questions were tackled by the HeinrichBöll Foundation and MISEREOR in the worldwideEcoFair Trade Dialogue – working in cooperationwith the Wuppertal Institute for Climate, Environ-ment and Energy and a panel of experts from allcontinents, all of whom collaborated on theproduction of the present report. The dialoguewas conducted in regional consultations in Africa,Asia, Latin and North America and Europe. Parti-cipants included not only representatives offarmers’ organizations and NGOs but also ofministries, parliaments, the scientific communityand international organizations. The diverseconditions encountered in the different regions ofthe world and the varying positions taken in civilsociety were of paramount importance in ourdeliberations. Through this publication, we aremaking the results of the dialogue accessible topolitical decision-makers, civil society organiza-tions and interested members of the generalpublic.

We trust that the report will provide orientationas well as subjects for debate on the tasks of thefuture: towards a socially and ecologically morejust world trade system, sustainable agricultureand food security throughout the world. Previouspublications by our respective organizations havepaved the way by offering similar food for thoughtand exchange, such as MISEREOR’s study“Greening the North” and the “Jo’burg Memo” bythe Heinrich Böll Foundation. It was against thisbackground that we initiated the EcoFair TradeDialogue.

It is now widely acknowledged that sustain-able development is not possible unless tradepolicy is also treated in conjunction with societalissues concerned with the livelihoods and rightsof human beings and the protection of theenvironment. This view constitutes the founda-tion of the principles presented in this report forthe regulation of agricultural trade, e.g. EconomicSubsidiarity, Multifunctionality of Agriculture,Trade Justice and Environmental Integrity. Procee-

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ding from these principles and an in-depthanalysis of the shortcomings of the prevailingagricultural trade system, concrete reform propo-sals have been elaborated, also taking intoaccount institutional challenges.

No doubt many a question remains unans-wered and some points will give rise to contro-versy. Nevertheless, it is obvious that a paradigmchange is becoming ever more pressing. Thetime is thus ripe for a broad and intensive discus-sion geared to developing new and innovative

solutions and creating a more just and sustain-able global society for all. The present report“Slow Trade – Sound Farming” is one of our maincontributions to this debate. Over the next fewyears – especially between 2007 and 2009 – theEcoFair Trade Dialogue will organise conferencesand seminars to make the reform proposalsknown worldwide while they are being debatedwith political decision-makers and civil societyorganizations, and with a view to inspiringaction.

Prof. Dr. Josef Sayer Barbara UnmüßigDirector General Executive Board

Bischöfliches Hilfswerk MISEREOR Heinrich Böll Foundation(German Catholic Bishops’ Organizationfor Development Cooperation)

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The reform of agricultural trade rules is atthe center of negotiations at the WorldTrade Organization (WTO) regarding amultilateral framework for the global

economy. However, the reforms envisaged do notbode well for the future of agriculture across theglobe. They will deepen the desperation of small

farmers and undermine local and global ecosy-stems. Moreover, they will make agriculture unfitfor productivity leaps in the upcoming post-fossilage. With their gaze fixed upon the reduction oftariffs and subsidies, protagonists from both theNorth and major Southern countries largely ignorethe challenges posed to agriculture and rural

For the hurried reader…

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communities by poverty, environmental decline,and dwindling oil resources. While farmerseverywhere will have to respond creatively tothese challenges, trade and structural adjustmentpolicies drive change into the wrong direction. Forthis reason, this document proposes politicalperspectives and policy instruments for a tradingsystem that offers genuine opportunities for thepoor, preserves the environment, and helpsagriculture to shift to a solar resource base.

The EcoFair Trade Dialogue was launched bythe Heinrich Böll Foundation and Miseror (bothbased in Germany but with offices and partner-organizations around the world), together withthe Wuppertal Institute in the wake of the WTOMinisterial Meeting in Cancun in September 2003,when agriculture figured as an important bargai-ning chip for concessions in industry and services.This report is the product of consultations andworkshops that were undertaken with anenormous number of civil society organizationsacross all of the continents. The 12 authorsthemselves come from the Americas, Australia,Africa and Asia, from small countries and largetrading powers, from South and North; they workas trade analysts for non-governmental organiza-tions, as promoters of sustainable agriculture atthe grass-roots level, as researchers in universi-ties, or as policy advisors for parliaments andgovernments.

In allusion to the international movement ‘SlowFood’ that champions the cause of good, clean,and fair food, this report is called ‘Slow Trade –Sound Farming’. The title graphically conveys thereport’s view that trade in favor of people and theplanet will de-escalate trade competition thatfavors power and profit.

Part 1 sets out seven principles for the design of anagricultural trade architecture. The principles arebased on the conviction that public interest valuesare to be placed before private interests, and thatmarkets are to be framed by politics. The principleof Multi-functionality emphasizes the fact thatfarming is embedded in social and natural webs;the principle of Human Rights underlines thattrade reform must improve the plight of the leastadvantaged citizens on the globe; the principle ofEnvironmental Integrity reflects agriculture’smission to regenerate soils, water and biodiversitywhile producing food, fuel and fiber; the principleof Democratic Sovereignty defends the rights ofcitizens to express their collective preferences onhow to shape trade and investment policies that

impact their day-to-day lives; the principle of Extra-territorial Responsibility expresses the globalresponsibility – in particular of powerful countries– not to inflict harm on citizens beyond theirborders; the principle of Economic Subsidiarityimplies that economic exchanges in the foodsystem should preferably be carried out at thelocal and national level, while exchanges on thecontinental or global level should have only acomplementary function; and finally, the principleof Trade Justice suggests that reversing presentasymmetries calls for an inequality of opportunityin favor of the weak rather than an equality ofopportunity which favors the strong.

Part 2 surveys the most pertinent problems thatare connected with the deregulation of agricul-tural trade. A business lens on agriculture pointsout that trade talks are governed by the narrowvision of agriculture as a money machine genera-ting growth and foreign currency. However,agriculture’s role goes far beyond the accountingsheet; it is the mainstay of rural life, just as it ispart and parcel of the biosphere. When thesecontexts are systematically neglected, tradepolicy generates mistaken decisions.

More specifically, the chapter In disregard oflivelihoods highlights the fatal consequences ofthis neglect for small farmers and rural societies inmany countries. People have been pulled andpushed off their land and into urban agglomerates;globalization and trade liberalization are in partaccountable for the current demise of thepeasantry. The authors of this document, however,reject the hidden assumption of free trade diplo-mats that small farmers are on their way out – aprice of progress. Instead, small-scale family farmshold the key for more productivity, environmentalsustainability, and more employment.

The chapter Forgetful of nature demonstrateshow the business vision of agriculture hasgenerated potentially ruinous consequences forboth nature and farming. An increase in cross-border trade in agricultural goods will most likelylead to a further spread of large-scale industrialagriculture, hungry for water and land. In addition,this puts the future of farming itself at risk, as theenvironmental base crumbles, and one of themain ingredients of industrial agriculture – cheapoil – disappears.

Putting the spotlight on trade negotiations,Leeway for corporations argues that the free tradephilosophy is grounded in the assumption thatthe only barriers to open trade come from state

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actions. However, corporate concentration andunchecked market power is at least as much of aproblem. Where corporations are dominant,producers are hampered in selling their productsnot because of tariff barriers or public subsidies,but because corporations control prices andstandards. As a result, deregulation of marketscoincides with corporate interests. While libera-lization dismantled national border protections, itended up strengthening transnational cartels.

And finally, the chapter Enduring asymmetriesaddresses the huge inequalities in the presenttrade system. The ‘one-size-fits-all’ prescription ofeliminating trade barriers puts less competitivecountries at a disadvantage since it forces weakand strong players to compete in the same league.Moreover, what has euphemistically been called alevel-playing field in trade competition is actuallya set of rigged rules that tilt the field to the advan-tage of powerful cartels and countries. In such asetting, it has proven to be a fallacy for too manycountries to direct their agricultural productiontowards exports and the global market. Yet de-rigging the rules is not sufficient since free tradeplays into the hands of the strong. Instead, traderules will only become fair if they favor the weakover the strong.

Part 3 sketches out solutions. These includeoptions for redesigning agricultural trade rulesalong with a number of instruments for steeringtransnational flows in farm goods. The proposalsrest on the view that the concerns for humandignity and the integrity of the biosphere must beincorporated into the architecture of trade rules.It is an expression of structural irresponsibilitywhen the WTO restricts its competence only totrade issues, calling on national governments totake charge for social and ecological concernswhile at the same time diminishing their authoritythrough the politics of deregulation.

First, countries need a larger national policyspace. After decades of disempowering nationalpolitics, power has to be returned to nationalgovernments and communities to shape tradeflows according to their collective preferences.Above all, they must regain the authority to governthe import of goods, services, and investments.

As agriculture remains the main source oflivelihood for the majority of people in developingcountries, import liberalization has to take a backseat when domestic livelihoods and food securityare at stake. This is why countries require a freespace with respect to international trade rules in

order to protect domestic markets from importsurges through border control policies, includingtariffs, quotas, and price- and volume-triggeredsafeguard measures. Furthermore, countriesneed to retain some authority, for instance, toinfluence flows of foreign investment, to direct theactivities of transnational corporations, to linkdomestic production to strict food safety orenvironmental standards, or to design supportschemes for maintaining a healthy rural economy.It is neither effective in terms of the common goodnor legitimate in terms of democratic sovereigntyif trade concerns drive politics and society.‘Obstacles to trade’ are welcome as long as theyare provisions for the public benefit.

Second, agriculture – in providing both privatewealth and common wealth – is unlikely toprosper unless there is sufficient Investment inmulti-functionality. However, ensuring environ-mental as well as social multi-functionality callsfor granting support to agriculture. It is thereforemisleading to advocate the removal of alldomestic support schemes. The adequate leveland structure of investment and regulation foragriculture is the issue, not the elimination of thestate’s role.

Support can be institutional or financial. Insti-tutional support may include tax policies, promo-tion of knowledge, infrastructure, and provision ofresearch – all tools that are of core importance inthe transition to sustainability. Financial support,in contrast, may include payments to farmers,albeit under tight conditions. Under the principleof extra-territorial responsibility, support schemesshould not unduly harm the opportunities ofothers in foreign markets. Export subsidies are inany case illegitimate. If agricultural dumping isnot to be strictly prohibited, a multilateral institu-tion should establish a ‘Dumping Alert Mecha-nism’ that warns governments when dumpingthreatens to undercut the economic base offarmers in importing countries.

Third, farmers everywhere, whether poor orprosperous, in the South or in the North, sufferfrom low and volatile prices for their produce.Stabilizing prices at sufficient levels is arguablythe single most important measure to enablesmall farmers to support themselves and to savethem from gradual extinction. Due to theuniqueness of agriculture as a business, however,supply responses to changes in price are usuallyslow and imperfect. Supply management offers apowerful tool to help support reasonable pricesfor both producers and consumers.

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Supply management has been practiced inmany countries; it attempts to balance produc-tion with market demand. Key to its properfunctioning is a flexible adjustment mechanismthat determines the amount of quota and the priceper product with a view to matching productioncapacities to market needs. If a legal frameworksupports such a scheme, if all stakeholders areguaranteed a fair say, and if monitoring and enfor-cement mechanisms ensure compliance, supplymanagement can offer a viable solution to theprice crises in agriculture. For the internationallevel, a ‘Multilateral Cooperative Framework forBalancing the World Market Supply’ is proposedas a platform for collaborative supply manage-ment on part of the major agricultural exportcountries.

Fourth, Setting standards, namely sustainabi-lity process and production standards, will be anessential part for any public policy that seeks toalign the pursuit of private gain with the protec-tion of the biosphere and of fundamental socialrights. For too long, the dismantling of protectio-nist measures has had the effect of actuallyprotecting the ruthless. As long as productioncosts are not required to incorporate the cost ofsafeguarding common goods, free trade willcontinue to accelerate both the marginalization ofthe poor and the decline of the biosphere. Tradinginternationally has to be understood as a privilegeto be offset by internalizing social and environ-mental costs.

As a first step, countries are advised to promotethe development of independent sustainabilitystandards and certification systems for farmersand processors in the national economy;standards for organic agriculture serve as oneexample. As a second step, they must mainstreamsuch standards as mandatory requirements for alldomestic producers. Having done this, they mayset up corresponding sustainability standards forqualified market access to grant preference forsustainable commodities over those that areproduced in an environmentally and sociallyharmful manner. Such qualified market accessschemes should conform to ‘Meta-standards’ atthe multilateral level that define common criteriafor the process of participatory standard-setting.At the same time, a ‘Centre for Dispute Mediationin Conflicts Over Standards’ would mediatedisputes on different sustainability standardsbetween countries. Finally, revenues from tariffson harmful products in richer countries arechanneled into an international ‘Sustainable Rural

Development Fund’, which would support thetransition to sustainable production practices andexports in developing countries.

Fifth, Democratizing the food chain is thereform perspective that responds to the fact thatit is often corporations and not governments thatstructure markets to the disadvantage of smallproducers and local businesses. The idea is toshift more power to producers and artisans whileensuring that any intervention in local markets byforeign corporations is made subject to competi-tion control and domestic investment policies.

Three multilateral instruments are proposed toshape the conduct of corporations: first, a publiclyaccessible data bank containing information onsize and scope of large agribusinesses, as well ason mergers, acquisitions and joint ventures in thefood system; second, an ‘Anti-trust Body’ thatscrutinizes mergers and acquisitions, andforestalls the abuse of market power; and third, arange of ‘Development Contract Boards’ thatsupervise contracts concluded among variousactors in transnational commodity chains forestablishing a fair distribution of benefits. Inaddition, measures for re-regionalizing trade flowsare recommended, including policies for localcontent management, requiring corporations topurchase from local suppliers, to involve localprocessors or to sell to locally based retailers.

And finally, Redressing asymmetries outlinesproposals on export and market access policiesthat aim at strengthening the position of smallfarmers when it comes to international tradeflows. It is doubtful that completely free trade –premised on the assumption that Northernprotectionism is abolished – could createanything close to a real level playing field becausethe asymmetries among nations and withincountries are just too great.

To begin with, the attention lavished on exportpromotion tends to hide the fact that exportsoften fail to benefit the majority of producers, inparticular small farmers, just as they often implymajor environmental cost. In response, this reportoffers guidelines for a sustainable export policy.Such a policy will in particular place national foodsecurity before exports, and prioritize subsistenceproduction or domestic markets over the produc-tion for foreign markets. Furthermore, to realizegreater equity among nations, weaker playersneed a system of preferences, not just equalchances. Following the principle of trade justice,special and differential treatment should there-fore become a structural characteristic that is

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embedded within the trade regime. Market accessrules are proposed that use a combination oftariffs and quotas. Tariff rates differentiateproducts according to their quality, while quotasfor products from weaker economies are providedfor within each tariff rate should a country wish toimport a product. Last but not least, it is not set instone that cross-border trade is necessarilyanimated by the search for profit; it can also beconducted in the spirit of reciprocity and mutualsolidarity. What if Southern countries opted out oftrade competition, weaving together regionaltrade agreements that seek to implement solida-rity exchanges?

By way of conclusion, Part 4 of the reporthighlights the broad contours of a post-WTOarchitecture of agricultural trade. The authors ofthis document hold the view that a multilateralframework for trade is indispensable. Howeverthe WTO in its present institutional make-up failsto meet the requirements for such a framework.As a consequence the WTO faces the challenge toreinvent itself – or to ultimately leave the institu-

tionalization of agricultural trade rules to othersettings in the context of the United Nations.

Given the analysis and recommendations ofthis report, a new institution would include atleast five branches: the coordination branch, thequality branch, the price management branch, theanti-trust branch, and the dispute settlementbranch. They would perform the five functions ofa trade organization that truly works for the publicinterest: to provide a setting for intergovern-mental negotiations, to guarantee a floor ofquality of trade flows based on multilateral meta-standards, to control international market pricesthrough a cooperative mechanism based onsupply management, to supervise competitionthrough anti-trust measures, and to offer amechanism for settling disputes. Above all, whileat present the overall objective is the removal ofbarriers to trade for the sake of creating a unifiedglobal market place, a future institution will placethe coordination of differing interests amongnations at the center of attention. Its essentialobjective will be to manage trade and not toderegulate trade.

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Introduction

The EcoFair Trade Dialogue

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Counselor Lieuvain shouted thesequestions at an unruly crowd thatlistened attentively in the town square ofYonville, apart of course from Mme Emma

Bovary and her lover Rodolphe, who wereengulfed in thoughts of their own, which mostlikely had little to do with agriculture.

The question that Gustave Flaubert’s CounselorLieuvain raised over 150 years ago (in MadameBovary, part 2, chap. 8) has not lost any of itsrelevance today. Indeed if a contemporary novelistdecided to set a similar story in the WTOheadquarters on the shore of Lake Geneva, he orshe would plausibly have his or her hero pose thesame questions to a similarly attentive, yetagitated audience of diplomats. For it appearsthat the world of trade and finance has lost sightof the multiple uses of agriculture, despite thefact that it occupies the top of the Doha Round’strade agenda.

The tunnel vision of trade

As WTO Director-General Pascal Lamy has pointedout in the context of the ailing Doha negotiations,agriculture is the “make-it or break-it issue” forgovernments who are struggling to agree on thereform of global trade rules. It is at the core of theagriculture issue where the stand-off betweenSouthern countries (regardless of the differencesamong them) that demand access to exportmarkets and Northern countries that also wantmarket access but are defending high levels ofpublic support for agriculture at the same time.Also at the core of the agriculture debate is thefundamental challenge of how to ensure truefairness in the free trade regime. Without acompromise in agriculture, the entire negotiationpackage will unravel and this will have the effectof undoing important agreements in core sectors,such as industry or services, as well. Agriculture isnot just critical to the global trade regime, it ispresently the linchpin of any framework of rulesfor the global economy as a whole.

Yet despite the critical importance of agricul-ture in global trade negotiations, it appears thatneither the state nor the fate of global agriculture

are of particular concern to trade diplomats. Theyrarely review the plight of peasants in India, theloss of potato varieties in the Andes, or the impactof global warming on rice yields in Vietnam.Likewise in other arenas of trade reform, whetherit is structural adjustment programmes or regionaltrade agreements, both the world of farming andthe importance of the natural environment remainmarginalized from the inner workings of globaltrade economics. The day-to-day survival issuesthat loom heavily for farmers and their families areconspicuously absent from negotiation tables.

The spotlight is instead focused on issues suchas import tariffs or export subsidies, accessstandards or safeguard mechanisms, most ofthem loaded with impenetrable complexities. Thisshould come as no surprise, since trade negotia-tors are chiefly concerned about increasing boththe value and the efficiency of trade flows acrossborders, so as to strengthen their respectivecountry’s competitive position in internationalmarkets. For these actors, the world of agricultureis in perfect balance when global competition isallowed to work itself out in such a way thatproducers who manage to achieve the mostefficient combination of production factors willultimately prevail. In other words, trade policy, asit is currently regulated, treats agriculture as abusiness that produces commodities for saleagainst foreign currency. To be sure, this spotlighthighlights a dimension of agriculture that wouldotherwise remain in the dark. Nevertheless, theshadow created by this spotlight is enormous inits proportions and impacts. As witnessed in tradetalks, negotiators use agricultural exports as atool to boost their nation’s economic perfor-mance, but are strikingly unconcerned about theconsequences of this strategy for farmers andecosystems. In their eagerness to maximizenational economic opportunities, negotiatorsdownplay the importance of the overall share ofthe agriculture sector in GDP, and in many cases,its overall share of export values.

However, it is a widespread tendency toconsider the money value of market turnover asan appropriate indicator of the weight of agricul-ture relative to other sectors of the economy. With

“And what should I do here gentlemen, pointing out to you the uses of agriculture?

Who supplies our wants?

Who provides our means of subsistence?

Is it not the agriculturist?

For how should we clothe ourselves, how nourish ourselves, without the agriculturist?”

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the share of agriculture in gross national productdecreasing in many industrialized economies,often to a meager 2-5%, farming is increasinglyperceived as a sector that is rapidly fading intoeconomic insignificance. “Why should Europeanbusiness be held back by something as marginalas farming interests?” proclaimed industry repre-sentatives as they observed their export opportu-nities dwindle with the European Commission’sdefense of agricultural interests in recent tradetalks. This sort of misguided assertion is as uncon-vincing as insisting that the human heart, given itsshare of 2-3% in body weight, is unimportant to ahuman being’s overall health.

Notwithstanding all of the consequences thatflow from ignoring the importance and signifi-cance of agriculture, the tunnel vision that charac-terizes trade in agriculture as a business presentsother serious problems. For the regulation of thenarrow aspect of trade continuously spills overinto the regulation of the sector at large. The effortto create unified global markets by removing so-called ‘barriers to trade’ casts a long shadow overthe agriculture sector as a whole. Underpinned,moreover, by the fear of sanctions by the WTO orthe pressure of loan conditions by the Interna-tional Monetary Fund, the narrow view of tradepretends to have ontological priority over any non-trade concerns. Put differently, the tail keeps onwagging the dog. It is this defect that makes thenewly emerging framework for agricultural tradeunfit for the 21st century.

Our concerns

This report provides an overview of the elementsof a framework for agricultural trade that wouldactually foster not only the goals of social equityand environmental sustainability, but nationaleconomic growth as well. The report highlightsthe particular importance of livelihood rights andecological integrity against the economic compe-titiveness of nations, the main value of which ismost often prioritized by trade reforms initiated bythe IMF, the WTO, or by bilateral and regional tradeagreements. What is patently clear is that thestruggle for gains in export markets is drivingnegotiations as opposed to the important rightsto food, sustainable farming livelihoods or healthyecosystems, which at best, receive passing atten-tion or at worst, are sacrificed for the sake ofunfettered economic growth.

The authors of this report reject the dominantpattern that favors economic growth over the

importance of meeting human needs and protec-ting the environment. The authors are convincedthat the unregulated trade in food, fibers, andfuels does nothing to make the world safer, moresecure or sustainable. Rather it renders the worlda far less hospitable place not just for future, butalready, for present generations.

Free trade in agriculture will aggravate theglobal poverty crisis. As farming becomesintegrated into global market relations, the ranksof the poor, marginalised and dispossessed willincrease exponentially around the world. To besure, larger farm enterprises and corporateagribusinesses are well-placed to enjoy signifi-cant gains. But the bulk of small landholders,women farmers and rural craftspersons are likelyto be further marginalized into obscurity. Tradeliberalization promises to make the world a moresocially explosive place. In contrast, the frame-work for fairness, described in this report, aims atstrengthening the economic position of sustain-able small and medium-scale agriculture alongwith rural business. It is skeptical about theunconditional increase of cross-border trade thatwill only help the already strong, and arguesinstead for a socially responsible trade policy thatallows governments to combine a mix of importprotection and export promotion measures. Theauthors further argue that pro-poor policiesrequire governments to find ways to integrate theeconomic and social importance of sustainablesmall and medium agriculture into the domesticeconomy, ensuring as a matter of priority, theaccess of small-holders to internal markets. Aboveall, the authors of this report disagree with thewidespread insinuation that small farmers arebecoming a relic of the distant past. On thecontrary, the authors maintain that a flourishingsmall-holder economy is a critical mainstay forsecuring the livelihoods of a growing number ofpeople, and for sustaining diversity in society’sknowledge and culture base. These are all valuedand essential elements of a truly post-industrialworld.

Free trade in agriculture will also aggravate theglobal crisis of the biosphere. Unregulated long-distance trade of large volumes of crops and meat,apart from special cases like cocoa and coffee,tends to give a large boost to industrial farming inboth Southern and Northern countries. Howeverconventional industrial agriculture is a source ofmany serious environmental consequences. It is ahigh consumer of land, water and fuel as well as ahigh emitter of chemicals and nitrates. Although a

17

reduction in subsidies might at times be a disin-centive for the further intensification of agricul-ture, an overall expansion of trade flows is likelyto accelerate the decline of the health of thebiosphere. In contrast, this report regards farmersand breeders as actors who provide goods whilecontinually promoting the health of ecosystems,animals, and people. It therefore proposes a traderegime designed to stimulate environmentalresponsibility in agricultural practice.

As sustainable farming systems are more fit fora future after oil and gas, it follows that traderegimes that disregard environmental factors arehistorically outdated. The authors of this reporttherefore call for rules of exchange that secure aminimum standard of environmental quality forglobal trade and investments. Putting people andthe planet ahead of GNP growth, however,requires governments to slow down their drive forhigher export earnings – the drive that has beenthe primary objective of trade reform thus far.While any suggestion to re-position the signifi-cance of growth will make some parties in thedebate nervous, the consequences are not as direas classical economists might argue.

First, it is by now considered as common sense– except perhaps in some trade circles – thateconomic growth by itself will not lead todevelopment in human and social terms. Humandevelopment depends on the institutionalcontext of economic growth. What matters mostis the existence of the rule of law and publicpolicy interventions that foster social and naturalcapital. A trade regime cannot claim to advancedevelopment worldwide, if its only goal is thepromotion of economic growth. Growth must beframed by the public interest in meeting basichuman needs and ensuring a safe and healthyenvironment. Furthermore, as the pattern ofdemand changes, especially in the food sector,growth that is pro-poor and pro-environment ismore likely to succeed than growth that is solelyfocused on increasing GDP. Input marketsbecome costlier with the price hike in rawmaterials, just as output markets become moredemanding in quality, in particular in the highprice segment. Putting growth in perspective iskey to the long-term development of societiesand the health and integrity of the global environ-ment – and this is what multilateral trade institu-tions should focus on as a matter of the highestpriority!

Since the de-regulation of global trade is clearlythe wrong approach for building just and sustain-

able societies, the authors of this report hold outlittle hope for the Doha Round of negotiationsunder the WTO to meet the twin challenges ofpoverty and environmental decline. On thecontrary, these challenges will continue to grow inmagnitude and will generate even greater humansuffering if the current round is allowed tocontinue unchecked. If however the Round finallydisintegrates, parties will have the opportunity toreturn to the drawing board. Instead of attemptingto resurrect the dead body of Doha, it would thenbe high time to construct a new architecture oftrade rules but from a different starting point. Ifthis does in fact happen, future historians willconsider the breakdown of Doha not as a defeat,but as a blessing in disguise. In either case, it istime to mobilize efforts to commence a process ofnegotiation towards a General Agreement onSustainable Trade. This report is a contribution tothis endeavor.

Our process

This report is the result of extensive dialogue,consultation and exchange that took place acrossmany continents and with hundreds of civilsociety organizations. The 12 authors come fromall continents – from the Americas to Australia,from Africa to Asia –, from small countries andlarge trading powers, from South and North. Mostof the authors come from civil society; in theirprofessional life they work as trade analysts fornon-governmental organizations, as promoters ofsustainable agriculture at the grass-roots level,as researchers in universities, or as policyadvisors for parliaments or governments.

It was in the wake of the WTO MinisterialMeeting in Cancun in September 2003 that theHeinrich Böll Foundation and Misereor, bothbased in Germany but with offices and partnerorganizations across the world, together with theWuppertal Institute as the scientific facilitator,decided to launch the EcoFair Trade Dialogue. InApril 2005, under the broad canopies of purple-blooming jacaranda trees on the campus ofChapingo University near Mexico City, the authorsconvened for the first time, with four subsequentmeetings convened in Germany, Senegal andMexico. Through a common effort, we attemptedto make sense of the ongoing trade negotiations,grappled with the ominous fate of agricultureunder industrialization, pondered the experiencesof small farmers with trade reforms on the ground,recalled agriculture’s burden on the biosphere,

18

and explored new directions for trade rulesbeyond the free trade paradigm.

Several background papers accompanied thedialogue among the authors on the core themes.These papers can be found at: www.ecofair-trade.org. Furthermore throughout 2006, sevenstakeholder consultations were organized indifferent countries and different settings todiscuss preliminary findings with a range of localand professional experts from grass-rootsorganizations to government decision-makers. Inorder to reflect the realities of the diverse regionsof the world, these consultations took place inSenegal for West Africa and in Thailand for SouthEast Asia, in Brazil, Mexico and the US for South,

Central and North America, as well as in Belgiumand Germany for Europe. Through these consul-tations we reached out to over 250 people acrossthe globe that provided valuable feedback andcomments that helped to shape the variousreform proposals contained in this report. Finally,regular contact was undertaken with a broadercircle of experts, the ‘International ConsultativeBoard’ consisting of 28 international experts anddecision-makers, who reviewed papers, advisedon specific questions, and participated in consul-tations. Through this report, we are proud topresent the outcome of these debates to policy-makers, civil society organizations, and thebroader public.

19

At the WTO Ministerial Meeting in Cancunin 2003, numerous civil societyorganizations called for moving agricul-ture out of the ambit of the WTO. We

would like to join those who put it differently. It istime to move the WTO out of agriculture. Thisformula emphasizes that the free trade philo-

sophy underpinning the WTO drives changes inagriculture into the wrong direction. Following thestructural adjustment programmes prescribed byinternational financial institutions for manydeveloping countries in the 1980s and 1990s, theWTO became a dominant force, embodying theefforts by major export nations to transform the

Part 1 Principles

20

world into a borderless marketplace whereeconomic efficiency would reign supreme. Themarket was expected to rule, and politics wassupposed to retreat. To be sure, this approach isnot without merits. It had matured at a time whenstate bureaucracies, be it in communist countries,welfare democracies or developing states,weighed rather heavily on societies. But now themarket-first approach has run its course; thelandscape of challenges has changed. In the firstdecade of the 21st century, it is clear that the worldis hardly preoccupied about the possibility ofnation- states overpowering markets. Instead itfears eroding states, worsening poverty, andwidespread environmental collapse, not tomention the ever-present danger of corporationsoverpowering democracies.

In view of these evolving challenges, it makesabsolutely no sense for public policy to focusexclusively on how best to maximize private gains.Politics, instead, will have to return to its originaltask – promoting the common good. Against thisbackdrop of changing priorities, what are thefundamental principles that must guide thedesign of an eco-fair trade framework for agricul-ture?

Multi-functionality

At times, etymology can be revealing. Considerthe word ‘agriculture’: already the noun ‘culture’ in‘agri-culture’ reflects dimensions that span wellbeyond crops and cowsheds. Moreover, the Latin‘cultura’ reveals a close link between farming (lat.:colere) and worship (lat.: cultus). From timeimmemorial, indeed, cultivating plants has beenlinked to both ways of life and conceptions of theworld. The word ‘agri-culture’ reflects this duality.Indeed, it is a testimony to the fact that agricultureis a polyvalent activity that should not be reducedto the language of crop yields and money.

Farming not only produces tons of maize ormeat, but also livelihoods and landscapes andmeaning as well. In other terms, agriculture fulfillsmany functions. It generates commercial goods,such as bushels of wheat, liters of olive oil, orsacks of coffee to be sold to processors andwholesalers. Beyond that, however, it alsoprovides subsistence, sustains food habits,supports artisans, shapes community relations,and underlies human rituals and ceremonies.Different farming systems co-produce differentsocial contexts, but the production of economicgoods is in most cases closely related to the (re-)

production of common social goods. Similarly,agriculture impacts water cycles, generates soils,conditions the patrimony of plants and animals,and molds hills and valleys. Once again, althoughdifferent farming systems co-produce differentnatural contexts, the production of commercialgoods is intimately connected to the (re-) produc-tion of common environmental goods. As commongoods are essential for well-being, sacrificingthem blindly diminishes overall welfare. However,unlike public goods such as bridges or schoolscommon goods are not purposefully produced,but assets, such as social cohesion or fisheriesthat are unintentionally generated by humans ornature. They are usually taken for granted, andtherefore vulnerable to being neglected.

Agriculture is not an isolated activity; it isembedded in social and natural webs. Seen in thislight, the multi-functionality of agriculture reflectsthe larger truth that there is more than one sourcefor the well-being of society; real wealth is basedon the availability of both commercial goods andcommon goods. In other words, it is social andnatural capital together with monetary capital thatgenerates the wealth of nations.

In order to secure common and not just privatewealth markets must be framed by politics.Markets are unrivalled in producing and deliveringgoods and services efficiently, but they were nevermeant to create community or equity, security orsustainability, sacredness or beauty. It is up tocitizens, governments and lawmakers to ensurethat such common goods are as carefully safegu-arded as private goods are by businesses andconsumers. This is a genuinely political taskbecause common goods cannot be quantifiedmore than in a rudimentary fashion; their protec-tion, therefore, needs to be based on judgmentrather than on calculation. From this vantagepoint, it must be the core objective of any multila-teral trade regime to define a framework of rulesthat allows for the mobilization of financial capitalwithout the degradation of social and naturalcapital.

Human Rights

Far from being just an afterthought to trade, atten-tion to the importance of protecting commongoods has been at the core of internationallawmaking since the Second World War. Inaddition to international trade law, which was firstcodified in GATT and subsequently in the WTO,several other strands of norms and institutions

It is social andnatural capital

together withmonetary capital

that generates thewealth of nations

21

have been developed to guide the emerging worldsociety – most importantly human rights law.

Indeed the canon of international human rightslaw, which comprises the Universal Declarationon Human Rights as well as the InternationalCovenants on Civil and Political Rights and onEconomic, Social and Cultural Rights, enumeratesimportant norms that mediate the relationshipbetween the state and individuals – can be consi-dered the constitution of the world society. Itcodifies the idea that the rights of personsprecede the rights of states, with the conse-quence that states – and other powerful actorssuch as transnational corporations, as can beargued in times of globalization1 – have the dutyto ensure the conditions for basic economicsecurity and social participation of citizens. As theUniversal Declaration on Human Rights of 1948states “Everyone has the right to a standard ofliving adequate for the health and well-being ofhimself and his family, including, food, clothing,housing, and medical care” (Article 25). Withoutthese conditions people would be deprived oftheir birthright to a healthy and prosperous life.Therefore states have committed themselves torespect, protect, and fulfill these rights.

In relation to the right to food, for instance, theobligation to ‘respect’ means that states must notdeprive people of their right to adequate food andmust ensure that individuals are free from hunger.Similarly, the obligation to ‘protect’ implies thatthird parties, including powerful economic actorssuch as corporations must not be allowed todeprive individuals of their access to food. Thismeans that people should have physical andeconomic access at all times to food that isadequate in quantity and quality for a healthy andactive life. And finally, by ensuring that vulnerablegroups can feed themselves or, in the last resort,providing them with food, states carry out theirobligation to ‘fulfill’ this right.2 It is important tonote that human rights imply absolute obliga-tions. They are ends in themselves and cannot besubject either to political bargaining or toeconomic trade-offs. In particular they cannot beoverruled by cost-benefit considerations, accep-ting sacrifices in the present for presumed aggre-gate gains in the future.

However, there is no mention of human rightsin the statutes or by-laws of the WTO, nor has theAppellate Body made any reference to them.3 Thisis astonishing, since human rights law is thefoundation of the United Nations system; itsignals how far the WTO has insulated itself from

the common values that underpin the UN system.Consequently there has never been a systematicreview of the impact of trade liberalization policieson the ability of individuals to exercise theirfundamental human rights across the world.Nevertheless, there is sufficient evidence toassume that the loss of import protection or theincreased market power of corporations moreoften than not undercut livelihoods and the basiceconomic security of considerable parts of thepopulation in Southern countries. There can be nodoubt, however, that the choice of trade policiesmust be constrained by the obligations set out ininternational human rights instruments. There-fore, a framework for trade will have to bedesigned in a way that ensures that the livingconditions of the least advantaged citizens on theglobe are significantly improved, and at aminimum are not allowed to worsen in any way.

Environmental Integrity

Agriculture underpins the availability of commongoods not only in the social, but also in the naturalsphere. It is mainly through agriculture thathumans enter in contact with nature. On the onehand, humans have the ability to significantlymodify species, water-courses, and landscapes,and on the other hand they receive vital resourcesand life-sustaining services. For better or worse,agriculture largely shapes the natural common-wealth. Next to energy, it is the way in whichagricultural practices are conducted in futureyears that will determine the fate of the biosphere.

Trade agreements continue to disregard theintimate connection between agriculture and theenvironment. This neglect has potentially ruinousconsequences for both nature and farming. Onthe one hand, increased cross-border trade inagricultural goods is likely to lead to a furtherspread of industrial agriculture, relying heavily onexternal inputs, such as engineered seeds, fertili-zers, pesticides, fuel, and irrigation. On the otherhand it is the future of farming itself that is threa-tened by the looming prospects of environmentaldegradation that results from unsustainableagricultural practices. Soils cannot be renewed,agro-biodiversity diminishes, scarcity of watermakes irrigation less feasible, and the imminentpeak in world oil production deprives industrialagriculture of its main ingredient – cheap oil.Industrial agriculture is “sawing off the branch itis sitting on”. Last but not least, in particular in theSouthern hemisphere, global warming is likely to

The canon ofinternationalhuman rights canbe considered theconstitution of theworld society

The way in whichagriculture isconducteddetermines the fateof the biosphere

22

reduce fertile land and productivity – this prospectalone should awaken trade negotiations fromtheir tunnel-vision induced slumber.

Given this context, the fundamental orientationof agriculture must change. While for decades thestandard of excellence has been to achievemaximum yields per hectare, environmentalprotection and management now becomesparamount. What counts is not just output for themarket, but the continuing environmental healthof ecosystems near and afar. Innumerableexamples in crop cultivation and livestock-raisingpoint the way, but there is no doubt that farmingpractices across the world – just a few decadesafter they had been lured into using industrialinputs – will have to be overhauled again. Environ-mental sustainability calls for greater attention tobe paid to the complex interplay of the differentwebs of life that inhabit agro-ecological systems.It also implies moving from an attitude of controland dominance over nature to a spirit ofstewardship that is grounded in a respect fornature. Bio-diverse and locally adapted farmingsystems hold most promise for the transition to apost-fossil agriculture where divers fields willhave to replace the use of chemicals and humanintelligence the use of fuel. At any rate regenera-ting land, water, and biodiversity while recoveringinvestments for land, animals, and work, is thecollateral benefit to be expected from any agricul-tural system in the future.

Democratic Sovereignty

The principle of Democratic Sovereignty is a coreuniversal principle in international relations. Atone end of the spectrum, Democratic Sovereigntyrefers to the ability of the nation state to besubject to no outside power, or to be able to actwithout interference. On the other end of thespectrum, Democratic Sovereignty regards thestate’s legitimacy and sovereignty as arising fromthe community of citizens and sees the state’sfidelity as belonging to that community.

Opening up foreign markets for the export ofgoods and investments has been the primaryinterest of economically powerful countries sincetime immemorial. These objectives have becomeeven more aggressively pursued in the era of GATTand the WTO. The driving force behind negotia-tions has been the unwavering ambition of thedominant triad – the United States, the EuropeanUnion and Japan and their desire to capturemarkets behind foreign borders in order to boost

their own economic growth. Meanwhile, they havebeen joined by other countries, especially thosecountries with large-scale industrial or agricul-tural exports from the South, such as South Koreaand China, or Argentina, and Brazil. All exportinterests, however, share a common utopia,namely to create a borderless world where theycan move goods and services around the globe,unfettered by rules specific to a place or a commu-nity. To a great extent, trade liberalization has hadthe effect of actually elevating exporting as a rightthat is allowed to override all other rights.

But one country’s exports are another country’simports. What appears as a barrier to trade to theexporting country may well be perceived as acollective preference from the point of view of theimporting country. The desire to export oftenclashes with the democratic right of nations andcommunities to manage their own internal affairs.If unregulated, imports may impact on what theWTO’s Agreement on Agriculture somewhatbashfully calls ‘non-trade concerns’. Yet thisseemingly innocuous phrase hides what mostsocieties would consider issues of highest publicconcern: food security, the welfare of ruralregions, the state of the environment, and thefuture potential for development. What happensto agriculture largely influences what happens tonutrition, health, gender equality, nature, and thelocal economy.

These are common goods of the greatestimportance to all citizens of a country. And it fallswithin the sovereign jurisdiction of nation statesto decide how to care for the provision of thesegoods within society. However if states are toexercise the right of Democratic Sovereignty, theycannot be allowed to become victims of collateraldamage that may be generated by deregulatedimports of products and investments.

The principle of Democratic Sovereigntyincludes the ability to govern the flow of imports.Therefore the policy space available under traderules to protect local communities, as usuallyrepresented by national governments, must bewide enough to enable citizens to express theircollective preferences on how to shape trade andinvestment policies that impact on their everydaylives. It is, after all, a liberal economist’s fallacy tothink that markets are not owned by anybody andtherefore should be available to all. For markets,far from operating in a social void, are associatedwith specific societies that are entitled to shapethem according to their requirements. In otherwords markets are not autonomous, their action

It is up to thecitizens of a

country to decidehow to care forcommon goods,

such as foodsecurity, rural

development, andthe environment

23

has to be framed by public policy. This is true forSouthern and Northern societies alike.

Extra-territorial Responsibility

It goes without saying that the notion of nationalsovereignty – democratic or not – has been trans-formed by the phenomenon of economic globa-lization. The world – not everywhere and not inequal intensity – has become interdependent. Thenation-state, in its idealized version, once encom-passed a physical territory governed by onecentral government, one economy, one nation,and one culture. Like a container, it held society inall its aspects within a clearly demarcated space.But with globalization, the container has brokenopen. Goods, money, information, images, andpeople now flow across frontiers, leading to theemergence of a transnational space in which inter-actions occur as if national spaces did not exist. Inthis context, nation-states are now one actoramong many others against the backdrop of awide range of transnational networks. There canbe no doubt that they will loose influence andrelevance in shaping the course of events unlessthey engage in supranational cooperation and acton the basis of pooled sovereignty.

However when money, people and goods flowseamlessly across frontiers, shouldn’t the conceptof responsibility also assume a cross-bordercharacter? To ask this question takes us one stepcloser to finding the answer. Insofar as the sphereof action has become transnational, the sphere ofresponsibility cannot remain strictly national,insulated as such by events occurring outsidestate borders. This is also true for countries whoseactions or the actions of their inhabitants haveeffects that reach far beyond their frontiers.However, there are two possible ways of framingglobal responsibility in this context. Either it isexercised in a spirit of omnipotence or in a spiritof moderation. While hegemony will trump in thefirst case, fairness is the mark of the second. It isthe very core of the principle of fairness not toseek advantages at the expense of others;likewise it is the core of global responsibility notto do harm to others. In a globalized world, nation-states and powerful actors must have due regardfor citizens in other countries primarily in anegative sense; they should refrain from inflictingharm on citizens beyond their borders. This is thevery essence of Principle 21 of the StockholmDeclaration of 1972 that has become widelyaccepted as a norm of international law.

However, when it comes to trade policy,countries, either individually or multilaterally,typically take actions that do in fact impact adver-sely on other countries through such acts asdumping, through investments, and throughexports. These impacts matter if they contradictobligations deriving from an international treaty,be it an economic, social or environmental one.For instance the human rights obligations ofstates and non-state actors do not stop at territo-rial borders, they reach geographically to othercountries as well. As the Special Rapporteur to theHuman Rights Commission on the Right to Foodhas recently stated: “Governments mustrecognize their extraterritorial obligationstowards the right to food. They should refrain fromimplementing any policies or programs that mighthave negative effects on the right to food ofpeople living outside their territories”.4 Dumpingwould be a case in point: when the EuropeanUnion dumps subsidized milk products in BurkinaFaso or Brazil, thereby undercutting domesticfood production in the receiving countries, basicsurvival rights are at stake. Similarly, foreigndirect investments that disregard labor rightscontradict obligations under the InternationalLabor Organization (ILO), just as much as environ-mentally destructive ones may contravene obliga-tions assumed under the UN Conventions onClimate Change or Biodiversity. And exports maynot only represent economic, but also environ-mental or social dumping if they are produced ina way that ignores obligations under differentinternational agreements.

Economic Subsidiarity

The potential conflict between the principles ofDemocratic Sovereignty and Extra-territorialResponsibility – namely that a country should beallowed to govern its imports, while at the sametime these import measures should not harmothers – is put into perspective by the principle ofEconomic Subsidiarity. According to this principle,economic exchanges should preferably be carriedout at the local and national level, whileexchanges on the continental or global levelshould have only a subsidiary function. EconomicSubsidiarity aims at localizing economic activitieswhenever possible and reasonable. In the light ofthis principle, present-day globalization is to aconsiderable extent questionable, since itpromotes long-distance exchanges of productsand services that could be provided locally or

It is the core ofglobalresponsibility notto do harm toothers

24

nationally as well. A general preference for shorterrather than longer commodity chains is supportedby reasons of democracy, development, andecology.

Considerations of democracy suggest thatproduction networks in their geographical scaleshould not entirely outstrip the scale of politicalcommunities. Economic activities that surpass theboundaries of political communities happenlargely beyond the range of influence that isnormally available to citizens and governments,unless of course governments are operating on amultilateral level. However, citizens are likely to beable to identify and express their preferencesmuch more easily when they have maximumcomprehension of, and control over the economicactivities affecting them. Thus productionnetworks and trade flows that center on the localor national level are likely to have a far greaterdegree of democratic legitimacy.

Also considerations of human developmentshould encourage international institutions toregard as an important task the re-regionalizationof trade flows wherever possible – even if thismight constrain the potential for economicefficiency. Efficiency in the allocation of goods isnot an end in itself, but a means to ensure thereproduction of livelihoods and the economicwell-being of the people. Rather than endangeringlocal communities by making them the hubs forthe extraction of capital, goods and resources, theregionalization of trade flows serves as a catalystto spur sustainable development at the local level– in particular if production enjoys forward andbackward linkages to other sectors of the localeconomy, such as to local input providers, proces-sors, and traditional retail outlets. And wheresmallholder agriculture is well integrated into thelocal economy and rural non-farm employment inthe production of off-farm goods and services isstimulated, the regionalization of trade flows willhave important positive ramifications for povertyalleviation.5

Finally, from an environmental perspective,long production chains imply long distances intransport. If there is some kernel of truth to thesuspicion that the period of globalization willcome to be seen as the Indian summer of the oilage6, the geographical scale of agriculturalmarkets will have to be reconsidered. About threequarters of the energy consumption in the foodsystem takes place beyond the farm gate, andenergy used to transport foods to rich countrymarkets from around the globe, 365 days a year,

regardless of seasons, accounts for a significantpart of total energy consumption in the foodsystem. If climate change is taken seriously, thereduction of food miles through the re-regiona-lization of production chains has to be the corner-stone of trade, energy and infrastructure policiesthat will guide the reform of the industrial foodsystem.

Trade Justice

Treating unequal individuals equally can lead toreal injustice. While it is a matter of course inboxing or soccer not to have players of very diffe-rent weight or talent competing in the sameleague, the free trade system ignores this truismof fairness. Rather, its philosophy is to put everyplayer, strong ones and weak ones alike, onto thesame playing field. While the GATT in its earlyyears had a membership that was predominantlyrepresented by the richer countries, it wasprobably a major mistake to extend the GATTmodel to a world beset with social discrepancies.For in such a world, equality of opportunity endsup favoring the already strong. Consequentlyreversing present asymmetries calls for aninequality of opportunity in favor of the weak.

Nevertheless, transnational markets in agricul-ture are presently structured in such a way thatthey continue to disadvantage producers inSouthern countries. Market power concentratedin a few transnational agribusinesses, togetherwith the use of export subsidies, food aid, andsome forms of domestic support paid out by richgovernments to their farmers all conspire to drivedown prices in non-rich countries, ruining theirlocal farmers and industries. Exercising moneypower in this way is blatantly unfair. It ignores theExtra-territorial Responsibility of all nations tosafeguard social and economic human rights andto strengthen the position of disadvantagedcountries. Since rich countries failed to suffi-ciently move on this matter, it is not surprisingthat Doha talks were dealt a fatal blow.

What is needed in a drastically unequal worldis a form of positive measures that redress thehistoric wrongs of past discriminatory approa-ches. Until the international community succeedsin making poverty history, there can be noquestion that special and differential treatmentmust be the rule, not just the exception. One waythis can be done is by distributing rights tomarket access unequally. Economically morepowerful countries – independent of their classi-

In an unequalworld, Trade

Justice requiresgranting more

opportunities toweaker players

It enhancesdemocracy when

productionnetworks match

the boundaries ofpolitical

communities

25

fication as developed or developing nations –should grant preferential access to weakercountries, while weaker countries should begiven more discretion to control imports andinvestments. Furthermore, groups of countriesmay be given space to enter into cooperativerelations with each other, granting advantagesamong themselves. If such schemes are designedin the spirit of mutual assistance, the sameadvantages may be legitimately denied to richer

countries. In this case, the principle of non-discri-mination would not apply. And finally, differentforms of financial redistribution from stronger toweaker countries will have to be institutionalized.However, such support should be channeled lessthrough aid than through global fiscal policies. Adouble dividend would be attainable if levieswere charged to environmental over-users, andrevenues distributed to economically weakcountries.

26

Part 2 Problems

Trade negotiations in agriculture discuss justabout everything except agriculture. Be it theWTO Agreement on Agriculture, or rules agreed innumerous bilateral or regional trade agreements,or trade policies enacted through loan conditionsof international financial institutions: the world offarming and rural life remains largely ignored.Instead, the focus of trade politics is restricted toagriculture’s role as an economic sector that mayspur growth, and generate foreign currency.

However this narrow vision has a price. For itneglects that agriculture’s role goes far beyondthe accounting sheet. In fact, agriculture is themainstay of rural life, just as it is part and parcelof the global biosphere. It delivers much morethan commercial goods, for it co-producescommon social and environmental goods.However, the narrow vision of current tradepolitics continues to be blind to the non-economicaspects of agriculture. Because agriculture is

2.1 A business lens on agriculture

27

primarily a place-bound business that deals withlife, it rarely follows basic economy theory and theexpectations arising from it. As a result, agricul-ture usually has a hard time to withstand compe-tition from industrial sectors, requiring publicsupport for survival.

Mainstay of rural life

Trade negotiations usually disregard the impor-tant role that agriculture plays in underpinningthe availability of common goods in both thesocial and the natural sphere. In social terms,agriculture is the mainstay of rural life, and rurallife comprises much more than just agriculture.First and foremost, the rural world is based on therural economy with its various layers, includingthe subsistence economy that offers food, shelterand exchange outside the cash nexus, as well asthe informal sector that provides for daily neces-sities, and small businesses that supply servicesand goods, and industries that cater to largermarkets. Farming and livestock raising also offerjobs and economic opportunities, but in addition,agriculture provides the basis for employmentand income in related local sectors. It is importantto note that farmers – the world over, but in parti-cular in marginal regions – not only produce goodsfor monetary returns, and in response to thedemand of markets. Most importantly, of course,they farm in order to ensure their family’s foodsecurity. In addition, they farm to produce theirown seeds, to grow feed for their animals, planttrees for fuel wood, grow medicinal plants, as wellas to produce clothing (cotton, wool) or construc-tion materials (wood, bamboo). Farmers are rarelydriven just by their own need for cash, nor just bywhat the market would pay for. Quite to thecontrary, except in an industrial context, farmersproduce a lot of their ‘capital’ by itself and is notnecessarily dependent on monetary return toachieve it. Yet these non-monetary economicassets of agriculture are nowhere to be found ineconomic trade statistics, or tax and financesheets.

Moreover, the rural economy in particularconsists not just of market-related activities, butalso of community-related activities, such asexchange among relatives or communal work. It isboth the market and the community that sustainrural livelihoods. As a consequence, it is mislea-ding to view the rural world exclusively throughthe optic of productivity and output. For example,farmers may choose to first invest in social

relations by investing returns from their croppinginto expenditures on weddings, funerals, gifts orbeer parties, securing thus their place in thecommunity and the ability to call for help in hardtimes.7 Investment in community is just as muchan investment in agriculture.

Furthermore farming promotes a rural culturethat shapes the material world and the socialimagination. Food customs, agricultural techni-ques and knowledge, settlement patterns,housing designs, work rhythms, festivals andworldviews are likely to be defined by traditionand culture of a distinct place. In rural Mexico forinstance, corn is not just a crop, but at the verycore of a food culture, as well as the object ofceremonies, just as the potato is in the Andes, riceis in the Philippines, wheat is in Italy or millet is inMali. As the very term agri-culture implies, landand mind are interconnected. Again local habitsmay follow a logic different from economic ratio-nality. In central Africa for example, where coffeeand beans are intercropped, coffee tends to becontrolled by men and the beans by women.Changing cropping patterns would at the sametime change gender relations. And as it is wellknown, in most agrarian cultures, land is regardedfirst and foremost as a bridge connecting thepresent tenants to both ancestors and descen-dants, and only second as a factor of productionwaiting to be allocated for optimal use. Againstthe background of rural economy and culture it isevident that the value of agriculture surpasses themoney value of its crops and fields. Thereforeinterventions that only aim at boosting themonetary value of agriculture are likely toundercut its non-monetary economic, social andcultural values.

Supporters of unconditional trade liberaliza-tion often ignore this larger context in whichagriculture is an important part. They campaignfor a competition-driven agricultural economywithout taking the fate of the rural world intoaccount. This is the case when it comes toindustrialized countries where the winds of

“We should focus our debate on the global framework and existingglobal arrangements. However, our discussions should not belimited by the mindset of the WTO. We need to go far beyond theWTO. Our discussions should only be limited by the possibilities…”

Mario Aguja, Akbayan Representative in the Congress of the Philippines, at the Asian Regional Consultation, May 2006

Investment incommunity is asmuch aninvestment inagriculture

28

competition threaten to leave nothing but a fewfactory farms in their wake. However, it is muchmore the case with respect to less industrializedcountries where the rural economy has to accom-modate the majority of citizens. As it happens,free trade agreements along with structuraladjustment programs have often failed to besensitive to the fact that about 2.5 billion peopleworldwide depend – as for millennia – on agricul-ture for their livelihoods. Some 70% of the world’spoorest people live and work in rural areas, animportant fact that should, one would think, figuremore prominently in agricultural trade negotia-tions. Instead the larger questions, which relate tothe WTO Agreement on Agriculture, are conveni-ently stored away under the ambit of so-called

‘non-trade concerns’, despite the fact that theyintimately connected with the economic, socialand cultural human rights of vast parts of theworld’s people, including their food security.

Despite this poignant reality, trade negotiatorscontinue to remain unimpressed that trade libera-lization is deepening the dualism among farmers,between those wealthy farmers that benefit fromnew commercial opportunities, and the majorityof others who languish behind and becometrapped in a vicious cycle of stagnation andpoverty. Exposing the rural world to ever increa-sing pressure from global markets may alsoundermine the viability of non-farming sectors inthe rural economy. This is especially the casebecause the global economy has the tendency todisplace locally grounded business, replacingthem with transnational distribution systems. Asresult rural life atrophies, along with the assetsthat are essential prerequisites for diversifiedeconomies and sustainable livelihoods.

Part and parcel of the natural world

Apart from sustaining rural life, agriculture alsoproduces common environmental goods. Consi-dering that about 40% of the Earth’s land surface

is used as farm or pasture land, it is by no meansan exaggeration to say that most interaction thathumans have with the natural world is throughagriculture. Most rural economies rise up from thefields, woods, and streams, from the complex ofsoils, slopes, and rains that distinguish a parti-cular landscape. And most rural economies leavetheir particular imprint on the biosphere, shapingwater courses, plant and animal species, landforms, and microclimates. Moreover, it is throughfarming that humans usually provide for theirbasic human needs. The food and fiber obtainedfrom fields are essential fuel for the humanmetabolism. Agriculture, unlike any otherindustry, exists in a symbiotic relationship withthe natural commonwealth.

Agriculture can be regarded an intenselymanaged ecosystem, which – as with the case ofall ecosystems – offers a multi-functional range ofbenefits to people. Following the classificationsuggested by the Millennium Ecosystem Asses-sment, these benefits include: provisioningservices such as food, timber, or fiber; regulatingservices that affect climate, floods, wastes, andwater quality; cultural services that providerecreational or aesthetic benefits; and supportingservices, such as soil formation, photosynthesis,and nutrient cycling8. While the output servicesprovided by agriculture have increasedenormously over the last decades, the regulating,the cultural, and the supporting services havesteadily declined. The most important driver inthis transformation has been the conversion ofwoodlands and wetlands to cropland, alongsidewith energy and capital intensive technologies aswell as practices employed to increase theproductivity of farming and livestock raising.9 Thishas had the effect of creating a ‘predatory’ relati-onship between agriculture and naturalresources. In other terms, as agricultural systemscreate privately-owned value, yielding more andmore marketable goods like food and fiber, theymay also damage commonly owned goods, suchas water quality, capacity for photosynthesis, orbeauty. Highlighting agricultural growth only inmoney value easily masks the possible decline innon-monetary value, and this trend will surelyexacerbate the steady decline of the biosphere.

It is, however, fairly obvious that the degrada-tion of natural capital not only weakens ecosy-stems, but the agricultural economy as well. Afterall, no other sector of the economy is as dependenton the silent workings of nature as agriculture.Basic production processes, such as soil forma-

“Of course, agriculture is much more than a business. Still, weneed to emphasize the business aspect, since farmers today leave

their land because they can no longer earn a living fromagriculture. If these people abandon their farm work, they as well

abandon the multiple functions, which agriculture provides tohuman communities and the natural world.”

Bruce Ross, Ross Gordon Consultants, Belgium, at the European Regional Consultation, November 2006

As agriculturalsystems create

privately ownedvalue, they may

damage commongoods

29

tion, watering, plant growth, reproduction,nutrient supply, and pest control, rely on complexwebs of life. If vital ecosystem services fail, farmingitself is put at economic risk as a result of degradedecosystems. Loss of agro-biodiversity, forinstance, diminishes nature’s capacity to cope withpests. A decrease in groundwater levels makesirrigation farming less viable. In many cases, theresponse of many farmers is to replace failingecosystem services with oil-based and chemicalinputs, thereby exposing themselves to the risk ofrising oil and resource prices – and therefore to therisk of indebtedness and land loss.

It is not just in commercial agriculture that theviability of private value production thrives on theavailability of common environmental goods. It iseven more the case with subsistence agriculture.No one is more dependent than the rural poor onthe natural commons. However, ecosystemservices sustaining the poor are usuallyoverlooked in national statistics and povertyassessments. For example a recent study thatsynthesized data from 17 countries found that22% of household income for rural communitiesin forested regions comes from sources typicallynot included in national statistics, such asharvesting wild foods, fuel wood, fodder,medicinal plants, and timber10, with poorerfamilies having a higher share than richer families.In sum, the disregard for nature is a recipe foreconomic insecurity in agriculture.

But most trade policy, from structural adjust-ment programs to the WTO Agreement on Agricul-ture and regional trade agreements, undervaluesthe intimate connection between agriculture andthe environment. This neglect has potentiallyruinous consequences for the global environ-ment, not just for nature and local farming.Increases in cross-border trade in agriculturalgoods are likely to lead to a further spread ofindustrial agriculture, consumption of externalinputs, such as engineered seeds, energy-inten-sive fertilizers, noxious pesticides, electricity, fuel,and irrigation. These trends are all expected toexpand – generating in turn a very wide range ofvery serious consequences for the biosphere.Most importantly, industrial agriculture is nowunderstood to be both a major cause and also avictim of climate change, since its practicesrelease much more greenhouse gases than tradi-tional or organic forms of farming.11 Thereforetrade policy that disregards important environ-mental considerations is clearly ill-equipped todeal with the new generation of challenges in the

age of climate chaos and dwindling biologicalassets. Humankind can no longer afford to treatagriculture just as a business. Only agricultural

systems that regenerate and improve commonenvironmental goods while offering food, fiber,and fuel, will be able to meet the pressing humanand ecological needs generated by a planet inperil.

Uniqueness of the agricultural economy

Agriculture is not just more than a business, it isalso unlike any other business. For agriculturedoes not follow basic economy theory, nor theexpectations arising from it. Textbook models ofthe dynamics of supply and demand in perfectmarkets assume the unrestrained mobility ofproduction factors. The promise of the market tomake the best out of scarce resources rests on thecapacity of actors to continuously shift factors ofproduction to more efficient applications. Andindeed, markets can be superb in driving theefficient allocation of productive resources in theeconomy. They play out this strength in an optimalfashion when resources can be moved from oneallocation to another without any friction, but in aflexible response to changing demand. As aconsequence in market economies, sectorsmarked by highly mobile resources, such as finan-cial markets, have a structural advantage oversectors characterized by less mobile resources,such as industry with its factories and employees.This hierarchy in mobility makes itself particularlyfelt in markets with large geographical scopes, i.e.in global markets. When it comes to seeking thebest allocation across the globe, it is therefore notsurprising that fast and mobile production factorsare greatly favored over slow and immobile ones.As a rule, owners of mobile production factorsbenefit from trans-nationalization, while ownersof place-bound factors find themselves at adistinct disadvantage.

“In Chile, two of our major environmental problems are the so-called ‘Green Flood’ of export-oriented pine and eucalyptusmonocultures that pushes away small farm families towards urbanareas and the industrial breeding of salmon for exports. Theimpacts of these activities are devastating and will destroy thenatural resource base in the medium and long term with naturaldisasters to unfold alongside social conflicts.”

Mario Rivas, DAS, Chile, at the South American Regional Consultation, August 2006

Agriculture as abusiness fails tomeet theexpectationsraised by textbookeconomics

30

Seen from this angle, agriculture presentsanother fundamental handicap. Many of itsproduction factors are relatively inert. It is truethat not even financial markets conform fully tothe textbook model, but agriculture is particularlybadly off. Fields and, to a lesser extent, people arebound to place. While in many industries andservices, productive resources can be smoothlyrelocated and recombined according to marketconditions, in agriculture, land can neither bemoved nor be put to different use so easyly. Theexception here is the case of industrial livestockoperations, which can and in fact do move aroundthe globe, and do not differ much from car orcomputer chip production facilities. But a corn orwheat farmer, faced with a long-term pricedecline, has much less latitude than, let us say, amanufacturer of office chairs in the same situa-tion. While the office chair company may decide toreengineer its assembly line to produce elevatorcabins or to shift his or her production to somelow-cost country, the farmer would have a hardtime shifting to fish-farming or relocating tocountries where prices might comfortably pay forsome gain.12

Furthermore, not only is land fixed to place, butso are soil quality, water availability, hours ofdaylight and climate. Moreover, plants with theirdistinct physiology are better suited to certainplaces and not to others. Crop cultivation is linkedto biological and seasonal cycles that governreproduction, maturation, and decomposition. Itis not possible to stop or restart these cycles ondemand, and it requires genetic interventions in

order to accelerate them. To be sure, agro-techno-logy has in recent times been employed onmassive scales to alleviate some of these condi-tions, for instance through fertilizers, irrigationtechniques or soil-less cultivation, but there arelimits. In agriculture, the odds are clearly againstacceleration and mobility.

The underlying reason for this can be explainedthrough the laws of thermodynamics. Agriculture,as the mathematician and economist Nicholas

Georgescu-Roegen pointed out some forty yearsago, taps into the flow of low entropy (i.e. the flowof valuable energy) that reaches the earth as solarradiation, while mining – the other source ofnatural wealth available to humankind – taps intothe stocks of various forms of low entropycontained in the crust of the planet. Howeverthere is, as he explained, a fundamentalasymmetry between the two sources of valuableenergy. While mineral wealth can be turned into aflow almost at will, the rate of flow that comesfrom solar radiation and photosynthesis is onlymarginally subject to human control. As a conse-quence, industrial and agricultural activities areprofoundly distinct.13 Conversely, this factor helpsto explain why ‘industrial agriculture’ andlivestock raising in factories are at the forefront.Since they mobilize fossil fuels for tractors andtechnology, phosphate for fertilizers, and ore formachinery, and since they relocate around theglobe with tremendous mobility, capital- andresource-intensive industrial operationsconstantly out-compete extensive and site-boundfamily farms.

There is yet another reason why agriculture asa business is distinct from other economic activi-ties, and does not fulfill the expectations raised bytextbook economics. Economic theory generallyassumes that the interplay of the supply anddemand curve delivers an optimal price in themarket. In response, economists and tradenegotiators alike have assumed that the free playof market mechanisms will guarantee reasonablecommodity prices. Yet the invisible hand is clearlynot working well in agricultural markets. Econo-mists may call it a market failure, but in agricultureneither supply nor demand corrects itselfproperly.14 While in many industries, productioncapacity once developed can eventually bereduced in response to market signals by slowingoutput, or dismantling factories and selling theassets to other industries. By contrast, withagriculture, total annual output changes over amuch longer period of time. If (new) producersgenerate over-production, or if domestic supportand export subsidy policies lead to excess supplyon the world market, or if new technologiesenhance productivity, this in turn drives a fall incommodity prices. It does not, however, reducesupply. For in the short run, crops that have beensown must be harvested, no matter how lowprices are at that point in time. Even if individualfarmers go out of business, supply will not changeif their land is taken over by another farmer. If at

“Land is in fact a common good that is bound to a place and cannotbe moved. However, transnational agri-business companies are

highly mobile; they export and exploit natural resources andrelocate once they have exhausted them.”

David Cardozo, Sobrevivencia, Paraguay, at the South American Regional Consultation, August 2006

31

all, in densely populated regions, such as parts ofEurope or Asia, land may be put to different use inthe long run, for instance, as it becomes convertedinto urban space. But in the short and mediumturn it will stay in agricultural production. And inthe vast expanses of rural Argentina, Australia,Brazil, Canada, or the US, land is very likely to befarmed in the long term since there are no alter-native uses for the land.

Not only is supply very inelastic, but demand isusually sustained at a relatively constant level aswell. For consumers do not tend to eat more iffood prices fall. Demand may slowly increase dueto changing consumer habits, such as meat-baseddiets. Transnational food corporations may spendbillions of dollars in advertising conveniencesnacks and fast food, which may seduce people toeat more – and which has been a primary factor ingrowing obesity levels around the world. Stillunlike the demand for cars, houses or clothes,doubling consumers’ income will only have aminor impact on their demand for food. As regardsfood, agriculture is doomed to be a business withlimited demand. With the rise of a new market forbio-energy, however, non-food demand for crops

may potentially become unlimited in the future, inturn threatening feed and food production.15 Ifdemand for fuel spreads, the economic prospectsfor crop cultivation are likely to improve consider-ably; at least large-scale agriculture would trans-form into a business with expandable demand.But for the time being, demand as well as supplyare less elastic than in other sectors of theeconomy, resulting in ever decreasing food prices– under which small and powerless farmers suffermore than large-scale operations.

Agriculture is unique; it is not a normalbusiness and at the same time, it is much morethan a business. This uniqueness creates seriouschallenges for agriculture in most countries. For itis expected to provide common goods withoutremuneration, while struggling under decliningfarm gate prices and malfunctioning marketmechanisms. Yet ensuring the so-called multi-functionality of agriculture makes public inter-vention indispensable. Therefore, governmentsacross the world are obliged to provide support toagriculture for securing food production andsustaining family farms after the onset ofindustrialization.

Globalization hitsfarmers mainlythrough surges ofcheap imports

2.2 In disregard of livelihoods

Recounting the history of the 20th century, theBritish historian Eric Hobsbawm describes atlength the ruptures and revolutions, the wars andmassacres of this, as he calls it, ‘Age of Extremes’.Yet in his view, the most far-reaching sea changethat occurred in that century, the one thatseparates the modern world for ever from thepast, is the world-wide death of the peasantry. Forthe second half of the 20th century marked theend of several thousand years of cultural evolu-tion during which the overwhelming majority ofthe population survived by growing food, raisinglivestock or harvesting the sea as fisherfolk. Infact the peasants of rural Europe and Japan havemore or less stopped tilling the land, comprisingbut a very small proportion of the population.16

Still large tracts of Latin America, Asia and Africaremain dominated by farming societies, with alarge part of the population earning its living fromagriculture. The world’s population in agricultureactually increased over the last five decades, from1.5 to 2.5 billion.17 However, it is true that thesefarming societies face real threats of impoverish-ment, and may well rapidly follow the direction by

their Northern counterparts. By myths andpromise of a better life, as a result of degradingsoils, shrinking income, and growing indeb-tedness, people are pulled and pushed off theirland and into urban agglomerates, in order to finda new way of living, or to succumb to even greaterlevels of poverty. Globalization and trade are inpart accountable for the current demise of thepeasantry. If the world does not want to witness afurther loss, an alternative agricultural traderegime, which is committed at its core to addres-sing the global crisis of agriculture, is absolutelycritical.

Liberalization and its discontents

One of the harshest impacts of globalization onfarmers has been generated by cheap importsthat drive national prices to such a low levelwhere farmers can no longer compete. As recentlyas one decade ago, Indonesia had a flourishingfarming system that was highly successful inachieving self-sufficiency. But as a result of liberalpolicy reforms that were implemented in the wake

32

of the Asian financial crisis, overall food importsrose significantly, with imports in soybeansincreasing by 50%. Just in the soy sector, twomillion people fell into unemployment.18 Jamaicahas experienced more than a doubling of importsof vegetable oils after 1994, while domesticproduction declined by two thirds. In the Philip-pines, rice imports continue to flood the domesticmarket since 1995, despite the fact that rice isgrown all over the country. Senegal’s imports of

tomato paste rose fifteen fold after 1995, whichforced the reduction of domestic production byone half. There are many such examples.19 Sincethe 1980s, trade liberalization, together withstabilization and privatization policies, has been amajor driving force behind the reform of agricul-tural systems and trade patterns. The steadyinflux of cheap imports from the world market hasdevastated local farm and livestock productionand rendered many farmers bankrupt.

There are multiple reasons why countries haveliberalized their markets. Many of those in needfor financial bail-out, like the Philippines orIndonesia, surrendered to structural adjustmentprograms imposed by the World Bank and theInternational Monetary Fund, which placed condi-tionalities on the provision of hard cash to thedismantling of protectionist measures. Othercountries opened their markets as a condition tobilateral or regional trade agreements, and someeven unilaterally liberalized, as they embraced the‘Washington Consensus’ and followed theireconomic advisors’ promise of faster rates ofgrowth. In the course of trade liberalization,countries reduced their tariffs and eliminatedquotas, privatized state trading enterprises andreined in government support, at times weake-ning national laws and regulations on socialpolicy, food safety, the environment, or humanhealth. Much of this happened outside the realmof the GATT or the WTO. But with the establish-ment of the WTO in 1994, the level of liberalization

that countries had so far achieved was sealed andenshrined into international law, includingsanctions if they were to reintroduce protectionistmeasures. Moreover, the WTO’s Agreement onAgriculture obliged governments to convert allagricultural non-tariff trade barriers into boundtariffs that would be required to be reduced overtime, and requested them to further reduceagricultural support and subsidy programs.

Although there is still some policy spaceavailable under the WTO, many countries today donot make use of it to implement policies availableto stabilize food prices, or to enhance domesticproductivity and self-sufficiency. Whetherbecause of failing democracy, inadequate institu-tional arrangements, or policies that serve onlythe minority, or deficient analysis of the problems,it is clear that poorly designed governmental inter-ventions in too many countries around the world,exposes their farm sector to the harsh conse-quences of unregulated competition on the worldmarket. With the remaining political void, especi-ally as state trading enterprises and food marke-ting boards have become increasingly privatized,transnational corporations are now perfectlyplaced to consolidate their power and control onprices and supply throughout the entire foodchain (chapter 2.4).

Clearly the impact is greater in poor countries.This is especially the case for low income and fooddeficient countries, where agriculture providesthe main source of livelihood, for as much as 50-90% of the population. Empirical evidence showsthat many poor countries have had to face increa-sing imports and stagnating domestic production,while export earnings from agriculture have barelyincreased. Over the last two decades, the importbills of developing countries have increasedenormously and even tripled for Least DevelopedCountries, trapping them in growing tradedeficits.20 Just a few countries in the North, suchas the US, Canada, or Australia, along with fewcountries in the South, such as Brazil or Argentina,Chile or South Africa, share these new markets.Yet their exports generate a massive displacementof farmers and rural job losses in the importingcountries. West African poultry farmers lose out toBrazilian chicken producers, who dump chickenlegs at almost zero price on their markets, sincethese are the by-products of chicken breastproduction for North American consumers. Outra-geously cheap wheat from Egypt drives Kenyancereal growers out of the market, while growingevidence raises suspicion that this might be

“In Ecuador, food imports have increased and local producer priceshave decreased. Producers are driven out of business.

In recent years, a quarter of the economically active population hasleft the country. An important percentage of ‘campesino’

agriculture has been left in the hands of the poorest, the women,the elderly and the youth.”

Francisco Hidalgo Flor, SIPAE, Ecuador, at the South American Regional Consultation, August 2006

33

wheat from the US or the EU that only transitsthrough Egypt in order to make use of theCommon Market for Eastern and Southern Africa,a regional free trade agreement to which Kenyaand Egypt belong.21 By and large, agriculturaltrade liberalization in practice does not live up tothe promises envisaged by David Ricardo, thefather of free trade theory. Instead it has produceda win-lose-situation.

However, it is not just a matter of somecountries gaining and others losing. Even instrong agricultural export countries, many smallfarmers struggle under tumbling prices, while onlya minority of large-scale industrial farm opera-tions actually flourish. Even within Brazil, forinstance, millions of small soy farmers have beenforced out of the market as a result of Brazil’s bigbusinesses driving down the world market pricefor soy beans. Women in particular are unable tocompete, which is highlighted by the fact thatpoverty in rural areas throughout the world conti-nues to be highest in poor female-headed house-holds. And yet, women grow at least 65% of thefood consumed in the world – a number even moreimpressive in light of the fact that they often do soin addition to household work and child care.22 Asfarm income continues to be depressed, womenare now forced to take off-farm jobs to supple-ment family income. In the absence of properrules and conditions, it is clear that trade libera-lization in agriculture does not serve the wealth ofnations, but rather the wealth of traders.

What liberalization leaves behind is not just aquestion of poor national economic performance,such as negative terms of trade. It is also aquestion of poverty for millions of small farmerand pastoralist families around the globe. Oftenpushed on to the margins of survival, they areforced to sell their land and migrate out of theircommunities in hopes of earning cash income onindustrial plantations, or in urban areas. As aconsequence, according to United Nations data,urban populations are expected to increase to 5billion inhabitants in 2030, 2 billion more thantoday, while rural populations are expected todecline to 3 billion.23 In particular, young peopleleave their parents’ farms, migrating into citieswhile leaving behind mainly elderly women andmen who can only run agriculture as a sideline oron part-time basis. An increasing number ofhouseholds – and even villages – in rural areas areforced to choose between retaining sufficientlabor to support agricultural production, orsending all their members to the urban world.24

The impoverishment and depopulation of ruralareas will likely be the biggest threat to the foodsystem in the future, when an ever growingmajority of people in cities will depend on an evershrinking minority in rural areas to produce theirfood. Since these minorities can no longer earndecent living from farming anymore, rural life andrural economies may collapse altogether. Whatwill this mean for our food security in the 21st

century?

Industrialization and its discontents

Some argue, pointing to the situation in industria-lized countries today, that two or three percent ofthe population may be just enough to providefood for the rest. They view the elimination ofsmall farmers as a regrettable but unavoidablenecessity; the price of progress. Yet this argumentliterally evokes a day-dream, as it is unrealisticthat the hundreds of millions, now and in futuredecades flooding into urban agglomerations, willbe absorbed by other economic sectors within ashort period of time. Therefore keeping people inagriculture – at least in the short- and medium-term – is not a matter of choice, but the singlemost sensible option for ensuring employment inthe vast majority of countries. Even in countriessuch as Brazil, where 77% of the rural labor forceis employed in small farms, and all the more inmany African countries, where this figure variesbetween 78% and 86%, small farms offer thegreatest potential for ensuring jobs and sustain-able livelihoods.25 Instead, the increasedindustrialization of agriculture, which aims atsubstituting labor through machinery and chemi-cals, will even further aggravate the displacementof people. A corporate-dominated industrial,export-led agriculture even poses a threat toemployment in those few countries where itactually flourishes, such as in Brazil. There theMinistry of Agrarian Development found thathousehold agriculture creates on average one jobper 8 hectares, while corporate farms merely offerone job per 67 hectares.26

The labor intensity of small farms may be inter-preted as an inefficiency. If industrial farmsproduce more but with less labor, aren’t they moreefficient? But a straightforward analysis of theeconomic facts reveals they are not. Contrary toconventional wisdom, economies of scale do nothold up in agriculture. A considerable body ofempirical studies shows an inverse relationshipbetween farm size and land productivity, as well

Theimpoverishment ofrural areas islikely be thebiggest threat tothe food system inthe future

Agricultural tradeliberalization doesnot live up toRicardo’spromises; it hasproduced a win-lose-situation

34

as between land productivity and capital inten-sity.27 Small farms produce more food on lesshectares and with less capital but with more labor.Whether production per hectare or per unit ofinvestment are considered as the indicators ofefficiency, small farms trump large-scale and moreindustrialized ones. This is true not just for develo-

ping countries that have greater access to verycheap farm labor. Even in the US, the smallestfarms were found to be more than 100 times moreefficient than the largest ones.28

This is in part due to the existence of unpaidfamily labor that often ‘subsidizes’ small farms.Yet most of the efficiency potential is realized bylabor-intensive farming practices that makeoptimal use of the land. While large-scalemonoculture farming maximizes the yield of butone single crop in the field, small-scale mixedcropping, cover cropping or combined agro-forestry, for instance, maximize the density ofplants per acre and take full advantage of themutual interactions between plants.29 As globalpopulation growth is one of the major challengesto the food system in the 21st century, improvingsmall farmers’ potential is the best solution toensure food security throughout the world.

However, it goes without saying that smallfarming systems today – highly heterogeneous asthey are the world over – are far from performingat maximum productivity. In many countries,unproductive agriculture is the main reason foreconomic stagnation in rural areas, and for insuf-ficient domestic food production. However, theanswer is not to replace these small-scale systemswith industrialized agriculture. Instead, raisingsmall farmers’ productivity through least-cost andsustainable farming practices should guide thereform of agricultural policies in order to maximizetheir contribution to food security.30

This is all the more true when environmentalimpacts are taken into account. Industrial farmingtechniques, and more so intensive factory-basedlivestock raising in particular place tremendouspressures on natural resources and pollute the

environment. It is true that many small farmingsystems today are far from being sustainableeither. Small farming also generates a range ofenvironmental impacts. For example, in manycases small farmers may be constrained to farmmarginal land, they may lack appropriate equip-ment, or adequate information regarding sustain-able agriculture practices. For others, the GreenRevolution promised higher yields through theintensive use of agri-chemicals. And while aconsiderable share of small farmers could drasti-cally increase their yields through Green Revolu-tion technologies, they do so at the cost of theenvironment, accelerating biodiversity loss aswell as exacerbating the pollution of soils, waterbodies, and the atmosphere.

Nevertheless there is sufficient scientificevidence to show that the future of sustainableagriculture lies with small farmers. In what hasprobably been the largest ever analysis of sustain-able agricultural practices, Jules Pretty and agroup of scientists, studying 286 completed andon-going farm projects in 57 countries, concludedthat small farmers increased their crop yields byan average of 79% simply by using environ-mentally sustainable techniques such as croprotation and organic farming. With thesepractices, they were able to reduce fertilizer andpesticide use, maintain or even build up soil ferti-lity, and increase the efficiency of water, land useand carbon sequestration.31 While many smallfarmers continue to produce in unsustainablemanners, compared to input-intensive, large-scale industrial farming, and especially if the smallfarmers are encouraged to practice biodiversityfarming, small farmers hold out the greatestpotential to realize agriculture’s role in regenera-ting social communities and the natural environ-ment.

The benefits of small farming are considerablein scope. They include generating meaningfulemployment and income in rural areas, thusslowing down migration. They also include consi-derable potential for producing more efficientlyand more sustainably in response to growingglobal demand for food. In addition, small farmershave a political virtue to offer. The struggle forachieving sustainable development and anagricultural trade system that takes on the globalchallenges in the rural world will only be of valuein the future, if it is inclusive and participatory. Ifthis struggle excludes the world’s 2.5 billionpeople that currently derive their livelihoods fromfarming, their voice will not be represented, and

“Industrial monoculture farming in Brazil causes too many socialinjustices, such as the devastation of the natural resource base,

the disappearance of livelihoods, the criminalization oforganizations and movements, and the promulgation of laws that

perpetuate this unsustainable production model.”

Rita Zanotto, MST, Brazil, at the South American Regional Consultation, August 2006

Small farmingsystems can best

realizeagriculture’s role

in regeneratingsocial communities

and the naturalenvironment

35

their knowledge and experience will not be able tocontribute in meeting the global food challenge.As long as these people go to bed hungry, they arenot able to engage in their communities andcountries to make vital decisions, for instances,

regarding rural development, food security, andnatural resource use. Empowering farmers,through fair trade rules as well as through othermeans, therefore, is a matter of democracy.

2.3 Forgetful of nature

As never before in history, the 21st century willexpose agriculture to a series of bold challenges.Four particular pressures on agriculture willincrease exponentially and their interactions willcreate even more dangerous threats to thebiosphere. First, global climate change will posea major threat to the life-support conditions thatare essential for farming systems in many regions.This in turn will undermine the ability of theagriculture sector to meet growing demands forfood. Second, in the post-‘peak oil’ age, thefarming of bio-energy crops and planting of bio-materials will place enormous pressures onagriculture. Thirdly, demand for food and fuel willin any case rise due to a constantly growing worldpopulation, which midway of this century isexpected to reach about 9 billion people. Andfinally, unsustainable farming practices continueto overuse their environmental base as if not one,but three planets were actually available for culti-vation. All these challenges combined make thefuture of agriculture look rather grim. But trade inagriculture and current trade rules are linked tothese changes. Is it possible to anticipate a traderegime that is properly equipped to deal withthese challenges?

Burden on the biosphere

No human activity has more profoundly alteredthe face of the Earth than agriculture. It is notsurprising that long before the advent ofindustrial agriculture, farmers time and againhave felled forests and depleted soils. The Andes,North Africa, and the Middle East are importantcases in point; they were at times over-farmed tothe point of degradation. Even today, smallfarmers account for significant environmentalproblems, such as the deforestation of tropicalforests from Brazil to Indonesia, as they areconstantly forced to farm virgin forest land tosustain their own livelihoods. What is new is theextent to which modern practices systematicallyoverexploit natural resources and pollute the

environment. Industrial agriculture is a highexternal-input form of agriculture. As such, itrelies on hybridized or genetically modified ‘high-response varieties’ – grown in monoculturesirrespective of local conditions. It also requiresagrichemicals, uses large amounts of fertilizers,and often consumes much more water for irriga-tion than traditional farming ever could. As aresult, industrial agriculture gives rise to a seriesof threats to the biosphere.

To begin with, most of the human-inducedgreenhouse gas emissions are caused by theburning of fossil fuels. However, land-usechanges in agriculture and forestry as well asemissions from farming and livestock play a signi-ficant role as well. Agriculture alone – not consi-dering the entire food system – contributes over20% to global anthropogenic greenhouse-gasemissions32, releasing in particular methane,nitrous oxide, and to a lesser extent carbondioxide. Even in the EU, which as a region isresponsible for the world’s highest emissionsfrom transport, industry and households, it isestimated that agriculture is responsible for 10%of all greenhouse gas emissions.33 What is parti-cularly emission-intensive is the conversion oftropical forests and savannahs into agriculturalland, primarily through the burning of biomassthat originally occupied the land, and the releaseof organic carbon stored in soils.34 Next in termsof the severity of impact is livestock production.Approximately 25% of anthropogenic methaneemissions come from livestock, while their

“In Indonesia we have experienced severe problems with palm oilplantations. Thousands of hectares are owned by foreigncompanies, forests are cut down and forest dwellers are expelledfrom their land. And while the plantations are supposed to producea regenerative resource, they in fact exploit the resource base andcause environmental pollution and devastation.”

Delima Hasri Azahari, Consultant, Indonesia, at the Asian Regional Consultation, May 2006

36

warming potential is about 20 times morepowerful than carbon dioxide. With animalsmoving from pastures to intensive stall-feeding,and the number of farmed cattle, pigs, and poultrysteadily increasing to meet the growing number ofmeat-based diets, more methane is released fromenteric fermentation and animal waste. Grass-fedanimals emit less methane then livestock that isfed on a high protein diet.35 In addition, a signifi-cant share of methane emissions is produced fromthe expansion of flooded rice paddies, as well aslarge amounts of nitrous-oxide emissions, whichare generated from the breakdown of fertilizer aswell as manure and urine from livestock. Both arefurther contributions to the breakdown of theglobal climate system.

The food system at large contributes muchmore to anthropogenic climate change than actualfarming and livestock raising. Greenhouse gasesare emitted through the production and use ofagro-chemicals, farm machinery and pumpedirrigation, all of which account for more than 90%of the total direct and indirect energy used inagriculture. As farm inputs are very energy inten-sive to produce, a ton of cereals or vegetablesfarmed by means of industrial agriculture requires6 to 10 times more energy than by traditional ormore sustainable agricultural methods.36 Inaddition, downstream operations, such as trans-portation, processing, packaging and retailing,require even more energy than agriculturalproduction itself. For example in the US, theyrequire more than twice as much energy thanfarming in the field. And nearly 75% of agriculturalproducts in the US are processed in some way,which consumes one-quarter to one-third of thewhole energy used in food systems.37 Finally, in a

rapidly globalizing agricultural market, emissionsfrom food miles are constantly on the rise. Eachitem of food today travels on average 50 percentmore than it did in 1979, with modern airfreighttravel emitting much more carbon dioxide thantravel by ship or road. As well-off consumers now

embrace a year-round ‘dietary summer’, the totaldistance traveled by imported vegetablespurchased weekly by just one family can easilyamount to a distance equivalent to severaljourneys around the equator.38 When consideringall of the different impacts that agriculturalpractices contribute to the global climate changecrisis, it can safely be said that the industrializa-tion of agriculture as a whole, as well as long-distance distribution and industrial processing,has emerged as a major driver of the climatechaos.

As we have witnessed in recent years, theglobal climate is now beginning to strike back withenormous ferocity. Global warming has alreadyresulted in an increase of global average meantemperature by 0.8 degrees Celsius compared topre-industrial levels. It is however expected to riseto as much as 6.4 degrees by the end of the 21st

century, if business as usual continues.39

Obviously the planet is not just getting warmer. Inaddition to this predicted change in global tempe-ratures climate change will have other severeeffects, including a rise in sea-level, increasedfrequency of extreme weather events, such asstorms, increased flooding, or irregularities inmonsoon patterns, as well as the melting of snowcover and ice caps, or the weakening of oceanthermohaline circulation.40

Climate change will rebound on agriculture in avariety of ways. Crop cultivation will be mostimpacted by a change in temperature and precipi-tation, greater vulnerability to diseases, insectsand pests, increased vulnerability to the degrada-tion of soil and water resources, and pressure onnative biodiversity. Scenarios for cereal cropsreveal that in some temperate areas, yields willpotentially increase with small increases intemperature, but decrease with larger tempera-ture changes. In most tropical and subtropicalregions, however, yields are projected to decreasewith even minimal increases in temperature, asthey already grow at their thermal optimum.41

Where large decreases in rainfall are expected tooccur, especially in subtropical and tropical dryland and rain fed agricultural systems, such as inthe Sahel, the African Horn, the Chilean Andes, orparts of Central Asia, East Asia, and South Africa,crop yields will be even more adversely affected.However, water damage to agriculture is not onlyassociated with decreasing precipitation, but alsowith increased run-off. A comparative study of fivemajor agricultural regions – Northeast China,Brazil, the US Corn belt, the Danube Delta, and

“The industrial model of production is not durable. We cannot keepimporting genetically modified soy beans from Brazil in order tofeed poultry in the EU, which is then dumped on third markets in

the South – forcing the Brazilian farmers to overexploit their land,the EU farmers to pollute their land nearby factory farms, and the

small farmers in the South to be driven out of production.”

François Dufour, Confédération Paysanne, France, at the EcoFair Trade Dialogue panel discussion in Hong Kong, December 2005

Industrialagriculture, long-

distancedistribution and

industrialprocessing are

major drivers ofthe global climate

chaos

37

Argentina – indicates that excess water as well asaltered timing of the water supply could have evengreater impacts than drought.42 In light of thetremendous impacts that are associated withclimate change, for those regions that will bedisproportionately impacted, the climate chaosmay well unleash a socio-economic chaos forentire agricultural communities.

However, agriculture is not only a victim ofclimate change, but can be part of the solution tothe problem. Agriculture not only releases green-house gas emissions, it can – practiced in the rightway – provide important carbon sinks. Studiesprove, for instance, that a shift from conventionalindustrial practices to organic farming signifi-cantly contributes to the mitigation of climatechange, both through less emissions from inputsand farming practices, and through increasedcarbon storage in the soil.43 At the same time,diversified sustainable farm systems are lessvulnerable and offer the best potential foradapting to changing climatic conditions. Further-more, agriculture can provide the basis for thepost-carbon economy in the future. Throughfarming bio-materials can substitute for mineralsand fossil-fuelled transport systems, and can alsohelp to retire resource-intensive industrialproducts and processes. In particular, the provi-sion of bio-gas and bio-fuels for industry, house-hold use and transportation are importantsolutions for making societies more climate-friendly. However, agriculture in a solar economywould have to generate other environmentalqualities than just protection of the global climate.Indeed, environmentally friendly productionpractices must ensure that the production of bio-energy and material does not undermine thecarrying capacity of soils and ecosystems.

Today, the potential for agriculture in helping toprotect against further deterioration of ecosy-stems is far from being realized. High-input andintensive farming systems are the prominentdrivers behind increased land degradation, waterscarcity, pollution, and global loss of biodiversity.For instance mono-cropping requires high levelsof pesticide and fertilizer applications, whichpollute the soil and the groundwater. Monocul-tures take livestock out of crop systems andconcentrate them in confined areas, creating asurplus of manure, which is then often over-applied on land surrounding the livestock facto-ries, and may run-off and pollute adjacent waterbodies. Furthermore, the use of heavy machineryin the field often leads to soil compaction, which

impedes root growth, limits soil drainage, and inturn may result in run-off, increased erosion andthe transfer of pollutants to surface waters. Whereland is irrigated, salinization is an important causeof land degradation, as it leads to the accumula-tion of salts in the soil; about 20% of the world’sirrigated acreage is estimated to be affected bysalinization, with salt concentrations high enoughto decrease yields significantly.44 Moreover inmany places, irrigation is depleting undergroundaquifers faster than they can be recharged; insome cases, such as in the Midwest of the US,agriculture even depends upon ‘fossil aquifers’that mostly contain water from the last ice age andreceive little or no recharge.45

On top of land degradation, pollution, andoveruse of water resources, industrial agriculturalproduction systems have greatly diminishedbiodiversity – both through farming practices andthrough the selection of crops grown. Farming inmonocultures, which only grow one single crop ona given field, is especially harmful to biodiversity;in fact monocultures are the “antithesis to diver-sity”.46 They require large amounts of fertilizersand pesticides, fungicides, herbicides to sustainhigh yields and to control insects and pests, whilefields are literally turned into ‘agricultural deserts’killing almost everything apart from the intendedcrop. Equally important is the loss of cultivatedcrop diversity due to the use of hybrid or geneti-cally engineered seeds. Over several millenniafarmers have selected seeds and thus shaping aspecific local fauna and flora; but today only ninecrops account for three quarters of the plantsconsumed by humans.47

Trade as driver

Does trade liberalization in agriculture lead to afurther expansion of environmentally destructivefarming? The answer, according to most of theevidence, is yes, although a number of caveatsmust be made.48 First, since both exports andimports increase as a result of liberalization, theoverall volume of transport is bound to increase.Average distances will in all likelihood grow; morewheat travels from the US to Egypt, fresh vegeta-bles reach Europe from India, and soybeanshipments from Brazil to China are on the rise.Some reduction in transport, however, is possibleif tariff escalation is removed. In this case proces-sing would be encouraged to take place incountries that have mainly been exporters of rawmaterials, leaving lighter and less voluminous

38

goods for shipment. In general though, the explo-sion in food miles is the Achilles heel of a globa-lized market in agriculture, making it vulnerable tosteep rises in oil price and the impacts producedby climate change.

Less clear-cut are the effects of subsidy removalin industrialized countries. On one level, reducingsubsidies is regarded a classical win-win situa-tion.49 Since the bulk of conventional subsidiesaims at reducing the cost of environmentally perni-cious inputs, such as chemical fertilizers, pesti-cides, irrigation water, and fuel, their eliminationwould benefit both trade and the environment – notto mention taxpayers and consumers. Moreoverprice supports, unless linked to production limits,encourage higher volumes of output; their aboli-tion, therefore, would ease environmental stress bydiminishing overall production. In addition, biodi-versity will benefit as pressure to expand cultiva-tion into fragile areas lessens. On another level,however, farmers may respond to less support byshifting to more valuable and more input-intensivecrops, setting off a cycle of increasing specializationand a degree of concentration, which leads to lessfarms at constant levels of output. For example,when New Zealand eliminated price support after1984, the use of pesticides and fertilizers substan-

tially decreased at first, only to rebound after adecade of restructuring in the farming industry.50

Moreover, increased competition is likely toundercut more extensive farming that sustains abroad variety of crops, hedges, trees, and culturallandscapes.51 In the extreme, farming might largelydisappear, concentrating only on the most lucrativelocations. Borderless competition, at any rate,tends to threaten small-scale, site-oriented,integrated farming systems, as they are to be foundeverywhere in the world, except for most ofAustralia, Canada, the US, and some ex-communistcountries. Apart from special cases, trade tends tomarginalize alternatives to large-scale industrialagriculture.

For Southern countries, the environmentalprospects in the wake of trade deregulation aresimilarly mixed. Of particular importance, is thepartial shift of agricultural production fromindustrialized to developing countries that isexpected with deregulated market access toNorthern markets.52 On one level, some argue,this success for the South may make sustainablefarming practices more viable for producers,because market access to the North improvesreturns from agriculture in the South.53 But onanother level, this geographical shift is most likelyto be accompanied with a move from staple foodproduction to export crops, such as from grains toprocessed food and meat. This is most likely toincrease pressures to enlarge the area under culti-vation, leading to the clearing of primary forestsfor arable land, the conversion of natural prairiesfor crop growing or livestock grazing, as well asthe draining of wetlands for irrigation or for culti-vation.54 In addition, only more specialized farms,using higher volumes of pesticides, fertilizers,water, and fuel, and relying on a narrow range ofplant genetic resources, may be capable ofsucceeding in global markets. Export-orientationsets the course for high-input farming. This is thereason why empirical studies from Chile andMexico, for example, report a more intense use ofland, native forests, surface water and aquifers,and of agrichemicals, as well as erosion of landand genetic stock.55 In short, trade liberalization isassociated with the spread of the industrial modelof agriculture – along with its detrimental conse-quences for both the health of humans and thebiosphere.

Finally, more trade is likely to increase theamount of ‘virtual resources’ used by nations. Theterm ‘virtual resources’ refers to the amount ofland, water or other resources embodied in theagricultural goods obtained from foreigncountries. The importing country thus utilizes bio-capacity of another country in order to sustain itsown economy. If a country is a net-importer, i.e. ifit is drawing on more virtual resources fromabroad than it provides to others, it takes a dispro-portionate share of the Earth’s resources. Environ-mentally this is not necessarily a problem as longas the exporting country disposes of abundantresources. However if exports wear ecosystemsdown to the point that locally or nationally regene-rative capacities are undermined, the importingcountry is in effect exporting environmentaldestruction. This will lead to environmentalburdens being shifted across the globe, creating

The explosion infood miles is the

Achilles heel of aglobalized market

in agriculture

Export-orientationsets the course forhigh-input farming

“What takes place in a free trade regime is not just theglobalization of markets but the globalization of market failure.

Agriculture is rife with market failures and environmentalexternalities, related in part to high-input industrial agriculture.

It is well documented that trade liberalization spreads the modelof industrial agriculture around the world. This in turn has

generated severe environmental problems.”

Timothy Wise, Tufts University, USA, at the North American Regional Consultation, September 2006

39

new classes of winners and losers. For examplethe EU, in 2000 with only 15 member states at thetime, already utilized 43 million hectares ofvaluable tracts of farmland in the South, whichamounts to about 30% of fields and pastureswithin the EU.56 The EU thus benefits from Latin-American soybeans, African cocoa, and Asianpalm oil. A similar scenario can be described forvirtual water. Depending on the respectiveclimatic conditions, for example, the production ofone kg of wheat uses between 1,000 to 2,000liters of water, one kg of cheese uses 5,000 to5,500 liters, and one kg of beef consumes up to16,000 liters of water.57 Important virtual waterexporters are the USA, Canada, Australia, Argen-tina, and Thailand, while for instance Japan, SriLanka, Italy, South Korea, and the Netherlands arelarge net importers.58

Both potential and known trade-related conse-quences are particularly acute with the emergingworld market in bio-fuels. There is no doubt thathumid tropical countries offer more suitableconditions than temperate zones for the produc-tion of bio-fuels that are derived from energycrops. Demand for bio-fuels is rapidly rising,especially in the urban centers of the world inresponse to the forecasted scarcity of petroleum-based fuels and the need to shift the global fuelmix from fossil fuels to renewable fuels. If tariffbarriers are removed, the economic prospects foragro-exporters will be very positive. As a result,agriculture may well enter a new age of renewedcommercial strength. In fact, Brazil is now poisedto become the most important exporter of bio-ethanol made from sugar cane. Moreover Argen-tina is planning the large-scale cultivation ofsoybeans, just as Indonesia and Malaysia arestepping up palm oil production for the export ofbio-diesel.59 However risks are high that unregu-lated trade in bio-fuels would take the world into

a new round of agricultural intensification, landconversion, and expanding virtual acres. The culti-vation of sugar and soy already today carries aheavy environmental burden – and a social

burden as well. An economic boom in bio-fuels islikely to worsen the situation. Moreover,grasslands and forests are likely to be convertedinto energy crop fields on a massive scale incountries such as Brazil and Indonesia, unlessfarmers are required to focus on productivity andto recycle agricultural waste material. And finally,the expansion of virtual acres could create seriousand irreversible environmental consequences formany exporting countries. It is unlikely that inter-national bio-fuel trade will realize its promise forthe welfare of countries unless measures aretaken to ensure that bio-energy plantations donot expand through land-grabbing, destruction ofvaluable ecosystems and the dispossession ofindigenous peoples and local communities. Tradein bio-fuels will become yet another driver ofenvironmental decline unless it is held to the mostrigorous standards of environmental and socialquality, and unless its expansion is matched by asimultaneous strengthening of indigenous andprotected areas as well as small farmers’ landrights.

2.4 Leeway for corporations

Nation states are the principal actors on the diplo-matic stage, but in the global market, neitherstates nor state-owned enterprises are thedominant actors, rather it is the private firm.Some four hundred years ago the East IndiaCompany became the first multinational firm.Today, there are over 60,000 transnational corpo-rations around the globe, with a total of some870,000 subsidiaries. Not only do they employ a

workforce of 53 million, they also control millionsof local suppliers and service firms.60 In particular,in agricultural markets the dominant power oftransnational corporations has emerged as aconsiderable challenge. High levels of concentra-tion in the food trading, processing and retailingsector impact not only on farm livelihoods, butalso in the way farming and livestock raising ispracticed, and the type and quality of food

“In the new market for bio-fuels, many of the issues mentioned in the EcoFair Trade report shine a spotlight on the problems withthe system at large: we face the problem of unsustainable farmingpatterns, declining farm gate prices, corporate concentration in the market, and asymmetries in trade relations. As for agricultural trade in general, we need regulated, eco-fairtrade for bio-fuels rather than free trade.”

Suzanne Hunt, Worldwatch Institute, at the North American Regional Consultation, September 2006

Trade in bio-fuelswill become yetanother driver ofenvironmentaldecline unless it isheld to rigorousstandards ofenvironmental andsocial quality

40

provided to consumers. Free trade agreements,such as the Agreement on Agriculture in the WTO,or regional agreements such as NAFTA or CAFTA,are grounded in the assumption that the mainobstacle to free trade is state intervention inmarkets. In fact, concentrated market power hasemerged as a primary reason for the failure ofmarkets. While liberalization aimed to dismantleborder protections, it had the effect of actuallystrengthening transnational cartels. Eco-fair traderules will have to include policy options that seekto re-democratize the food chain and strengthenlocal economies vis-à-vis transnational corpora-tions.

Faces of power

“We are the flour in your bread, the wheat in yournoodles, the salt on your fries. We are the corn inyour tortillas, the chocolate in your dessert, thesweetener in your soft drink. We are the oil in yoursalad dressing and the beef, pork or chicken youeat for dinner. We are the cotton in your clothing,the backing on your carpet and the fertilizer inyour field.”

This quote is from a corporate brochure of theUS-based corporation Cargill (2001), one of thegiants of global agribusiness – and the world’ssecond largest private corporation in terms ofrevenue. Cargill has operated since 1865. Since itsincorporation it has steadily led the ranks inseveral segments in the food economy. Forexample, it is the biggest single trader of corn inthe world, controlling a quarter of the global corn

market. It has the largest terminal capacity of anycompany in the US, while it enjoys enormouscapacities in Canada, Argentina and Brazil as well.It is among the three top beef producers in the US,and plays an important role in poultry productionthe world over. In terms of its operations, it ownsa worldwide transportation business, with ships,trucks, barges, and railcars, as well as grain eleva-tors for storage. Moreover, the Cargill empire isnot restricted to just selling and processing

commodities, but also includes a wide range ofservices, including banking, loans, investment,currency deals, risk insurance, shipping.61

Cargill, however, is but one of several giantfirms in the trading and processing sector,alongside its competitors Archer Daniels Midland(ADM), Bunge and Louis Dreyfus. Other sectors ofthe food system reveal similar patterns of marketconcentration, in particular among inputsuppliers, processors, and – more recently – retai-lers and supermarkets. Among input suppliers,for instance, the top 10 multinational seed firmscontrol half of the world’s commercial seed sales,while about 10 companies control 80% of theglobal pesticide market. One firm, Monsanto,controls 41% of the global market in commercialmaize seed and a quarter of the global soybeanseed market, while it sells the seeds for a striking88% of the total area planted in geneticallyengineered crops worldwide.62 The level ofconcentration among processors is extremelyhigh as well. For example, the top five cattleslaughter houses in the US together make up 89%of the market. And in Brazil only three companiesdeliver 86% of refined soy oil.63 Perhaps the mostdramatic development in market concentrationhas been the emergence of food retailers andsupermarkets as dominant global players.Constantly growing at a very fast pace, already in2003 the top 30 retailers shared 19% of themarket in Asia and Oceania, 29% in Latin America,and 69% in Europe.64

Needless to say, these corporations enjoyenormous power in the market. Increasingconcentration and globalization of certainsegments in the food economy today has madeagricultural commodity and food markets veryunequal. Many of these markets look like anhourglass with a large number of farmers at thebase selling to a small number of powerful andextremely globalized groups of processors, distri-butors, and supermarkets in the middle, who sellto a very large number of consumers at the top.65

In such a market, agribusiness firms often haveboth dependent suppliers, i.e. suppliers withnowhere else to sell their production, as well asdependent buyers. In this situation, the biggestrisk is that powerful players increase their profitsat the costs of all other actors, to the detriment ofthe overall efficiency and fairness in the system.

Market power in agriculture is not new. In graintrading, for instance, four of the top five firmstoday dominated the market 100 years ago, too.But these days, market power has reached

“In visits that I have made to Europe I have learned that thesituation of agriculture in North and South has many similarities.

Above all, like in our region, the European family farmers arestruggling with corporate concentration and agribusiness power.”

Felipe Iñiguez, MAELA, Mexico, at the Central American Regional Consultation, October 2006

Whileliberalization

aimed to dismantleborder

protections, itended up

strengtheningtransnational

cartels

41

another dimension acquiring important newcharacteristics that reflect the wider globaleconomic trends that marked the end of the 20thcentury. Bio-technological innovations in theareas of input supply and crop-engineering, aswell as technological advancements in transportand communications have revolutionized foodproduction, processing and distribution, and havefacilitated the concentration of power at points inthe food chain where these technologies arecontrolled. Consumers around the globe, not leastdue to the globalization of communication andmarketing strategies, are attracted to processedfoods from hypermarkets or snacks and refresh-ments from convenience stores rather than bylocal foodstuffs, thereby rewarding global overlocal producers. Trade rules have also played theirrole in the corporatization of the food system, asthe steady downward pressure on bordermeasures and tariffs has opened up markets inways that favor companies in a position to dobusiness on a global scale. This trend is likely toaccelerate. The further liberalization of servicesunder the WTO’s General Agreement on Trade inServices, and additional liberalization that willresult from regional and bilateral agreements, willimpede the regulation of corporations at thenational level. In the meantime small-scale produ-cers, independent growers, small and mediumenterprises, local retailers and market vendors,small cooperatives, family farmers and consumersare struggling to cope with the impacts of theincreasing market power and the further consoli-dation of a few dominant food corporations ontheir business – and the daunting challenge ofsaving their livelihoods.66

An important aspect of market power is theasymmetry in access to information faced by diffe-rent parts of the production system. Since trans-national corporations tend to control thebottlenecks in the hourglass through which muchof the production, processing and trade mustpass, they also control market information. Whennegotiating trade deals or contracting withfarmers, corporations can use their informationaladvantage to widen the price gap betweensuppliers and successive buyers, or to gouge onthe prices in other ways. With market power,corporations are able to pull profits away fromfarmers, concentrating profits on value-addingactivities and on food retail, as well as on the evermore elaborate technologies for farm productionthey offer, including genetically engineered seeds,expensive herbicides, pesticides and fertilizers,

or global positioning systems that determine howmuch of which input goes where on the farm.These inputs at times may increase the harvest.But as costs for industrial inputs rise and farmgate prices fade, corporations not only make itextremely difficult for farmers to earn a decentliving, they in fact drain money out of the widerrural economy.67

Power imbalances in the market not onlyenable corporations to control prices, but also toset quality standards for products and productionprocesses. Be it in textiles, computer hardware, orfood items, in recent years a large number ofcorporate standard schemes have emerged. Manyof these have been solely governed by the corpo-rations themselves, without the aegis of govern-ments or the proper participation of stakeholders.Supermarkets have even developed their own fairtrade and bio-food lines, in response to thegrowing interest of wealthier consumers.However, most of them lack meaningful participa-tion from the respective suppliers.68 While some ofthe corporate standard schemes were successful

in establishing basic labor or human rights inproduction, most of them have been designed outof a primary concern with marketing or long-termshelf-live concerns of global corporations.Farmers’ preoccupations or sustainable resourceuse are largely disregarded. For example, Nestléand Parmalat between them forced at least50,000 dairy farmers out of business in Brazilwhen they bought out milk cooperatives in the1990s and changed the standards for handlingand storing milk prior to purchase. They insistedthat farmers wishing to sell them milk install theirown refrigeration units on farms – a prohibitivecapital cost for many farmers, and a cost that wasnot justified by their output as small-scale produ-cers.69

Overall the emergence of standards, set byindustry without reference to governments, has aprofound impact on who can sell their producewhere. For instance, EurepGAP, a set of standardsdeveloped by a group of European retailers, has

“The farm crisis is largely a result of market concentration. InCanada, farm profits are at a record low, while corporate profits areat an all time high. Powerful corporations can skim profit off themarket, to the detriment of farmers and farm workers”

Darrin Qualmin, NFU, Canada, at the North American Regional Consultation, September 2006

Agribusinesscorporations infact drain moneyout of the ruraleconomy

42

been adopted by most of the dominant retailers inthe EU. Farmers who do not comply with thesestandards have hardly any access to the Europeanmarket – regardless of what kind of market accessconditions are provided officially by the EU.Schemes for tariff free market access that aredesigned to redress asymmetries, as for examplethe ‘Everything But Arms’ initiative to LeastDeveloped Countries, can become meaningless ifcorporate created standard schemes introducetheir set of market access conditions.

Worse than the introduction of corporatecreated standards is corporate production thatlacks appropriate standards altogether. Efforts toundermine governments’ attempts to establishquality standards for process and production arealso a problem. Transnational traders and retai-lers, and in particular industrial livestock produ-cers, increasingly shift their investments in foodproduction to countries where environmental andsocial requirements are low, and source theirproducts from areas where laws and standardsare neither properly enforced nor monitored.70 Atthe same time, they challenge governments,

especially those in poorer countries, to keepstandards low as a condition for maintaining theirinvestments. As they can pit countries againsteach other in the global market, they enforce akind of political inertia, which results in a ‘stuck atthe bottom’ trend in standards and qualitycontrol.71

Likewise, corporations influence rule-makingat the national and international level throughcorporate lobbying. Dan Amstutz, a former Vice-President of Cargill, for example, drafted the initialtext of the WTO Agreement on Agriculture; RufusYerxa was US Ambassador to the GATT and servedfor a while as a lawyer for Monsanto, and thenbecame Deputy Director of the WTO responsiblefor intellectual property issues. The ease withwhich agribusiness executives move in and out ofgovernment offices in many countries is proble-

matic. In part there is the risk they will neglect thepublic interest in favor of promoting the interestsof the corporate sector. More generally there is aproblem that their background and experience isover represented, while the experience of smallfarmers, or farm worker unions, or consumers istoo rarely represented in the higher echelons ofgovernment and supranational administrations.Yet trade policy continues to be set by exportersand importers in collusion with trade officials.Today more than ever, those officials must bemade accountable to protect the wider concernsof agriculture, especially the public interest in asustainable, just and safe food system.

Transnational commodity chains

In colonial times, when companies started toweave business nets around the globe, theyusually imported inputs that were otherwise notavailable, or exported specialty goods to foreignmarkets. Gold and glass beads, spices and textilescrossed borders, and were handed over fromproducers to traders to consumers. Later on, largecompanies started to set up offices in severalcountries, and eventually grew into multi-nationalcorporations. Ford, Fendt or John Deere, forinstance, built plants in many regions of the worldto produce their tractors and machinery close tothe final market. During the last couple ofdecades, the era of globalization brought aboutthe rise of trans-nationally operating businesses.Transnational corporations source raw materialsand intermediate products from around the globeso as to involve production facilities in multiplecountries in the processing of just one givenproduct.

Transnational commodity chains are increa-singly common in all aspects of economic life, andagriculture is no exception. Much as clothingmight be made from US cotton, sewed intogarments in China and then sold in Europe, so dosupermarkets for well-to-do consumers increa-singly offer out of season foods by sourcing fromfarmers under contract on the other side of thehemisphere. Traditional commodities, too, arebecoming integrated into transnational foodchains, as soy grown in Brazil, for example, mightbe milled into cake in the EU and then re-exportedto a factory farm in Asia as animal feed, while thesoy oil is sold to an EU food processor. As a result,the globalization of economic relations is takingplace primarily among and within corporations.Today two-thirds of all world trade is carried out by

“The ‘campesino’ is always the weakest link in the commoditychain. For instance in Brazil, in the tobacco sector,

90% of the production is in the hands of family farmers, but theseproducers are at the mercy of high price fluctuations and

conditions which are imposed on them by ‘American Tobacco’and other tobacco companies.”

Altemir Tortelli, Fetraf-Sul, Brazil, at the South American Regional Consultation, August 2006

43

transnational corporations, with more than half ofit entirely among their scattered productionlocations.72

In transnational commodity chains, marketpower takes on a new character. Conventionally –and in agriculture still prevalent today – acompany achieves market power throughhorizontal integration; it then dominates onegiven point in a production chain, such as in theheavy farm machinery market. More recently,vertical concentration has emerged as an impor-tant source of market power in agri-food systems.Vertical concentration refers to the dominance ofone firm at several if not all points along a commo-dity chain. For instance 90% of US chicken isproduced in a vertically integrated chain, where afirm contracts with a poultry grower and provideseverything – chicks, feed, veterinary services,vaccines – and buys the chickens; those that makethe grade, at least.73 This model is now spreadingacross the globe, particularly to Asia, where theThailand-based transnational Charoen PokphandGroup (CP) has emerged as the largest agro-industrial corporation. CP runs operations inlivestock, fruits and vegetables, grain and feedproducts, convenience stores and supermarkets,shopping malls and fast food outlets, whilepoultry is the Group’s most important ‘product’. Atone end of the chain CP has established 109 feedmills in China, which provide feed for the chickens,among others, while at the other end, CP operatesKentucky Fried Chicken franchises in thirteen ofChina’s largest cities. In the late 1990s, thesefranchises were serving 75.5 million birds a yearto consumers. CP also exports large quantities ofchicken products to foreign retailers, such as toTesco, the largest supermarket in the UnitedKingdom.74

As in poultry, transnational commodity chainsall serve the purpose to source around the globeeach economic activity from farm input throughproduction, processing, distribution and retailingwhere costs are lowest, or for that matter, wherethe highest profits can be maximized. Throughrelocating and global sourcing, corporations arethus able to maximize external costs, and to avoidenvironmental, social and health costs they wouldotherwise bear where production standards andlabor costs are high. The externalization of costsis most obvious in the industrialization of farmingand livestock practices. In fact, the consolidationin the food system is a main driver behind theindustrialization of agriculture the word over. As amore centralized, consolidated processor will

generally prefer to deal with more centralizedretailers than the varied marketing outlets of atraditional market, by contrast, it is unlikely todeal with thousands of small farmers that offerdiverse crops in relatively small quantities. Forinstance, nearly 90% of Carrefour’s goods sold inIndonesia are domestic products, but the majorityof them originate from Unilever, Nestlé, andProcter & Gamble operations.75

One instrument that enables corporations tocontrol commodity chains is contract farming.Through contracts, for instance, Dole establishesdirect relationships with Philippine asparagusgrowers to serve the Japanese market, just as thegiant South African supermarket Shop Ritecontracts with small Zambian green bean produ-cers through its Zambian sister companyFreshmark.76 Farmers are often open to contracts,because their biggest risk is an uncertain price.Locking in a price through a contract can be a hugeasset, even if it means forgoing the chance of awindfall should prices be high at harvest orslaughter time. Sadly, to date the dominantpattern of contract farming is exploitation ratherthan cooperation. Hog and chicken production inthe US, for example, is dominated by contractsthat do not adequately serve producers – nor thewider public. The farmers raising the animalsbarely earn enough to make ends meet, andanimals are kept in appalling conditions.77 Thecase of contract-farming with high-value commo-dity producers in Kenya shows that farmers areforced to maximize yields, which multiplies soilerosion and environmental pollution, while theirfamilies still risk increased food insecuritybecause they are forced to devote all their land toexport rather than food crops.78 Often contractsare written in such a way as to impose the risk oflow prices on farmers, with options for the buyersto pay less if market prices are down when thefarmers deliver their products. Contract-farmingpracticed this way becomes a means of sustainedmarginalization, rather than sustainable integra-tion into the global economy.

These are some of the ways deregulated tradestrengthens the advantages of transnationalcorporations. For transnational agribusinesses,the elimination of national trade barriers is crucialso they can access an abundant and cheap supplyof commodities wherever it best suits themaround the globe. As more cross-border trade isconducted intra-firm, trade barriers become aninternal cost for the company, increasing theirinterest in eliminating barriers. Deregulated

The consolidationin the food systemis a main driverbehind theindustrializationof agriculture

44

markets thus directly serve transnational corpo-rations’ interests. However, farmers and localprocessors, face a number of increased riskswhen borders are opened. If governments want todesign a trade regime that empowers smallfarmers, managing these risks requires rules thatconstrain transnational corporations’ market

power and that strengthen small and mediumrural players. Strong guidelines to governcontracts along transnational commodity chainsmay offer a solution to ensure small farmers a fairshare in the trading, and require corporations tocomply with social and environmental processand production standards.

Most aridcountries cannotcompete with the

agriculturalsuperpowers ofthe subtropical

and temperateregions

2.5 Enduring asymmetries

Imagine, for a short moment, the famous golf starTiger Woods playing golf against you. He sinks theball in only three strikes while you struggle hardto hold the iron correctly, and probably need threestrikes to hit the ball once… Would this match befun for you? Or, imagine Champions Leaguewinner FC Barcelona competing against the teamof Tlaxcala, a tiny town in Mexico, on a soccer fieldthat is facing downhill towards the half ofTlaxcala. Would this be a fair play? Who in theworld would want to watch such a match on TV?Still these are basically the conditions prevailingin the global trade arena. Hong Kong against

Haiti, Brazil against Benin, the US against Niger.The ‘one-size-fits-all’ prescription of eliminatingtrade barriers across countries regardless of theireconomic strength puts less competitivecountries at a disadvantage; it forces weak andstrong players to compete in the same league.Moreover, what has euphemistically been calleda level-playing field in trade competition, is inreality a set of rigged rules that tilt the field to theadvantage of the powerful countries. Yet de-rigging the rules is not sufficient, as free tradeplays into the hands of the strong. Instead, underconditions of glaring inequality, rules are only fairif they favor the weak over the strong. Just as ingolf where weaker players are granted extrastrokes (a ‘handicap’) for a given course to allowplayers of different proficiency to play againsteach other on equal terms, in a fair trading system

weaker trading partners should be givenallowances that are not available to the strongerones.

Layers of asymmetries

Before considering rules, it is advisable toconsider the facts. For even in the absence of anyrules there are asymmetries in place that largelydetermine a country’s opportunities in the‘league’ of global trade competition. Geographicasymmetries are the mainstay of trade asymme-tries, but the socio-economic structure of theagricultural sector or the institutional capacitiesof countries in negotiation diplomacy need to beconsidered respectively.

Flying smoothly through cyber space withGoogleEarth, one can click on pictures that revealthe destiny of each countries’ agricultural system.Topographic, climatic, and eco-systemic endow-ments vary greatly, with mountainous regionshere and fruitful plains there, with hot and dryclimates in some countries and temperate, moistclimates in others. As agriculture is an ecosystem-based endeavor, the performance of a country’ssector largely depends on its natural endow-ments. And these endowments – as with human-built capital such as railways, canals, and know-how – in turn determine a country’s competitiveposition on the world market. While the tempe-rate and subtropical belts on both hemispheresenjoy prime conditions, sub-Saharan Africa is agood example of the limitations imposed bynatural endowments. Only 11% of total land areain this sub-continent is crop land, and around29% is permanent pasture. The rest is comprisedof forests and woodlands, savannahs, barrenlands, or deserts, besides a small share of urbanareas. Thus by their very nature, most scarce orarid countries cannot compete on equal termswith the agricultural superpowers of the subtro-pical and temperate regions.

“It is misleading to look only at asymmetries between countries. We have to address asymmetries between the interests of different

sectors of the population, and the various actors in the market.Renegotiating the trade relations between countries wouldn’t be

enough to tackle the asymmetries problem.”

Bishelly Elías, CIPCA, Bolivia, at the South America Regional Consultation, August 2006

45

However, these geographic asymmetries havebeen exacerbated by human activities. Preciselythose countries that are equipped best with fertileland and appropriate climatic conditions haveinvested most heavily in improving agriculturalproductivity. Farmers in the EU, the US, or Canadaare not only blessed with the soil they are born on,they have also received massive investment andsupport in order to utilize it in the most effectivemanner.79 Overall they enjoy working in a secureeconomic and social environment. In contrast,many agricultural sectors in countries of theglobal South are undermined by high levels ofpoverty, illness, and insecurity. In the globalmarket, these fragile social and economic condi-tions in fact work to a country’s competitive disad-vantage. How can, say, the sickle-swinging Malianpeasant with less than 1 hectare of farmland,deficient access to water and no access to supportor credit ever compete with the highly capitalizedCanadian wheat farmer with more than 100hectares of farmland? Moreover, social inequali-ties within a given country may predetermine whorealizes benefits from trade, or who ends up as aloser. The lower capabilities of small farmers toenter foreign markets as compared with respect tolarge farmers or as between local businesses andlarge corporations, as well as gender inequalities,are a major obstacle in this sense, with the resultthat women along with small-scale producers andtraders are disproportionately representedamong the losers.80

In negotiations at the WTO, as well as inbilateral and regional trade talks, these geogra-phic and socio-economic asymmetries arecombined with institutional and political asymme-tries. For example, eleven of the thirty LeastDeveloped Countries, along with another ninedeveloping countries, cannot afford to maintaindelegations at the WTO. Many other developingcountries maintain a presence with only one ortwo officials available to cover umpteen WTOmeetings per week and to represent their govern-ments at all the other international institutions inGeneva. Meanwhile the US, Japan, or the EU aresupported by armies of commercial staff, lawyers,academic consultants, and special advisers,monitoring all aspects of the negotiations inmicroscopic detail. Things have improvedsomewhat since the Cancun Ministerial Confe-rence in 2003; Southern countries haveassociated in groups, thus strengthening theirrepresentation in negotiations. And Brazil andIndia, for instance, have built up highly capable

delegations and now belong to the ‘inner circle ofpower’ at informal WTO negotiations, togetherwith the US, the EU, Australia, and Japan.However, stark differences in negotiating capaci-ties enable this minority of countries to slope theplaying field towards the majority, and to shape

the rules in their interest. For too many countriesgeographic, socio-economic and institutionalasymmetries in trade relations add up to a tripledisadvantage.

Rigged rules

The fact that the whole trade negotiating processis not taking place in a limbo, but is framed withina complex web of international power politics,allows space for dominant players to abuse theseasymmetries. Since the entry into force of theGATT, and especially after more and more develo-ping countries have acceded to it since the 1960s,the few economically strong and institutionallycompetent countries have consistently exertedpressures and arm-twisting practices on theweakest. Despite the GATT’s and later the WTO’sprinciple of ‘one country, one vote’ and theguarantees of consensus, these countries deter-mine negotiations from the very beginning: in theway they set the agenda, through the weight thatcountries’ proposals are given during negotia-tions, until the final rules are approved. All toooften, this includes informal pressures, such ascalls to capitals or threats to reduce aid flows. Thisconstellation – which by no means is limited totrade negotiations – has resulted in a set of‘rigged rules and double standards’ in the traderegime, to the disadvantage of many.81

Still taking at face value the promise of a levelplaying field in world trade held out by the North,Southern countries have persistently pinned theirhopes on greater and easier access for theirproducts to rich country markets. Governmentshoped to export their way out of under-develop-ment. However Northern countries continue to

“An analysis on the basis of comparative advantages is misleadingbecause a country as such is just an abstraction. If we look at thedifferent economic players within a given country, this will showthat trade liberalization so far was not about advancing the wealthof nations, but about advancing transnational companies and theircontrol of the market.”

Sergio Schlesinger, FASE, Brazil, at the South American Regional Consultation, August 2006

46

engage in targeted protectionism and exportdumping. During the Uruguay Round of tradenegotiations, for instance, when agriculture wasnegotiated for the first time under the GATT,Northern countries did agree to eliminate anumber of non-tariff barriers. However, theyreplaced these measures with prohibitively hightariffs, so in fact very little new trade opportunitieswere created. Moreover, as reductions wererequired on the average level of tariffs, Northerncountries could achieve the target by reducingtariffs on relatively unimportant goods by agreater percentage, while tariffs on sensitivegoods were lowered proportionally less. In effect,Southern countries were prevented from takingfull advantage of those markets where at leastsome of them would be competitive, such astextiles and agriculture. At the same time many ofthem had been forced to widely open theirborders under Structural Adjustment Programs bythe Word Bank and the International MonetaryFund. Taking exception for themselves to the freetrade standard they impose on others, theNorthern countries refuse to play by their ownrules.

Not only do the rules privilege powerfulplayers, but so does the application of the rulesthrough the Dispute Settlement Body. This body isone of the outstanding features of the WTO, sinceit allows one member state to denounce andretaliate against another when WTO rules havebeen violated. Unfortunately, however, the effec-tiveness of this mechanism has been seriouslyundermined by the lack of capacity of an impor-

tant number of WTO members to initiate a panelfor the resolution of their complaints. Technicaland financial constraints on top of politicalweakness are permanent obstacles for poorcountries that might attempt to bring a caseagainst a powerful nation. Moreover as regardsagriculture, the countries of the North includedthe so-called ‘Peace Clause’ – a carte blanche to

violate the rules and to continue granting lavishagricultural subsidies, safe in the knowledge thatthese could not be challenged for a period of nineyears under the WTO Subsidies Agreement. Inshort, in agriculture trade the ‘Peace Clause’maintained a license for the North to continueharming the South.82

The fallacy of export-orientation

Notwithstanding this truly tilted playing field,many trade diplomats still regard exports as thepanacea against economic underdevelopmentand for the alleviation of poverty. Exports areexpected to be a means to save ailing economiesfrom debt, lack of foreign currency, stagnation,and inefficiency. In particular, they are said to playa key role in generating foreign exchange thatenables the acquisition, through imports, of newlyaffordable goods that are necessary for increa-sing economic growth and technologicaldynamism, and enhancing domestic productivity.Thus many countries that supposedly possesstheir comparative advantage in agriculture havetrimmed their farm sector towards export-orien-tation. With the existing asymmetries and riggedrules in place, however, only a few developingcountries de facto experienced rising exportrevenues after trade liberalization. Most of themeither faced a stagnation in export volumes orfalling prices in export value. In fact, between 1961and 2001 real prices for agricultural commoditieson the world market have declined by about 2percent per year, but the average prices of agricul-tural commodities sold by Least DevelopedCountries fell by almost 70 percent relative to theprice of manufactured goods.83

It is questionable, however, whether a level-playing field in export-oriented agriculture bringsabout unequivocal benefits. In particular, export-oriented agriculture in many regions of the Southhas generated considerable problems. Incountries where an insufficient amount of food isproduced for the domestic market, export-oriented agricultural production swallowed upland that could otherwise be used to producestaple foods; thus export-orientation often wenthand in hand with an increase in food imports tofeed the population. Since it is not the broad partof the population that gains from exports, export-orientation has often not reduced poverty, but infact increased it. For in most countries the poten-tial gains from exports are highly unequally distri-buted among different agricultural groups, and

“There is a big difference between export of surpluses, and export-orientation. The moment a country aims at export-orientation, it will change its model of agriculture, and the structure of theagricultural sector. The case of Senegalese tomato production

illustrates that farmers often do not gain but lose from suchexport-orientation.”

Emmanuel Ndione, ENDA – Graf, Senegal, at the West African Regional Consultation, February 2006

Northerncountries refuse

to play by the freetrade standards

they impose onothers

47

among men and women. As a broad body of litera-ture demonstrates, the main beneficiaries ofexports are agro-industrial firms, especially thosethat are involved in basic processing of food, suchas rice mills, sugar refineries, or poultry abattoirs,as well as more advanced agro-industries in thedairy sector, fruit processing, oil preparation, andthe like.84 Small farmers, in contrast, who arerather locally oriented, with limited access tonatural resources, capital and infrastructure, andespecially women are largely neglected fromexport earnings. In between these two groups aremedium-sized producers with some managerialcapacity, such as coffee growers or vegetable,fruit, and ornamental producers. If in the vain ofexport-orientation, farms grow to a certain sizeand achieve the capacity that is needed forentering the export business, this consolidationinto larger farms once again displaces peoplefrom their land. At the same time, the UN Food andAgriculture Organization (FAO) has shown, thenumber of individuals absorbed into alternativeemployments, e.g., as laborers on export-orientedfarms, is usually less than the number displaced.Therefore, as the FAO clearly points out, thegreater the number of people engaged in theagricultural sector of a given country, the lessappropriate it is to trim the sector for exportcompetition.85

This is a main reason why even in countrieswhere agricultural exports thrive, they more oftenthan not have failed to advance poverty alleviationand human development. This is true for richcountries, as for example, Canada currentlysuffers from its lowest farm incomes since theGreat Depression and the 1930s, while at thesame time the Canadian agribusinesses’ profitsare the highest in history;86 and it is all the moretrue in Southern countries. Thailand, for instance,an often quoted success story, grew to be Asia’slargest food exporter, the largest rice exporter inthe world, and the fourth largest poultry exporter.Yet while exports increased 52% between 1995and 2000, about 40% of rural Thailand remainstuck below the poverty line. For many ricefarmers whose exports flourish, food insecuritycontinues to be a reality. Real farm income has notincreased since 1977 as farm gate prices remainlow, while spending on seed, fertilizer, and equip-ment rose over the same period. Many farmershad to finance their production through loans, butthe low farm gate prices cannot cover paying theirinterest rates, deferring their loans, and at thesame time ensuring their families’ livelihoods.

Thus many became seriously indebted and wereforced to sell their land and give up farmingaltogether. A concentration process was set inmotion, in which only the wealthiest and biggestfarms were able to persist, maximizing yields atany environmental and social cost.87 The Asian

Development Bank concludes: “Thailand’s pastgrowth has been based upon destructive patternsof exploitation of natural resources and environ-mental systems… The environment has beensignificantly degraded to the point where it mayimpede further economic development... Intensi-fication has also led to a number of socialproblems, contributing to the skewed consolida-tion of wealth while increasing landlessness,joblessness, and urban migration of the unskilledand unsuccessful”.88

In fact, environmental impacts are often theseamy side of exports. Mozambique’s exports insugar, to cite one example, have provided impres-sive employment opportunities and have turnedthe country’s poorest region, Sofala, into the onewith the lowest national poverty rate – althoughwages and work conditions on the plantationsand in the mills are still very poor.89 Yet apart fromthe fact that these export earnings largelydepend on preferential access to the ‘artificial’market of guaranteed prices in the EU, which isnow going to be dismantled, the intensiveproduction of sugar cane goes along with severedegradation of soils and depletion of water tablesin this water-scarce country.90 These types ofexports are not sustainable. They will certainlybring about long-standing environmental andsocial costs and offset opportunities for thegenerations to come.

To be sure, trade as such cannot alone be heldaccountable for the problems arising fromunsustainable farming practices. Indeed, Oxfamhas suggested that sugar exports from Mozam-bique could be made compatible with moresustainable production: “Both in Zambia andMozambique, there seems to be ample opportu-

“Access to international markets is not a solution for the‘campesinos’, whose problem, before anything else, is the lack ofaccess to their own local markets which are flooded with importedproducts at low prices. Export orientation has led to theabandonment of the countryside and rural marginalization.”

Ramiro Téllez, La Vía Campesina, Honduras, at the Central American Regional Consultation, October 2006

The more people inthe agriculturalsector, the lessappropriate it is totrim the sector forexport competition

48

nity for increased efficiency in water use. The vastmajority of land is now under flood irrigation, atechnique that involves high water use and leadsto high losses of fertilizer from cane fields resul-ting in pollution. Drip irrigation, a much moreexpensive but less labor-intensive technique,could radically reduce water and fertilizer losses,save money, and reduce pollution.”91 Yet all toooften, such important sustainability measures arenot considered when agriculture is turned into anexport business – while more often than not,export orientation intensifies production, andthus aggravates the problems of unsustainablefarming. For the problem in most countries hasbeen that exports, rather than being one elementof an overall national development strategy, have

either been its main engine and focus at theexpense of other objectives or else have remainedin enclaves separated from the wider economy.

Instead, realizing the potential gains fromexports requires an overarching domestic policyframework in which export activities areembedded as one amongst other means. Such aframework would need to guarantee the right tofood as well as other economic, cultural and socialhuman rights and ensure that the potentialeconomic benefits from exports are fairly distri-buted amongst the various actors in the foodsystem, while production for exports shouldneither undermine the resilience of agro-ecosy-stems, nor deplete the natural resource base at anon-renewable rate.

Too often, exportshave been made the

main engine ofdevelopment at the

expense of otherobjectives

49

Trade liberalization empowers transnationalbusiness by disempowering national politics. Itfollows the philosophy that state failures by farsurpass market failures when it comes to promo-

ting the common good. Consequently, structuraladjustment programs as well as obligations underthe WTO and other free trade agreements havesought to restrict the scope of national politics

Part 3 Solutions

3.1 Enlarging national policy space

50

through the regulation of trans-border flows inorder to remove barriers to the free flow of goodsand investments. Moreover, as the WTO considersbarriers not only tariffs or quotas at the border,but non-tariff measures as well, such as pricecontrols, investment rules or health standards,the power of societies to protect the publicinterest according to their collective preferences isseriously weakened.92 This contradicts theprinciple of Democratic Sovereignty thatrecognizes a society’s right to self-governance anddiversity. More specifically, when faced with thepressures of trade deregulation, governmentstend to downplay the importance of providing foruniversal access to social and environmentalcommon goods.

Indeed, it is hard to see how essential publicbenefits can be effectively provided for unlesspolitics assumes responsibility for it on thenational and sub-national level. For instance,safeguarding the human right to food may call forreviewing land tenure laws. On the other hand,redirecting farming practices towards a regenera-tive agriculture may require a particular system ofeconomic incentives and disincentives, or linkingcrop cultivation and industry may imply changesin investment policies. In particular, with regard tolivelihood rights, environmental protection, andsustainable economic development, it is only inthe national space where situation-specificpolicies can be implemented, which not only grow

out of the a political consensus, but which aregrounded in local knowledge and commitment.Without a certain amount of ownership by thepolitical community, it is likely that commongoods will not be adequately protected, therebytwisting the welfare balance of trade into thenegative. Similar arguments underlie the 2004UNCTAD XI concept of “political space”, which,however, tends to refer only to developingcountries.93

From this perspective, in particular for develo-ping countries, it is clear that trade reforms are

misconceived if they privilege export promotionover import governance. For the management ofimports is more important for the well-being of asociety than the facilitation of exports. Thequestion is not – as in the wake of the WashingtonConsensus – what countries need to be integratedinto the world market, but what they need toachieve equitable and sustainable development.Since less powerful economies are particularlyvulnerable to cheap and unqualified imports, theymust be guaranteed the right to regulate access totheir internal markets in order to best protect theirhuman development needs. It was always amistake to believe that fairness in world trade isachieved simply by providing better access for theSouth to Northern agricultural markets. Instead,what matters more is the ability of weakercountries to regulate imports in order to protect,if necessary, young industries, small farmers orindeed a fragile environmental base.

However, it has to be admitted that the plea formore national policy space can become counter-productive in the context of authoritarian orcorrupt governments. Unfortunately, there is alarge number of governments that are notgoverned by democratic regimes or where theyformally are, they continue to promote policiesthat serve elite minorities instead of the majoritiesof citizens. And in other cases, many governmentssimply do not function efficiently and lack theinstitutional capacities to implement effectivepolicies. However, policy space is the basis fordomestic social forces to demand and secure theirdemocratic rights.

For the sake of livelihood security

As agriculture remains the main source oflivelihood for the majority of populations in mostdeveloping countries, the sensible policy forgovernments and other policy makers is to ensurethat import liberalization takes a back seat whendomestic livelihoods and food security are atstake. More so, in the light of the human right tofood, political authorities have the obligation –and consequently the right with respect to inter-national rules – to protect, sustain and supportthe necessary conditions to encourage produc-tion of sufficient healthy food in a way thatconserves the land, water and ecological integrityof a place, and respects and supports producers’livelihoods.94

Above all, this obligation requires adequatespace for the governance of imports to protect

“Too often it is taken for granted that governments represent theirpeople. However governments are often focused on balancing theirnational accounts, with little concern for whether small producers

gain or lose. Much policy space is actually abused by governmentsin order to support powerful interest groups and corrupt elites.”

Babacar Ndao, FONGS/CNCR, Senegal, at the West African Regional Consultation, February 2006

The governance ofimports is more

important for thewell-being of a

society than thefacilitation of

exports

51

small farmers and artisans from devastatingimport surges. For many developing countriesthat have lost this space as a result of structuraladjustment, they are often unable to control thevolume of cheap food or dumped products thatare flooded into their markets. But the availabilityof cheap imports will not ensure national foodsecurity if domestic agricultural production isundermined by imports of food or non-foodcrops. For example, in India accelerated importsof edible oil products drove away countlessproducers of sunflower, coconut and palm oil; inGhana stockbreeders and butchers cannotsurvive against the massive volume of cheapmeat imports from Europe; and in Mexico maizefarmers have been driven to the wall by subsi-dized exports from the United States. Importsthat undercut domestic prices reduce consump-tion costs for urban dwellers but undermine thelivelihood of countless people engaged in agricul-ture and food production. In such circumstances,it is better for governments to restrict trade,rather than to put a large number of rurallivelihoods at risk.95

While there have been attempts by govern-ments to raise border protection, the remediesavailable within the WTO and bilateral agreementsare limited. The various agreements in the WTO,including the GATT and the Agreement on Agricul-ture, theoretically offer Member States someoptions for safeguard measures and qualitystandards. But in practice, these have been oflimited use to countries and have proved to becompletely inadequate in addressing price volati-lities in the international market.96 In the DohaRound of negotiations, countries of the ‘Group of33’ introduced a Special Safeguard Mechanismthat was both price and volume-triggered;however no proposal of quantitative restrictionson imports has been placed on the agenda.Indeed, the suggestion for a safeguard mecha-nism was undermined by the central focus of theRound on unrestrained market access in bothNorth and South. Such a focus implies that tariffsor other instruments of border protection aregradually removed rather than redefined in orderto create a space for the domestic economy todevelop. In contrast to an open border politics,this report maintains that countries shouldprovide more policy space to use both tariffs andquantitative restrictions. This may include price-and volume-triggered tariffs, price bands, as wellas quantitative restrictions (e.g., quotas), or othersafeguard mechanisms.97

For the sake of sustainability

In addition to securing farmer livelihoods byprotecting them from devastating import surges,countries need policy space to implement policiesand measures that chart their self-defined path tosustainable development. This is consistent withthe principle espoused in the Johannesburg Planof Implementation of the World Summit onSustainable Development that “each country hasthe primary responsibility for its own sustainabledevelopment, and the role of national policies anddevelopment strategies cannot be overempha-

sized”.98 Following the proposed principle ofEconomic Subsidiarity, such an approach calls forpolicies that make domestic production andprocessing of food a priority, along with thedevelopment of domestic markets. Furthermore,following the principle of Environmental Integrity,it calls for policies that discourage pollution andoveruse of soils and water, while encouraging thetransition towards a biodiversity-based agricul-ture. In the light of sustainable developmentobjectives, the governance of imports is not just amatter of restricting cheap imports, but rather oflinking the import of goods, services, and capitalto sustainability considerations. Countries mustretain authority, for instance, to influence flows offoreign investment, to direct the activities of trans-national corporations, to link domestic produc-tion to strict social or environmental standards, orto design support schemes to ensure healthy ruraleconomies.

National regulation has been increasinglyimpeded in the past two decades by the introduc-tion of structural adjustment policies in the 1980s,by the increasing number of side agreements tothe GATT, and later on by the WTO, including theAgreement to Technical Barriers to Trade (TBT),the Agreement on Sanitary and PhytosanitaryMeasures (SPS), the General Agreement on Tradein Services (GATS), or the Agreement on Trade-Related Investment Measures (TRIMS). As theseand other agreements restrict technical regula-

“How and why should we produce for others if we can’t evensupport ourselves? More important than gaining access to foreignmarkets is the need to develop internal markets. Therefore it is keythat countries are able to protect themselves from agriculturalimports.”

Eloi Nombré, Confédération Paysanne du Burkina Faso, at the West African Regional Consultation, February 2006

Countries needspace to implementpolicies that charttheir self-definedpath to sustainabledevelopment

52

tions, domestic support measures, or the imple-mentation of health and social standards, publicpolicy loses its capacity to support society inprotecting public goods. Furthermore, as theGATS – and as well, some bilateral and regionalagreements, such as the North American Free

Trade Agreement (NAFTA) – extend the non-discri-mination principle beyond products and servicesto actual companies, this creates seriousproblems precisely in the regulation of (agricul-tural) services, such as banking or extension,which are central to livelihood security.

However, countries must assert their authorityin restricting the activities of foreign corporationsif they conflict with national anti-trust legislation,or if they abuse their market power for pricemanipulation or the building of cartels. Furtheron, national governments might need to regulatecorporate activities in order to protect theinterests of domestic producers. For example,contract-farming by foreign supermarket couldbe conditioned to retain a fair share of the profitsfor local farmers. Governments might want toimprove the inter-linkages between farmers, localprocessors, small-scale retailers and consumersin their rural areas, as well as between foreigncorporations and local economies, so as to keepas much value creation as possible in the regionand to protect against the flight of capital. There-fore, policy space for local content policies or forlegislation on requirements for joint ventureswith local firms must be retained (more in chapter3.5).

Likewise, policy space must be preserved forspecific support measures. For instance, domesticsupply management schemes will not functionproperly unless they are linked to effective bordercontrol measures that restrict imports of thoseproducts under the scheme (more in chapter 3.3).The same holds true for state trading enterprisesor state-owned marketing boards. If such institu-tions should substantially support farmers in fooddistribution and marketing, guarantee minimumprices, and stabilize price levels through bufferstocks or storaging, they will require correspon-ding domestic legislation that controls importprices and quantities, and mandates suchmanagement of trade flows at the national level(more in chapter 3.5).

In addition, countries must be able to defendtheir right to impose measures for the sake of foodsafety, food quality, and environmental security,since these are important measures for preven-ting food-borne illnesses, and to protect thenatural resource base and the resilience of ecosy-stems. This requires increasing the capacity ofcountries in developing not only stronger andmore effective regulatory measures, such asprocess and production standards for sustainablefarming, processing and retailing, but alsostandards for the installation of monitoring andrisk assessment systems. It would defy theprinciple of Democratic Sovereignty if suchdomestic measures would become subject to amultilateral review mechanism that decides upontheir necessity, let alone their legitimacy.

Greater national policy space is needed:

■ To protect small farming systems from importsurges through border control policies, includingtariffs, quotas, and price- and volume-triggeredsafeguard measures;

■ To ensure the functioning of support policies,such as supply management or state tradingenterprises, through selected border controlmeasures;

■ To allow for domestic regulation on food safety,food quality, and environmental security;

■ To maintain a level-playing field betweenresponsible domestic producers and importersthrough corresponding quality conditions onimports; and

■ To implement guidelines for foreign corporations,including local content policies or conditions onforeign direct investment for increasing domesticvalue creation.

“Policy space is not about isolating ourselves from the rest of theworld. It is about shaping our policies according to the specific

conditions of a certain country and region, considering andprioritizing the right of people to consume culturally adapted,

healthy, and sustainably farmed products.”

Eva Carazo, Movimiento de Agricultura Orgánica Costarrricence, Costa Rica, at the Central American Regional Consultation, October 2006

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Ensuring thesocial andenvironmentalmulti-functionality ofagriculture callsfor domesticsupport

3.2 Investing in multi-functionality

Agriculture in most countries is in a fatal bind. Onthe one hand, farmers are struggling with decli-ning farm income and corporate concentration,but on the other hand, they are expected toprovide indispensable public benefits withoutremuneration. In particular, small and medium-scale farmers in fragmented ecological settingsare highly vulnerable to competition pressuredue to biased agricultural policies and subsidiestowards industrial agriculture and malfunctio-ning market mechanisms in the global market.For this reason governments across the world areconstrained to provide institutional or financialsupport to agriculture for securing food produc-tion and sustaining family farms. Except incountries with vast expanses of agricultural landand little traditional farming, small-scale andfamily farming is unlikely to survive unless it issupported by public policy measures. Further-more, just as support is required to ensure theviability of social common goods, it is alsorequired to underpin the provision of environ-mental common goods. Under competitive condi-tions, farmers must be awarded for producing –as economists say – positive externalities, suchas clean water, biodiversity, and rural lands-capes. In both cases, it is the so-called multi-functionality of agriculture, which is at stake, andwhich distinguishes it from other businesssectors.

Against this backdrop, the long-runningdebate on the reduction of domestic support foragriculture, the second pillar of reform under theAgreement for Agriculture, manifests itself in anew light. While a number of economists andpoliticians view domestic support policies as astronghold of protectionism to be entirelydismantled, appreciation for the non-marketabledimensions of agriculture suggests a shift inperception. For ensuring the multi-functionalityof agriculture – in both the social and the environ-mental sense – calls for domestic support. Insofaras this insight is taken seriously, the search forfair and environmental trade rules changes infocus. Attention will be directed towards the

proper level and structure of domestic supportrather than its elimination.

Nevertheless, it goes without saying that thepresent systems of domestic support are woefullyinadequate in promoting multi-functionality. Asto its social side, agricultural subsidies in the USand the EU (both among the largest tradingpowers each of whom grant the highest levels ofsubsidies) flow mainly to large industrial landhol-ders, retailers and food industry instead of tofamily farms and to sustainable rural develop-ment. Eligibility for subsidies in the US is notlinked to income levels, but to the type of cropsthat farmers produce. 90% of payments arechanneled towards corn, wheat, soy and rice,while farmers who produce about 400 other cropsreceive no financial assistance whatsoever.99 Inthe EU, since the latest reform of the CommonAgriculture Policy (CAP), direct payments tofarmers on a hectare basis allow companies toinclude these subsidies into their price calcula-tions, e.g., for machinery and chemical inputs butalso for low farm gate prices the processingindustries pay. As the hectare based paymentsare in most cases not bound to employment orenvironmental conditions, 80% of the total subsi-dies continue to be accumulated by less than 20%of the farms.100 This is why intensive, large-scalefarms and export-oriented agribusiness profitmost from the public payments. As to the environ-mental side of multi-functionality, a similar storyholds true. As public funds continue being used tointensify agricultural production the effect islargely the decline of ecosystems. Subsidizingchemical inputs, machinery, irrigation, andfactory farms externalize negative effects on theenvironment and costs on society as a whole.

Against this background it is high time toredesign current domestic support schemes. Afirst step in this endeavor is to clearly distinguishbetween at least three different types of support.The first type is market price support in whichproducer and consumer prices are influencedthrough a range of policies, such as guaranteedprices for certain produce, tariffs and levies on

Moreover, once countries have strict domesticlegislation in place, they need adequate policyspace to impose these same standards onimports. Countries must be empowered to condi-

tion access to their markets with certain sustain-ability considerations in order to preventdomestic producers from being disadvantaged byimporters (more in chapter 3.4).

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imports, or quotas, among others. Market pricesupport has not only come under criticism becausesuch ‘dirigiste’ measures are not compatible withthe free trade paradigm; their essential shortco-ming is that they provide incentives to over-produce, and hence contribute to dumping and adepression of prices in foreign markets. Introdu-cing supply management schemes where possibleis a viable solution: they stabilize prices, butwithout creating over-supply (see chapter 3.3).

A second type of domestic support consists ofdirect payments to farmers in which money istransferred from taxpayers to producers withoutraising consumer prices. In the past, due to WTOrequirements both supply management schemesas well as other market price support measureshave been largely replaced by increasing amountsof direct payments. Yet such payments createproblems of their own. As the increasingly concen-trated agro-industry can indirectly use thesesubsidies by lowering offers for farm gate prices,this still provide incentives for increased produc-tion, as farmers may continue to produce even ifthey are not competitive. Therefore, directpayments must strictly be conditioned to improvesustainable production practices, create employ-ment and reduce dumping practices.

A third category of domestic support consistsof specific support measures for rural economies,such as research, extension, education, infra-structure, as well as rural development and agro-environmental programs. Oriented in the rightdirection, so as to foster environmentally benignsmall-scale and family farming, this category ofsupport can combine policies and measures thatcreate an ‘enabling policy environment’ forsustainable agriculture.101 Considering thatfarmers should receive most of their income fromtheir farming, and not from the government, acombination of ecologically and socially condi-tioned direct payments, supply management aswell as an enabling policy framework shouldguide the reform of domestic support schemes.

Policy frameworks for sustainable familyfarming

The guiding strategy for governments intendingon facilitating access of family farmers to internalmarkets – which matters more than their access toforeign markets – should be to support smallfarmers, in particular women, in reclaiming long-term access to their domestic and local markets.First and foremost, this includes policies beyond

trade, which protect the land rights of communi-ties as well as access to basic natural resources,especially strengthening women’s rights and landentitlements. Moreover, as countries step backfrom both export-orientation and import depen-dency, governments will need to ensure thatdecentralized rural infrastructure fosters localmarketing. They must also ensure that rural andurban areas are sufficiently connected so as toelevate the hinterlands as the main suppliers offood for towns and cities.

Additionally, if small-scale production shouldbe favored over large-scale monoculture farming,these farmers will require support achieving‘critical economic mass’ through associative formsof economic activity, covering, for instance, jointwarehousing, processing, and marketing. A goodexample is the Anand Milk Producers Union(AMPU) in India, which was so successful that theNational Dairy Development Board of Indiaadopted it as its model. Owned by a union of smallmilk producer cooperatives, which are in turnowned by hundreds of rural women – some ofwhich actually own one dairy cow, the Unionoperated a large, modern dairy facility thatsupplied a variety of quality branded dairyproducts all over India.102 Comparable examplescan be found in Northern countries; for instance,in the marketing of fair organic milk in Germany, insome regions small farms have joined together torun their own dairy facility, so as to maintain a fairprice for their milk. Governments should provideinstitutional and financial support, includingpublic finances for micro-credit and loanprograms, to foster such associations.

In this vein, governments are well-advised toempower farmer organizations and producercooperatives to help them play a decisive role inthe local and regional market. In several parts ofLatin America, for instance, the direct participa-tion of family farmers in the local market has beenimproved through self-initiative and NGO-supportfor the creation of weekly ecological markets(Ferias Ecológicas). Relatively small infrastruc-tural and knowledge support – for example, provi-sion of market stands or timely transport, supportwith advertisement and training in basicbookkeeping – have had tremendous impacts.Similarly, several successful initiatives of local andregional trade networks have emerged, also inindustrial countries.

In addition, improvements in small-scaleproduction depend far more on expanding theknowledge base than on expanding the amount of

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farm inputs. Indeed, analysis has shown that inthose countries with successful increases ofagricultural productivity, public investments inagricultural research and development as well asin rural infrastructure were the most importantdrivers. Nevertheless, spending on agriculturalresearch is still very limited especially in develo-ping countries. What is more problematic is thatresearch, no matter if it is carried out in the Northor the South, is increasingly dominated by corpo-rations. Most of the private sector funds foragricultural research are employed by large inputsuppliers or processors, while at the same timecorporations also happen to be the primarybeneficiaries of publicly financed research. Conse-quently most research and development hasfocused on capital-intensive, high-input agricul-ture, such as on re-engineering crops with modernbiotechnologies – sectors in which corporationswill capture highest returns.103 Through patents,which corporations use as business tools torefinance their investments and to preventfarmers from reusing their developed products,such as seeds, corporations create new depen-dencies on corporate-based knowledge, andcontribute to the erosion of farmer-based andlocally generated knowledge.104

Besides calling for a reorientation of researchand development, governments, research institu-tions as well as farmer cooperatives shouldadvance low-cost, locally specific technologicaldevelopment that improves both the productivityand the environmental sustainability of moreextensive and traditional knowledge-basedfarming systems. Research should be re-orientedtowards the needs of small-scale and familyfarmers and sustainable agriculture, and it shouldbecome more farmer-led. In addition, researchshould professionalize the exchange of traditionalknowledge, in particular for female farmers,because in times of global environmental changeand fast-evolving economic restructurings, tradi-tional knowledge on seed breeding, sustainablefarming practices, and small-scale marketingstrategies must be constantly improved by inter-cultural learning and information sharing.

Finally, farmers should be supported in theirconstant transition towards more sustainablefarming practices. In North and South alike,farmers will need to maintain their natural produc-tion base and to produce healthy quality productsin order to remain viable in the long-term. Multiplestrategies to de-industrialize agriculture havebeen developed during the past decades, inclu-

ding Resource-Conserving Agriculture, OrganicAgriculture, as well as Agroecology as the mosteffective way of restoring on-farm nutrient cyclesand establishing biodiversity farming practices.105

Considering the ecological predicament, it is hightime that such strategies become the course ofaction for far-sighted farmers in North and South.

Governments must support this transitionthrough a range of policies and measures that haveproven viable in the past.106 For instance, if pollutingpractices are penalized with taxes and levies, thismakes polluters pay for the resulting environ-mental costs, and hence, will reduce pollution.Taxes could also be raised on industrial farm inputs,such as fertilizer or pesticides, so as to acceleratethe transition towards closing on-farm nutrientcycles. At the same time, governments could offerlow-interest loans for investing in resource-conser-ving technologies, and carry out environmentalrestoration programs to restore the capacity of localecosystems. If farmers’ training and farmer fieldschools for sustainable farming practices aresupported, and if the capacities of respective localNGOs are scaled up, this will catalyze further activi-ties in the farming communities and generate localownership on the process. Last but not least,communication strategies that provide better infor-mation for the public will promote a shift inconsumption patterns towards more sustainableand locally produced food items. Most importantly,however, governments should foster the develop-ment of local and civil-society based schemes forsustainability process and production standards,and develop strategies to ensure that standardsare mainstreamed in all aspects of agriculturalproduction (see chapter 3.4).

Tight conditions on direct payments

As supply management schemes and enablingpolicy frameworks correct the market trendscurrently working against sustainable family

Governmentsshould advancelow-costtechnologies thatimprove theproductivity ofsmall farmingsystems

“Be careful when demanding for more sustainability researchwithout insisting on which actors should actually conduct it. Many large corporations will develop GMOs and declare them asthe solution to sustainability. But GMOs generate newdependencies. We need farmer-led research for sustainableagriculture in order to enlarge farmers’ knowledge base and toenhance their capabilities.”

P.V. Satheesh, Deccan Development Society, India, at the Asian Regional Consultation, May 2006

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farming, they make compensatory payments tofarmers much less necessary. Nevertheless,limited governmental subsidies might be neededin certain cases. For instance, as farmers face realadjustment costs when converting to a moresustainable agriculture, governments may need toprovide subsidies for the transition period.However the current schemes of massive directpayments must be reformed, and any type ofdirect payments should be conditioned to strictcriteria. Since currently most payments stillmaintain an incentive for the maximization ofyields, and thus for over-production, they must beprofoundly reformed. In addition, eligibility fordirect payments should be made dependant onthe application of sustainable farming practices,while the amount paid should be linked to thenumber of jobs offered on the farm.107 This willpromote rural employment and benefit farms thatcarry out labor intensive and environmentallysound farming practices.

And yet, even after a massive reform of supportsystems in North and South, considerablyunequal opportunities remain between economi-cally stronger and weaker countries. This isespecially the case where subsidy levels in finan-cially strong countries are excessively high. Andstill, even with strict conditions in place, weakercountries will not be able to match the supportlevels that are affordable for economicallystronger countries, even though not all supportneeds to take a financial form. Therefore, thecomposition of subsidies continues to be on theagenda. So far the discussion about ‘green box’subsidies in WTO negotiations mostly focuses ontheir negative ‘trade distorting effect’.108 This is

not surprising since the distorting impact of greenbox payments on world production and trade iswell analyzed.109 Therefore, green box criteriamust be reformed. Yet discussion should alsofocus on the positive social and environmentaleffects that subsidies must generate, if theycontinue to be maintained. If a ‘genuinelygreening the green box’ did dominate the agenda,

those parties favoring subsidies in order tosupport the social and environmental multi-functionality of agriculture might even considercollaborating with those who wanted to minimize‘trade distortions’. Since neither ‘de-coupledincome support’ nor ‘investment aid’, categorieswhich are currently allowed under the green box,contribute to sustainability unless they are linkedto other conditions – even those subsidies cangenerate perverse effects if they enable farmers tocontinue unsustainable practices.

Support without dumping

In the current debate, governmental supportschemes are usually blamed for two reasons: first,support is said to distort prices and increasedomestic production, and thereby decrease themarket share of imports. Secondly, support is saidto cause product dumping onto other markets. Inthe context of an eco-fair trade regime, and for thesake of the principles of Democratic Sovereigntyand Economic Subsidiarity, the former concern isnot a priority. For no society in the world, be it inthe South or the North, should be prevented fromachieving food self-sufficiency on their own terms.However, a multilateral trade regime that respectsthe principle of Extra-territorial Responsibilityshould ensure that support schemes do not harmothers. For the dumping of products, eitherthrough export subsidies, in the worst casescenario or through green box payments, is in anycase illegitimate. As a stop-gap measure untilagricultural dumping is effectively prohibited, amultilateral institution should be authorized toestablish a ‘Dumping Alert Mechanism’ that warnsgovernments when dumping may underminefarmers’ affairs in the importing countries. On thebasis of that information, importing countriesshould be advised and provided the opportunityto protect their domestic sector, e.g. by adding apercentage tariff equivalent to the dumpingmargin on their tariff levels.

Nevertheless, the bias of existing supportsystems towards promoting privilege and degra-dation is reinforced by the bias inherent in thedefinition of dumping under the WTO. Govern-mental support measures are considered to be themain driving forces behind price distortions thatlead to dumping. As benchmark for calculating thedistortion induced by support measures servesthe world market price of a product; any support –beyond 5% of production value – is regarded astrade-distorting and therefore illegitimate.

No society in theworld should be

prevented fromachieving food

self-sufficiency ontheir own terms

“Public support for agriculture as such is not the problem, as longas it does not lead to dumping. Some support measures do not

cause dumping, such as public investment in research, investment in infrastructure, support for alternatives such as

agro-ecology or reforestation programs.”

Tania Vanegas, Centro Humboldt, Nicaragua, at the Central American Regional Consultation, October 2006

However the world market price might be too lowto serve as a point of reference, especially whenmajor suppliers fail to incorporate the costs ofsocial and environmental damage. For instance,neither the costs of the irreversible depletion ofground water for irrigation from fossil aquifers inthe US Midwest, nor those arising from the defore-station of primary forests for pasture land and,successively, export-oriented soy monocultures inthe Brazilian Cerrado, count into the supportcalculations of the WTO, or the OECD. Apart fromthis fundamental flaw, it has to be acknowledgedthat the full costs of sustainable agriculturalproduction – in a world of highly diverse socialsettings and ecosystems – can only be defined ina national (or even regional) context, not at theglobal level. What it may cost to sustain familyfarming and the natural resources base in a regionwith prime conditions may not be sufficient tosustain farming systems in a region with marginalland. Hence, the ideal of a global ‘single price’ thatmaximizes efficiency across all economies isincompatible with the principles of sustainability.

Against this backdrop, it is important toconsider the additional impacts of dumpingproducts that are sold at artificially low priceswhere they do not internalize the full environ-mental and social costs of production. In an eco-fair trade regime, a product would be consideredto be dumped if it was sold below the market pricein producer countries that internalized social andenvironmental costs. This new concept ofdumping would prevent current trends ofmounting cost externalization. Even conventionaleconomic theory predicates ‘free trade’ on thebasis of full production costs, which excludesocial and environmental externalities. Bycontrast, an eco-fair trade regime would only

allow the trading of goods at prices that interna-lized all the costs of sustainable production. Onemethod for calculating a benchmark could buildon existing scientific efforts to estimate the fullcost of production in agriculture. For example, agroup of researchers has approximated the fullcost of agricultural production in the UnitedKingdom, including costs from food-borneillnesses, environmental pollution, or the BSE-crisis.110 Using this metric, in the long run the‘Dumping Alert Mechanism’ would compute thedifference between the costs of sustainableproduction and the actual export prices for eachexported product from a given country, andpublish this data to alert importing countries topotential dumping.

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The ideal of aglobal ‘singleprice’ isincompatible withthe principles ofsustainability

InternationalNegotiations mustaddress theproblem of worldprice volatility anddecline

Elements of a ‘Dumping AlertMechanism’:

■ A Dumping Alert Mechanism warns governmentswhen dumped exports may undercut farmers’livelihoods in importing countries;

■ Exporting countries are registered at a multilateralbody and are required to provide information oneach year’s support levels;

■ The multilateral body verifies this data andpublishes for each exporting country the amountof dumping that takes place;

■ Countries that import goods are informed andadvised to increase their border tariffs vis-à-viscountries that practice dumping.

3.3 Stabilizing prices to protect farming livelihoods

The predominant problem for agricultural produ-cers around the world is the declining worldmarket price for food staples. Family farmerseverywhere, be they poor or prosperous, be theySouthern or Northern, suffer from drastic pricevariations and all-time low prices that depresstheir income and threaten their livelihoods. Socie-ties should in any case protect their farm sectorsagainst import surges and they should promotesupport for sustainable family farming. However,these measures will not be enough to stabilize

global price levels as long as other countriescontinue to over-supply the world market.Moreover, one of the main factors behind low farmgate prices is not over-production, but corporatepower and control of the market. In what is calleda buyers market, powerful processing or tradingcompanies can set prices at their will, and hencecontinuously depress farm gate prices (chapter2.4). International trade negotiations mustaddress the problem of world price volatility andprice decline as a matter of highest priority.

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Domestic supply management

The standard response to the crisis of low pricesin agriculture, at least on the part of affluentcountries, is to compensate farmers’ incomelosses with enormous governmental subsidies.However, reducing or even removing these subsi-

dies does not, as historical evidence clearlyindicates, lead to significant drops in production.On the contrary, production often increases.111 Forexample, after several supply managementschemes had been removed with the US Farm Billin 1996, crop prices tumbled to depths, which hadnot been seen since the 1970s. And yet plantedacreage did not experience any significantdownward adjustment. Likewise in Canada,neither the infamous cutback of subsidies forgrain transportation in 1995, which had been thesingle most important government mechanism tosupport agriculture, nor the tremendous loss ofincome due to the decline in world market pricesafter the implementation of the US Farm Bill in1996, took land out of production. Instead cropacreage remained stubbornly stable. Given thelack of alternative non-agricultural uses in the

main exporting nations, such as the US, Canada,Argentina, or Brazil, planting different crops is theonly viable option for farmers. Hence in Canadabetween 1991 and 2001, the production of wheat– Canada’s leading crop – decreased by 23%,while oilseed production increased by 143%. And

yet, the total aggregate area of land in productionhardly changed, thereby demonstrating thatneither government subsidies nor their elimina-tion offers a workable solution to the problem ofmarket failure.112

Supply management in agriculture has beenpracticed in many countries in the past, and is stillpracticed today. In general, it describes theprocess of balancing the production with themarket demand. As a result, supply managementsystems require accompanying border controlmeasures. Since the 1960s in Canada, forinstance, national production boards for eggs,turkey, chicks, and poultry have endeavored tobalance the interests of all stakeholders in therespective production chains. The central elementof these schemes is a quota production system, inwhich farmers purchase a license that allows themto produce a specified volume of the commodity.The boards maintain the legal ownership of thequota, and they have the right to make smalladjustments. Quota licenses may be transferredto other farmers, while a market concentration ofquota holders is restricted in order to protectfamily farms against corporate consolidation. Theactual prices are negotiated between marketingboards and processors, while they are based onthe costs of production and set to a level thatprovides farmers with a fair return. The admini-stration of the system is financed through a levyon all products produced. Over time, these supplymanagement schemes have made significantcontributions to Canada’s thriving farm sector. Theguarantee of stable incomes in the long run hasresulted in an increase in number of youngfarmers producing the commodities covered bythe schemes. Astoundingly consumer prices formilk, for example, are even lower than in the US,which has abandoned its supply management.And at the same time, Canada’s supply manage-ment has the effect of constraining dumpingpractices since it does not lead to massiveoversupply, which would have to be exported.

In general, a supply management scheme isviable if it consists of three components. First, itmust include a long-term program that controlsthe overall utilization of the production capacity.Second, it requires a short-term productioncontrol program that would provide for annualadjustments. And third, it needs a fine tuningmechanism that would deal with intra-marketingyear variations. Key to its proper functioning is aflexible adjustment mechanism to balancemarket needs with production capacities, i.e. to

“Once I have a quota for milk produced from, let’s say, 25 cows,nobody can take away that market from me. I am truly convincedthat I have an entitlement to own the market, which belonged to

my father and grandfathers.”

Bruce Saunders, Dairy Farmers of Canada, at the EcoFair Trade Dialogue panel discussion in Hong Kong, December 2005

“In Nicaragua we have a guaranteed price for national riceproducers, which has been negotiated between small and

industrial producers and the processing industry. The producersare given certain quotas, and if they are not able to serve the

demand, processors are granted the right to import the deficit at azero tariff. Similar programs exist in El Salvador for corn, rice and

sorghum. However, with CAFTA they are all being dismantled.”

Raúl Morales, Fenaccoop, Nicaragua, at the Central American Regional Consultation, October 2006

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determine the amount of quotas and the priceper product. The lack of a mechanism to providefor flexible correction to market demand was thereason behind the failure of many of these quotaschemes, especially those in the EU. If there is aclear underpinning legal framework, if all stake-holders are guaranteed a role in negotiationsand adjustments, and if strict monitoring andenforcement mechanisms are put in place toensure compliance, supply management indeedoffers a viable solution to the price crises inagriculture.113

A cooperative mechanism for balancingthe world market supply

In the medium-run, given advances in crop yieldsand the increase in crop acreage in countries likeBrazil due to the persistence of intensive andexport-oriented agriculture, there will be a needfor the major crop exporting countries of the worldto establish cooperative mechanisms to managethe production of crops.114 At the multilateral level,negotiations could be launched to adopt a ‘Multi-lateral Cooperative Framework for Balancing theWorld Market Supply’. This framework wouldleave the actual implementation of supplymanagement schemes to domestic policy makers.The multilateral framework would not only ensurethat major exporting nations implement supplymanagement schemes, it could also solve the‘prisoner’s dilemma’, namely that world marketsupply management can only be achieved coope-ratively.

Currently, the world market in food staples,such as cereals and oilseeds, as well as forproducts like cotton, sugar, or rice, is dominatedby merely a handful of countries. Therefore, amultilateral framework that includes the mainexporting countries of these crops would beviable and enforceable. For example, sixcountries – Argentina, Australia, Brazil, Canada,the EU, and the US – held 47% and 58% sharesrespectively in global production capacity ofwheat and corn, and 52% and 64% sharesrespectively of global exports in 2003.115 A multi-lateral framework with these countries as mainparties would indeed be a considerable contri-bution to a fairer distribution of productioncapacities and, therefore, to poverty reductionand the economic renewal of rural economiesworldwide.

What are the possible effects of such a frame-work? Will it serve the justifiable needs of poor

farmers around the world while placing newrequirements on participating countries? Willother producing countries continue to free-ride,enjoying higher prices without cutting backproduction? Fortunately, the framework willcertainly benefit both farmers – and taxpayersalike – in the participating countries. It is thefarmers who primarily produce export crops,which will suffer most from low and volatileprices. If these farmers produce less but in effectreceive higher incomes, they will certainly bebetter off as a result of the scheme. Therefore,even countries of the South, such as Brazil (soy,corn) or Thailand (rice), will be motivated to parti-cipate. As regards benefits to taxpayers, thecurrent practice of affluent countries compensa-ting their farmers for losses would be terminated.Billions of euros and dollars spent on compensa-ting farmers’ incomes would thus be replaced bya management scheme that is self-financedthrough a built-in levy on the products covered bythe scheme. Finally, even a sneaking transfer ofproduction capacity from countries under the

A framework forbalancing theworld marketsupply would be acontribution topoverty reductionworldwide

Steps towards a ‘Multilateral Cooperative Framework for Balancing the World Market Supply’:

■ Identify those countries with a significantinfluence on world market prices as participantsof the scheme (e.g. Argentina, Australia, Brazil,Canada, EU, US etc.);

■ Agree on the crop-specific caps that would governoverall global production capacity (e.g. -3% ofglobal wheat production) in order to raise worldmarket prices above a certain minimum level;

■ Determine country and crop-specific reductiontargets (e.g. US -8%, EU -4% etc.), according toeach country’s share in global exports;

■ Implement monitoring and verificationmechanisms to assist countries with compliance(e.g. independent third party verification); and

■ Ensure flexible review of the scheme over shortperiods for adjustment and improvement, and forimproving implementation at the national level.

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scheme to free-rider countries would still be inthe interest of the countries under the scheme,because the net return on exports will be higher

than it is under the currently flawed conditions.At the same time this shift of production capacityto countries dependent on imports will increasethe market share of their farmers, and improvetheir domestic food self-sufficiency.

Admittedly those that may lose in the shortterm are the urban poor, especially in Net Food-Importing Developing Countries, as they may facehigher food prices. However it is important to note

that many of these countries have a rural popula-tion of 50-80%, the majority of which are smallfarmers dependent on prices that ensure areasonable return on their work. Therefore ashort-term approach to this problem must beavoided. Sacrificing the livelihoods of smallfarmers to keep food prices low for the urban pooris not a satisfactory trade-off. Instead, supportfor consumers while local production is expandedwould provide both a way to increase the foodsupply and hence sustain affordable price levels,and to encourage employment in rural areas bysupporting the farm sector. Transitional correc-tive measures may be necessary to mitigate theimpacts of increasing food prices where dumpedcommodities are taken out of circulation. Forexample, as has recently been proposed by theAfrican Group, an ‘Import Financing Facility’ canbe made available to Net Food-Importing Develo-ping Countries that helps them subsidize food inthe short-term and develop efficient local produc-tion to relieve them from import dependency inthe long run.116

“We often cite export subsidies as the devil – and they are. Still,countries such as Australia and New Zealand have had a greater

impact on the decline of world dairy prices, and, according to theirclaim, they don’t provide subsidies to their dairy farmers. What we

need is a shared, international supply management scheme. Thequestion then is: who has to reduce production and by how much?”

Yves Leduc, Dairy Farmers of Canada, at the North American Regional Consultation, September 2006

3.4 Setting standards for quality trade

In agriculture and many other economic sectors,the present-day economic system is anythingbut a least-cost system.117 In a true least-costsystem, the losses inflicted upon common goodswhile producing commercial goods would beweighed against the gains made in the market.From this viewpoint, the objective of agricultureis not just to produce earnings but to contributeto the health for all, including both nutrition forpeople and regeneration of natural ecosystems.Food systems, therefore, are to be evaluated interms of a common health framework thataccounts for both the quality of food and thelong-term health of communities and ecosy-stems.118 However, since the free play of marketforces favors private gain over common goods, itis up to politics to rectify this imbalance. Publicpolicy interventions are necessary to ensureframework conditions that align the pursuit ofprivate gain with the protection of the biosphereand human rights.

Moreover, trade reform has to create a levelplaying field in the social and environmentalresponsibility between farmers and businesses.At present, deregulation unduly favors unsustain-

able farming practices and trading decisions,since corporations locate activities where socialand environmental costs can be most easily exter-nalized. Too often, the dismantling of protectio-nism has resulted in protection of the ruthless. Forinstance, sugar workers in Brazil toil while super-market chains compete at low prices, moreover,the elimination of mangroves may optimizeshrimp production for middle class dishes whilecreating environmental hazards, and finally, pesti-cides used in Pakistani cotton fields, while pollu-ting soils and laborers is indeed the hidden pricefor easy shopping in the fashion stores of theworld. As long as production costs are notrequired to incorporate the cost of safeguardingcommon goods, free trade will continue to accele-rate both the marginalization of the poor and thedecline of the biosphere. It is only throughminimum standards for securing the dignity oflabor and the integrity of the global environmentthat a groundwork for a fairer and safer 21st

century can be established. In the end, tradinginternationally must be understood as a privilegeto be offset by internalizing social and environ-mental costs.

Tradinginternationally

must beunderstood as a

privilege to beoffset by

internalizingsocial and

environmentalcosts

61

Sustainability process and productionstandards

As a first step, national politics should foster thedevelopment of standard monitoring and verifica-tion schemes. The establishment of productionprocess standards is crucial for minimizing clear-cutting, over-exploitation of water reserves,chemical pollution, or greenhouse gas emissions.The feasibility of monitoring and evaluatingproduction processes has been clearly demon-strated by fair trade and organic agriculture initia-tives, which are usually enforced by inspectionand certification bodies. The ‘IFOAM Norms’ fororganic agriculture, as one example, include adetailed set of general principles and standardswith requirements for crop production and animalhusbandry, including criteria for the evaluationand use of selected off-farm inputs, and standardsfor processing, handling, and labeling.119 AlthoughIFOAM is considered as the global platform of thecertified organic movement, the IFOAM Norms arebut one set of standards among many others thathave been developed by national or privateorganizations. Today in more than one hundredcountries, farmers’ organizations and consumergroups have developed their own sets of organicstandards and certification rules – many of themconsistent with IFOAM provisions, but specifiedand adapted to their respective environmentaland social circumstances.120 Governments shouldsupport the independent development of suchstandard schemes.

In a second step, governments should plan todevelop domestic agricultural transformationstrategies with standards becoming mandatoryfor all agricultural production. The steep increasein the volume of global area farmed under certi-fied organic agriculture121 has resulted in signifi-cant environmental and social improvements. Forinstance, organic agriculture consumes less waterand generates less soil pollution and fewer healthrisks. At the same time, species diversity is onaverage 30% higher than in conventional farmingsystems. In many cases, it is more labor intensive,because more sustainable soil management croprotation, associated crops, sustainable weedingpractices and precautionary pest treatmentpractices substitute chemical pesticides throughlabor.122

And yet critics argue that environmentalstandard schemes for production processes aresocially imbalanced. For certification can be costlyand complicated and, therefore, tends to disad-

vantage small producers. Costs can be reduced iffarmers form producer groups or co-operativesthat are certified as a whole; but fees may still behigh, and internal inspection systems within thegroup create new costs. Therefore, given the factthat quality control is necessary, governmentsshould foster the development of local, indepen-dent sustainability certification schemes. Localschemes have the potential to establish monito-ring and certification mechanisms that are bestsuited to the structure of the farming system andthe economic capabilities of the farmers; they canbest minimize costs and regulatory burdensplaced on small producers.

Moreover, locally and nationally independentschemes could be supported by a mechanism thatshifts the costs of certification from farmersengaging in sustainable production to those whocontinue conventional practices, as well as fromfarmers to consumers. The experience with energyfeed-in laws, which catalyzed an impressivepenetration of costly renewable energy systems inthe energy market in several countries are modelsthat could be considered in the agriculturecontext. For example, a fee could be added on allconventional products, which in turn crossfinances the costs for certification in sustainableagriculture, and assists small farmers incomplying with standards and certification requi-rements.

Qualified market access

A trade regime that is serious about sustainabilityshould support such inclusive sustainabilitystandards at the national and international level.Based on proven implementation of domesticsustainability process and production standards,governments must have the competence to alsolink market access to these standards. Thus tradein more environmentally and socially soundproducts will be favored over trade in conventio-nally produced goods. Indeed, the qualification ofmarket access in terms of social and environ-

“The experience in our region has revealed that only participatorycertification processes can be sustainable. We must empowerfarmer and producer unions to set up their own quality controlsystems.”

Fabíola Zerbini, FACES do Brasil, Brazil, at the South American Regional Consultation, August 2006

62

mental requirements is urgent since agro-industries and food retailers increasingly invest incountries where environmental and social requi-rements are weakest (chapter 2.4). Such astrategy transforms these actors into protagonistsof unconditional market access in countries withhigh food prices, thus increasing profits fromsales, but undermining the competitive positionof domestic responsible producers. Sustainabilitystandards at the border would work like tradefilters to reduce social and environmentaldumping.123 Governments could provide a ‘carrot’to sustainable producers and grant preferentialmarket access to products that adhere to certainsustainability standards.124 In other words,commercial goods that have been demonstrablyco-produced along with common environmentaland social goods would be given a trading advan-tage, thus encouraging a shift in production andmarketing towards eco-fair commodities world-wide.

However there are a number of questions thatmust be addressed. For example, would a schemefor qualified market access that rests on nationalsustainability standards turn into a new form ofprotectionism from Northern countries againstthe global South? Wouldn’t qualified marketaccess lead to another form of trade discrimina-tion, given that industrial countries currentlydemonstrate the greatest interest in environ-mental standard setting; have wealthier farmerswho can afford to pay for the resulting compliancecosts; and have in the past used food safety andother standards as a disguised restriction totrade?

First, it is probably a misconception to believethat Northern countries will be less offended thanSouthern countries by standards that aim at de-industrializing agriculture. This might be the casetoday since standards mostly encompass elabo-rate hygiene or health requirements for products.However, it might be different when Northern aswell as Southern countries develop interests toprotect their markets from social and environ-

mental dumping. Any move towards sustainableagriculture will be doomed to failure if cheapforeign goods produced by destructive methodsare allowed to penetrate the market. In thisregard, it will also be up to the North to change itspractices. It is not inconceivable that one day Indiawill produce its own environmental productionstandards for poultry imports or Thailandstandards for sustainable fishing. To be sure, thespread of industrial agriculture is global in scope,and even in poor countries, regions that are wellintegrated into the global market are usuallycharacterized by industrial agricultural productionsystems. However, overall agriculture in the Northis much more industrialized than in most of theSouth. For instance, the level of mechanization isnearly four times higher in developed countriesthan in developing countries. Regarding the use ofsynthetic fertilizers – and presumably pesticides,too – this picture is less clear. Still despite China,Brazil, India and a few other developing countries,the majority of the developing world uses lessfertilizer than the developed countries.125

Moreover, many countries of the South with theirvast regions characterized by small-scale agricul-ture that is organic by default will be betterpositioned than the countries characterized byindustrial monoculture farming in most of theNorth.

It is neither regions nor farming systems, butonly exports produced by environmentallyharmful farming practices, which would bechallenged through qualified market access.Therefore a key question that must be addressedis where do such exports originate and who profitsfrom low standards? Although extensive data isstill far lacking on the issue, presumably the bulkof global exports originate from high-inputindustrial systems in the North as well as in fewregions of the South.126 For instance, the top fivewheat exporters are the US, France, Canada,Australia and Argentina – countries that arecharacterized by highly industrialized agriculturalsystems. If all EU wheat exports are included,about 75% of world exports in wheat from 2006through 2015 will be produced by high-inputfarming.127 Likewise the top three soy bean produ-cers are the US, Brazil, and Argentina, whichaccount for 80% of global soybean and 70% ofglobal soy oil production.128 If their exports arechallenged by the rest of the world through quali-fied market access, it will not be the small soyfarmers in Brazil or Argentina who are affected,but the large industrial producers that account for

“If we respect the sovereignty principle, of course we have toaccept that Northern markets also need to be protected. No matterif rich or poor, countries have a right to preserve their communities

and their natural production base from predatory competitors.”

Françoise Bangré, Fédération Nationale des Femmes Rurales du Burkina Faso, at the West African Regional Consultation, February 2006

Commercial goodsthat have been co-

produced alongwith common

environmental andsocial goods

should be given atrading advantage

The trans-borderbusiness of globalcorporations must

be subject toqualified market

access

63

the majority of exports from these countries.These producers as well, along with the respectivetransnational trading and processing corpora-tions, have to be urged to shift towards moresustainable farming practices?

Furthermore, it has to be taken into accountthat in practice, more than governmentalstandards, corporate created standards, such asEurepGAP (see chapter 2.4), may become anunqualified trade barrier. Caribbean States haverecently complained at the WTO against this initia-tive of European retailers which increasinglydiscriminates imports from developing countriesbased on food processing and long shelf lifestandards. To the contrary, measures and instru-ments for qualified market access against ecolo-gical and social dumping would have to bedeveloped simultaneously from the bottom up bycivil society initiatives and from the top down bynational governments. For instance, farmernetworks like RIAF in the MERCOSUR region haveinitiated a mutual recognition of products fromsmall farmers which are partly recognized byMERCOSUR member states as qualified for loweror zero tariff products; farmers mutually acknow-ledge themselves as ‘small farmers’, while theyare then recognized by other MERCUSOR memberstates that grant preferential access to productsfrom these small farmers.

Finally, there is no question that the concept ofqualified market access extends well beyondagricultural goods. The requirement that invest-ments, goods, and services, which cross borderswill have to measure up to social and environ-mental standards is an indispensable element forany eco-fair trade regime. The agricultural sectoritself comprises a much broader range of goodsthan products, which are simply derived fromplants or animals; the companies producing ferti-lizers, pesticides, machinery should be taken intoaccount along with food processors and retailcorporations. As well, the trans-border businessof these companies must be subject to qualifiedmarket access. Why should Kenya not formulateinvestments standards for the entry of super-market chains, Uruguay fuel standards for harve-sters, or Thailand develop production standardsfor fertilizers? There is no doubt that qualifiedmarket access is neither to be restricted to agricul-tural goods nor to the South-North flow of trade.Quite to the contrary, given the unsustainability ofdeveloped economies, it is potentially morerelevant for non-agricultural goods and the North-South flow of trade.

Still, a cross-country comparison of the imple-mentation of environmental law suggests that itwill be the Northern countries which are morelikely to establish qualified market accessschemes, since many Southern countries will lackthe institutional capacity or political will andpower to do so. In this light, qualified marketaccess – although a concept that benefits allcountries alike – would run the risk of privileging

the North. This problem could be addressed byestablishing a funding mechanism linked to theintroduction of standards at the border. Revenuesgenerated from managing market access in richercountries would be earmarked for a fund thatwould be channeled into structural aid for thepromotion of sustainable rural development inmarginal regions.129 In this way tariffs applied tosocially and environmentally harmful practicesand products would be transformed into aid forsustainable rural development programs. Equiva-lent to the existing Global Environmental Facility(GEF), a ‘Sustainable Rural Development Fund’comprising both governmental and non-govern-mental organizations could establish criteria andsupport mechanisms that would facilitate thetransition towards sustainable farming practicesas well as the implementation of qualified marketaccess schemes in the South.

Meta-standards for the standard-settingprocess

Attempts by some countries to impose protectio-nist measures against others through qualifiedmarket access can be prevented through thedevelopment of global common standards.However the development of global standards is anenormous challenge, especially in a world that ischaracterized by highly diverse agro-ecosystems,farming practices, and food cultures. It wouldindeed be a loss for both ecology and culture ifharmonized global standards led to the harmo-

“Why should those actors who constantly break the rules ofinternational environmental and labor agreements be allowed tocontinue such illicit behaviour, while those who adhere to theseagreements and attempt to improve farming practices are the oneswho have to shoulder the extra cost burden. We need a tradesystem that turns this deficient situation on its head!”

Anja Osterhaus, Fair Trade Advocacy Office, Belgium, at the European Regional Consultation, November 2006

64

nization of production practices around the world.This has been the case where certified organicstandards developed in one country have beentransferred to production systems in another. Forexample, standards of the EU organic label prohibitsynthetic fertilizers, but in some tropical areassome amount of fertilizer seems indispensable. Inseveral places, such as in northern Sumatra,farmers groups have therefore developed their ownorganic standardization system, which aims atreducing synthetic fertilizers, but does not excludethem because intensified livestock raising formanure production in that region is simply not anappropriate option.130 Moreover, many organicstandards schemes focus on specific farmingpractices, but disregard equally important socialand economic aspects that must be considered inthe development of sustainable agriculturalpractices, such as the need for balance betweensubsistence and export agriculture or the preser-vation and integration of traditional knowledge.Finally, standard schemes developed in the Northrequire relatively costly monitoring and verification

systems. By contrast, in Southern local markets,where farmers sell directly to consumers, simplerand less costly standard and labeling systems willbe more appropriate. Therefore, productionstandards should be developed locally to ensurethat environmental, economic and social conside-rations and the particular capabilities of thefarming community are properly addressed.

The development of meta-standards may offera solution. Meta-standards would not harmonizespecific production standards. Instead they woulddefine common norms for the process of standardsetting. Is the process, which leads to local ornational quality standards sufficientlydemocratic? Are all the relevant stakeholdersincluded, since? After all, standard setting shouldreflect a common effort that includes the partici-pation of farmers, consumers, non-governmentalorganizations, local retailers, and small-scalesellers. Where common criteria for the standard-setting processes have been developed, these canprovide a basis for mutual acceptance of thevarious local and national standard schemes inthe trade between nations. Universal processstandards rather than production standardsshould be at the heart of negotiations over themutual acceptance of national productionstandards in order to ensure a balanced set ofcommon rules for a highly diverse world.

Meta-standards in the context of agriculturehave been developed by the International Federa-tion of the Movement for Organic Agriculture(IFOAM), who commissioned the IFOAM-associated International Organic AccreditationService (IOAS) to draft guidelines for the accep-tance of the various locally and nationallydeveloped IFOAM organic standard schemes. Itwould be a first step in the right direction if gover-nments around the world were to accept IOAS-accredited organic standard schemes at thedomestic level. More general guidelines forprocess standards have been developed by theInternational Standardization Organization (ISO),which provides a general code of good practice forstandardization (ISO/IEC Guide 59), or by theISEAL Alliance, which provides a specific code ofgood practices for setting social and environ-mental standards.131 Negotiations for such meta-standards in sustainable agriculture standardsetting processes would ensure the indepen-dence of the myriad of sustainable productionpractices, while at the same time, provide acommon ground for cross-border trade. Anindependent multilateral complaint body could be

‘Qualified Market Access’ and‘Sustainable Rural Development Fund’

■ As a first step, countries would establishindependent quality standards and certificationsystems at the domestic level. As a second stepthey would evolve these standards intomandatory requirements for domestic producers

■ Based on proven implementation of thesemandatory requirements, countries could thengradually impose quality standards at the borderand differentiate market access conditionsbetween products that adhere to theirsustainability standards, as opposed to productsthat are unsustainably produced;

■ Revenues from tariffs applied to harmful productsin the North are channeled into an international‘Sustainable Rural Development Fund’, whichsupports the transition towards sustainablefarming practices and the implementation ofqualified market access schemes in developingcountries.

Meta-standards onthe process of

standard-settingcan ensure a set ofcommon rules for

a highly diverseworld

65

established to deal with conflict betweencountries regarding differences in their standards.For example, a ‘Centre for Dispute Mediation inConflicts Over Standards’ could be established toprovide impartial complaint mediation anddispute settlement.

Although meta-standards do not define qualitynorms for farming and livestock practices, theywill require the development of such norms, whichin turn, will establish an important qualitystandard in international trade. The setting ofsuch standards for trade is essential to redress thenegative effects of globalization. Thus far, partici-pation in the transnational economy has had theeffect of driving down standards, since openborders invite companies to source or to locatewhere norms are weakest. By contrast, sustain-able global markets are unachievable unless theydrive up standards for companies participating inthem. Transnational markets should induce a raceto the top rather than a race to the bottom. As ageneral rule, the floor for global business shouldbe higher than for local business, and not theother way around. Entry into global markets mustbe conditional on a minimum degree of sustaina-bility performance. Otherwise the playing fieldremains biased against responsible farmers andcompanies. Through multilaterally agreed meta-standards, countries would be required toestablish and enforce domestic quality standardsfor sustainable agricultural production, and todevelop these standards in a process that is open,inclusive, and democratic.

‘Meta-standards’ and a ‘Centre forDispute Mediation in Conflicts OverStandards’

■ At the multilateral level, governments would agreeto meta-standards that would govern the settingof process and production standards forsustainable agriculture;

■ Meta-standards would define specific elements ofthe process, including duration, terms ofreferences for the balanced involvement of allaffected stakeholders, publication of results,periodic assessment and review of standards,etc.;

■ A complaints resolution mechanism, such as a‘Centre for Dispute Mediation in Conflicts OverStandards’ would be established to settlestandard-related disputes between countries;

■ With these meta-standards in place, governmentswould then be required to develop and enforcesustainability standards for process andproduction methods in agriculture at the nationallevel, or require mandatory participation instandard schemes developed by local actors.

3.5 Democratizing the food chain

If trade regulation is to respond to the emergingchallenges of globalization, it must address theproblem of market power and concentration inthe global market. The challenges for national andinternational policy makers in addressing thesechallenges are akin to the metaphysical challengeof ‘squaring a circle’. This is particularly the casebecause the level of concentration alreadyachieved in agricultural markets, and the powerthat corporations now wield are significantimpediments. Therefore, before any multilateraleffort to regulate corporate behavior is initiated,much work remains to be done to raise publicawareness and to mobilize public pressure forpolitical action. Three elements of a legallybinding global framework for corporate responsi-

bility and accountability are critical: a mechanismfor the stricter enforcement of anti-trust law atnational and international level; the establish-ment of global commodity boards that impose fairtrade standards along commodity chains andhold transnational corporations accountable; andthe implementation of a set of measures to regio-nalize trade. promote and protect sustainablerural economies.

Anti-trust and competition law

There are two prerequisites for an effective corpo-rate regulatory framework. The first is access toinformation, in light of the lack of informationabout the size and scope of large agribusinesses,

66

the market share they control, and the terms oftheir contracts. Just as WTO rules insist that gover-nments complete questionnaires about any state-trading enterprises in their country, this approachcould be expanded to include any companybeyond a defined size and market share – be it

private or public. A multilateral institution, such asUNCTAD or the FAO, could collect this informationand maintain a publicly accessible databank,including comprehensive information on mergers,acquisitions and joint ventures in agri-foodmarkets. The second prerequisite is that govern-ments must shut the revolving door betweencorporations and government agencies. Thiscould be achieved by requiring full disclosure ofmoney received from agribusiness or corporatelobbies by potential staff members, or by under-taking rigorous conflict of interest checks beforeprivate-sector appointments are made. Strongerlaws are needed to ensure longer mandatoryperiods between the transition from the privatesector to public office.132

Governments will be better equipped to enactstricter anti-trust legislation in a political climatewhere access to information is guaranteed andcorporate influence is duly controlled. Similarly,they will be better positioned to participate inmultilateral negotiations for a framework of anti-trust rules. One important example where publicpressure has had significant impact is in thecontext of WTO discussions on competitionissues. The reason for the public outcry was thatthe competition agenda as promoted by the EU,the US and some other WTO members wasfocused on advancing the interests of global firms,as opposed to reducing their power and level ofconcentration in the global market. The termina-tion of negotiations at the WTO was a hard-earnedvictory for civil society organizations. However,rich-country governments still attempt to advancethe corporate agenda in many bilateral andregional trade agreements. Other multilateral foradealing with competition, such as the ‘UN Set’ at

UNCTAD, the International Competition Network,or the Competition Committee at the OECD, are byand large ineffective in curbing market concentra-tion.133 Thus the challenge of how best to confrontcompetition issues at the multilateral levelremains to be adequately addressed.

The establishment of an independent multila-teral ‘Anti-trust Body’ is essential if anti-trust lawis to adequately counter the rapid increase ofconcentration in the global market. Such a bodycould help to prevent corporations from overpo-wering governments and locating to areas wherenational legislation is weak. Such an anti-trustbody would have the authority to scrutinizemergers and acquisitions, to prohibit them wherenecessary, and to deter corporations from abusingtheir dominant position in the market. The bodyshould neither involve industry nor be dominatedby industrialized countries. However, it shouldreport to a public board to be comprised of amajority of (small) farmer representatives, and aminority of representatives from consumers andcompanies.134 However, multilateral anti-trustnegotiations will only succeed if sound competi-tion policies are in place at the national level, or ifthey can build on effective rules at the level ofregional organizations (EU, ASEAN, Mercusoretc.).135

Development contracts alongcommodity chains

With the trans-nationalization of businessrelations, commodity chains now stretch faracross the globe, positioning individual actors atthe most favorable locations so that the sum ofrationalization gains can ensure a crucial marketedge. However farmers, especially small farmers,are often the weakest link in those chains. Theycan be blackmailed because few large corpora-tions dominate what is a buyers’ market, whilefarmers are unable to invest their ‘capital’ –whether land, climate or physical strength –elsewhere. Post-production phases such asprocessing, design, retailing, represent the bulk ofwhat consumers are willing to pay. Profits andpower typically increase towards the final stagesof production and marketing, but decreasetowards the suppliers of raw materials andsubcontractors. What often happens, in the wordsof a banana producer, is “a perverse transfer ofwealth, by some of the supermarkets, fromfarmers and farm workers of developing countriesto the consumers of developed countries”.136

“The ‘eco’ in a future eco-fair trade regime could be achieved by amodernization of trade policies, including instruments that qualify

trade flows such as qualified market access. However the ‘fair’ would need a modernisation of competition

policy that disciplines the power of corporations.”

Bill Vorley, IIED, United Kingdom, at the European Regional Consultation, November 2006

Multilateral anti-trust negotiationswill only succeed ifsound competition

policies are inplace at the

national level

67

In many respects, the situation is akin to theprocess of industrialization in nineteenth-centuryEurope. After a period of systematic exploitation,the political elite came to recognize that thedevelopment of clear rules governing the relati-onship between workers and employers wouldindeed benefit both the interests of the state andthe economy. The prohibition of child labor, thelimits on working hours, social insurance systemsfor illness and unemployment, health and safetystandards and legal minimum wage would formthe core of a system that could be described as asocial market economy. It is long overdue thatobligations concerning fairness in relations withinglobal production chains should now become acritical element of corporate accountability frame-works. The assurance of non-exploitativeexchange is a central responsibility for transna-tional corporations. Beyond their own self-interests, corporations have the civic responsibi-lity to ensure the secure integration of supplyfirms and contractual partners into their businessand to provide for a fair and equitable distributionof profits, particularly in dealing with ruralcommunities in the South. For this reason, trans-national product chains must be governedthrough development contracts between smallproducers and buyers.

The regulation of trade flows between marketactors and along transnational production chainswould be new to the realm of international politics.Nevertheless, this approach has been successfullypracticed for decades at the grass-roots level. Inthe 1970s the ‘fair trade movement’ catalyzed aprocess of governing trade flows in commoditychains to secure a more equitable relationshipbetween producers in distant countries, mostly inthe South, and consumers in the North. Whetherthe product is bananas, coffee or childrens’ toys,the principle is always the same: a higher finalprice and pre-investment finance aid, combinedwith negotiated standards for the productionprocess to ensure a fair share and better workingconditions for producers, improved productquality and increased ‘ethical consumption’practices. Moreover, fair pricing must be under-stood not just in terms of full cost pricing thatreflects all the costs of production. Fair pricingmust also be understood as essential to ensuringthat the health of communities and natural ecosy-stems is protected. Fair trade initiatives haveestablished successful contracts for long-termbusiness partnerships that may serve as importantprecedents for international trade agreements.137

The idea is not to upgrade ‘fair trade’ andsimply increase its market share.138 Rather it is torecognize that its constituent elements mayprovide important guidance in the possiblenegotiation of common rules for the governanceof transnational production chains. Govern-ments may opt for a multilateral mechanism thatupgrades some of the fair trade buildingelements as mandatory practices in transna-tional business relations. As a first step, corpo-rations would be obliged to conduct transparent,open and participatory negotiations withsuppliers and subcontractors on developmentcontracts for all aspects of their trans-borderbusiness. Following the fair trade principles,these contracts would have to comply with thefollowing requirements: (1) pay a price to produ-cers that covers the costs of sustainable produc-tion and livelihoods; (2) pay a premium thatproducers can invest into development priori-ties; (3) partially pay in advance, when produ-cers so request; and (4) sign contracts that allowfor long-term planning and sustainable produc-tion practices. Corporations would be required todeliver their contracts to newly-established‘Development Contract Boards’, which wouldsupervise those contracts and publish theirterms of references to enhance transparency andpublic information.

Companies would have to obtain accreditationto those boards. Regular audits should make surethat companies along withg their suppliers meeta basic standard of fairness.139 In this way,development contracts, including correspondingforms of contract-farming, may set the conditionswhich determine when companies may engage intransnational businesses. On the other hand, theywould ensure that farmers and small-scalesuppliers enjoy real participation in internationalmarkets, and a decent wage for their work. At thesame time, publicly available information on suchcontracts would help producer organizations andfarmer unions, national governments, and civilsociety organizations to adhere to fair businessrelations in transnational production chains, andto raise concerns where they might arise.

Given the complexity of those contracts, globaltrade would indeed become ‘slow trade’.However, this approach would ensure tradejustice, democracy and sustainability since theprimary agents of international agricultural trade– transnational companies – would be heldaccountable for the regeneration of agricultureworldwide.

Obligationsconcerningfairness in globalproduction chainsshould be part ofcorporateaccountabilityframeworks

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Regionalizing production chains

The implicit slow down of trade in transnationalcommodity chains through the accreditation ofbusiness contracts at commodity boards must beaccompanied by the explicit and active transfor-mation of transnational commodity chains intoregional ones based on the principle of EconomicSubsidiarity. Despite the reality that trade andeconomic activities tend to increasingly take placealong transnational commodity chains, thereference point to which communities and socie-ties can express ‘non-trade concerns’ still remainsthe nation state, the province or state or the localcommunity. Collective preferences as well as thepolitical will continue to be shaped in the publicrealm, and not along global economic valuechains.

As with measures to re-regionalize trade andproduction chains, countries must first reconsiderthe role of state-trading enterprises, as well asstate-owned marketing boards. State-tradingenterprises historically have been set up by gover-nments to achieve certain public policy objectives,such as supporting domestic prices, promotingefficiencies in agricultural production and marke-

ting, and making available affordable foodsupplies for low-income populations. Forexample, in Indonesia as well as in the Philip-pines, state-trading enterprises engage in paddyrice procurement, rice importation and rice distri-bution. While in India, apart from procurementand buffer stocking, they provide a minimum pricesupport for 24 commodities.140 Hence, state-trading enterprises offer countries an importantentry point for regulation of the market. Since theydepend on government mandates and are subjectto public interest law, they can potentially play auseful role in counteracting the market power ofglobal agribusiness. Nevertheless, in the processof deregulating and liberalizing developingcountry economies, state-trading enterprises –once common in agricultural sectors in most partsof the world – have been the subject of severecriticism. It is true that state-trading enterpriseshave been susceptible to corruption and misma-nagement. However, governments need to reviewtheir potential for reform, rather than simplyproceeding to dismantle them. Given the strategicpotential of state-trading enterprises in food priceand supply stabilization as well as in food qualityconsiderations, a strategy of transparency,accountability and good governance would beappropriate steps forward. In particular, in thelight of the stark power concentration and marketdisruptions generated by large transnationalcorporations, governments must have a sufficientpolicy space to improve and strengthen state-trading enterprises since current operations inmost countries are minimal and can barely influ-ence the market.141 In addition, governmentsshould strengthen farmers’ and consumers’ directinvolvement in marketing and trading boards toavoid governmental corruption.

Measures that restore policy space for sustain-able investment policies would go even furtherthan just counterbalancing corporations. Anumber of aspects of the negotiations under theWTO’s General Agreement on Trade in Servicespertain specifically to investor’s rights; in line withthe WTO Agreement on Trade-Related InvestmentMeasures, and even more so with investmentchapters in some bilateral and regional agree-ments, they consolidate the rights of corporationsto establish themselves in foreign countries, toacquire local companies, to secure work visas forforeign personnel, etc. Measures for re-regionali-zing trade and commodity chains are contrary tothese agreements. Policies for local contentmanagement would enable communities to

Collectivepreferences

continue to beshaped in the

public realm, andnot along global

economic valuechains

Three multilateral institutions for theregulation of corporations

■ UNCTAD or FAO should establish a publiclyaccessible databank containing information onthe size and scope of large agribusinesses, as wellas information on mergers, acquisitions and jointventures in the food system;

■ A multilateral ‘Anti-trust Body’ should beestablished to scrutinize mergers andacquisitions, and prevent corporations fromabusing their market power (e.g. in the control ofmarket prices, or building of cartels);

■ ‘Development Contract Boards’ should be set upto supervise trans-border contracts that wouldguarantee fair and equitable distribution ofbenefits among the various actors in transnationalproduction chains.

69

maximize inter-linkages between different sectorsof the rural economy as corporations would berequired to purchase from local suppliers – e.g.feed inputs for livestock raising or locallyproduced food in rural tourism services –, toinvolve local processors, and eventually to sell tolocally-based traders or retailers. Likewise,related services should be locally provided asmuch as possible, and in some cases, corpora-tions should even be obliged to contribute totraining and improving local service providers.

In addition, a ‘site-here-to-sell-here policy’provides an important guideline for governmentsconsidering an investment from a foreigncompany.142 The government could insist, whereappropriate, that the foreign company could onlysell in a given market if they agreed to producethere as well. In other words, market access ofcorporations would become dependent onrunning production facilities in that market. Sucha policy should be considered in sectors whereimport substitution is possible. For instance,Norway would not apply it in the coffee sector; butGhana might well consider imposing a site-here-to-sell-here-policy in the case of processedtomato products, as it witnessed a few tradingcorporations profit from the shut down of most ofGhana’s flourishing domestic tomato industry. Asite-here-to-sell-here-policy would enable gover-nments not only to maximize domestic produc-tion, but also to ensure that this production iscontrolled domestically. If a company was obligedto produce locally what it wanted to sell in thelocal market, its activities would be brought backunder the control of communities and citizens.Business would be subject to greater transpa-rency and accountability to stakeholder power,and would not just be geared to the interest of far-a-way shareholders. Moreover, threats by corpo-rations to relocate if standards are raised or ifwages are increased would become meaningless,since the price of doing so would be to lose marketshare to local competitors. If, through a set ofthese and additional measures, communitieswould gain the ability to embed the activities ofcorporations into the local economy, they couldstill reap the benefits of cross-country technologytransfer and information-sharing that multi-national corporations may bring about, whilerealizing the full potential of their respective ruraleconomies, and ensuring them a fair share inglobal value creation.

Finally, policies that make distance more expen-sive are a vital cornerstone for the re-regionaliza-

tion of production chains. Since agricultural tradeis very transport-intensive, considering the kilome-ters involved, the expansion of global marketswould not have been profitable without decliningfreight costs. In particular, competition of foreign

products in domestic market sectors – e.g. Brazi-lian chicken legs against local poultry, wheat fromthe US against domestic wheat – requires lowtransport costs; otherwise, the lower marginalproduction costs abroad would soon be eaten upby greater outlays on transport. Yet over and abovethe rising oil prices that can be expected in the faceof the global peak oil scenario, crop miles implystress on the biosphere, in particular through thepollution of air and water, and the emission ofgreenhouse gases.

Up to now, damage to the biosphere has notbeen properly mitigated because no owner existswho could claim compensation for any damagecaused. To reverse this situation, a new genera-tion of instruments is needed, such as ‘user fees’for the use of common goods. Such fees havebeen discussed in multilateral fora since the 2000Monterrey Finance Summit and the 2002 WorldSummit on Sustainable Development. Forexample a user charge based on aircraftemissions would be an effective and reasonablemechanism for controlling the level of atmos-pheric pollution caused by global aviation. Such acharge would decrease the demand for air travelby incorporating the environmental externalitiesinto the price of air passage and air freight.Moreover, the user charges would serve as anincentive for mobilizing the efficiency potential inengines, aircrafts and routing. Likewise, an annualfee could be collected from all ships, regardless offlag state or seat of the company, in order to taxthe use of the high seas for transportation.Although less environmentally harmful, oceanshipping does indeed generate a number ofserious marine and air pollution impacts. To thisend, user fees would help to re-internalize someof the costs that have increasingly been externa-

A new generationof instruments isneeded, such asfees for the use ofglobal commongoods

“There is not just one type of market, with one singular tradingsystem. There are many different types of markets, with differentproduction, trade and distribution systems. We need to re-regionalize trade, as the one-size-fits-all approach to create one uniform global market does not work to the public interest.”

Josefa Francisco, IGTN Asia, Philippines, at the Asian Regional Consultation, May 2006

Balancing out the enormous asymmetries amongnations in the world has been one of the statedgoals in particular of the Doha Round, otherwiseknown as the ‘Development Round’. The promiseof a level playing field in world trade held out bythe North has come to be viewed by the South asa viable path – were it not betrayed by Northernprotectionism and export dumping. Howeverdamaging this hypocrisy, it is doubtful that evencompletely free trade could create anything suchas a level playing field because the asymmetrieswithin countries and among countries are justtoo great. To begin with, all the attention lavishedon export promotion tends to hide the fact thatexports often fail to benefit small farmers, just asthey often imply major environmental costs.What then could be the guidelines for sustain-able export policies? Furthermore, to realizegreater equity among nations, weaker players

need certain preferences, and not just equalchances. Following the principle of Trade Justice,‘Special and Differential Treatment’ should there-fore be the norm rather than the exception. Whatmarket access rules could systematically favorweaker economies? And finally, cross-bordertrade does not necessarily be animated by thesearch for profit; it can also be conducted in thespirit of reciprocity and mutual solidarity. What ifSouthern countries opted out of trade competi-tion, weaving together regional trade agree-ments that seek to implement solidarityexchanges?

Putting exports in context

It is conceivable that in a truly eco-fair traderegime, the volume of agricultural exports willshrink to become a residual category. Agriculturalpolicy will only treat exports as a marginalconcern where it strengthens small farmers’access to local markets in order to maximize farm-level and national food security; where it regio-nalizes production chains where possible in orderto create employment opportunities and ensurethe vitality of rural economies; and where itfosters the ongoing transformation towards evermore sustainable farming practices.

Nevertheless exports will continue to play animportant role for development. However it isneither the cash value nor the volume that makeexports a valuable tool for sustainable develop-ment, but their particular quality as well as theirinter-linkages with domestic production andconsumption. Countries committed to sustain-able development will not simply maximize theirexport activities, but will instead opt for theintegration of carefully selected export activitiesinto a coherent national development strategy. Ifexports are to make a positive contribution topoverty reduction and economic diversificationwithout deteriorating social and environmentalcommons, they need to be embedded into anoverarching domestic policy framework. Such aframework has to be designed according to eachcountries’ particular circumstances, as any exportengagement needs to consider the country’srange of endowments and capabilities, and theparticular socio-economic structure of its agricul-tural sector. What then are the appropriate criteriathat could help agricultural exports contributepositively to sustainable development at thenational level?

First and foremost, countries that facepoverty and hunger within their borders butexport agricultural goods must considerwhether they are truly spending limitedresources effectively. In many poverty-strickencountries there are already enough caloriesproduced, but the majority leaves the ports as70

lized through globalization. Just like subsidies andstandards, user charges are tools that govern-ments, who are conscious of the importance of

protecting common goods, should consider inorder to secure long-term environmental health inagricultural trade.

“Trade is not an end but instead a means to a larger goal. The question is: what kind of development do we want to achieve,

including the relationship between agriculture and the economyand society at large. In answering this question, we need to

determine the role of trade as one amongst other means to achieve this development.”

Biswajit Dhar, Indian Institute of Foreign Affairs, India, at the Asian Regional Consultation, May 2006

In a truly eco-fairtrade regime,agricultural

exports may shrinkto become a

residual category

3.6 Redressing asymmetries

71

animal feed for factory farms abroad, instead ofbeing used as food staples for domesticconsumption. In the future, the production ofenergy crops for exports might aggravate thisstructural problem. However, the assumptionthat foreign currency income from exports willeventually enable the state to invest more inovercoming poverty has not been realized. Anytrade-off between the needs of the poor todayand the imagined gains for the state tomorrow islikely to be made in the wrong direction. Insteadpoor governments must not prioritize domesticfood security over export-orientation, but rather,should implement policies that redirect produc-tion and distribution towards domestic marketsand capacity-building.

Moreover, a national policy framework needs toensure that the production of export goods is notbased on cost-externalization, or the exhaustionof non-renewable domestic resources. Forexample countries in arid regions should beconcerned about exports that use large amountsof water in their production and thus depleteaquifers and ground water tables, such as cutflowers, or vegetables. Resource use is to be inter-nalized into the price of the product throughappropriate environmental policies, such as taxesor fees. Moreover as the exports business oftengoes along with intensive industrial farmingpractices, impacts associated with thesepractices, such as the pollution of soils and waterwith chemical residues or the loss of biodiversity,should be banned. For a comparative advantagethat is based on non-renewable resource exploi-tation or destruction will not pay off in the long-run.

In addition, a smart trade policy frameworkwill ensure that export earnings are reinvested ina way that creates a virtuous circle. It is primarilyLeast Developed Countries, where the linkagesbetween export-oriented agriculture and the restof the economy are rather weak, who havewitnessed the development of export enclavesthat not only failed to stimulate other sectors,but also failed to induce economic growth.Governments, therefore, should includeelements that effectively embed export activitiesinto the wider rural economy. An export compo-nent in agricultural growth and rural develop-ment is most effective in reducing poverty andstrengthening rural development if farming iswell connected to further value-adding enter-prises in the food system, such as local proces-sing and retailing industries, and if the agricul-

tural sector as a whole has substantial linkageswith other economic sectors. The UN Food andAgriculture Organization (FAO) has discoveredthat such ‘linkage-rich’ agriculture so far rarely

dovetails with export agriculture. FAO states that‘linkage-rich’ agriculture is usually encouragedby labor intensive rather than capital intensivemethods of production, as well as by a moreequitable distribution of income, consumptionpatterns favoring local rather than importedgoods and services, and through links to othermarkets, especially urban produce markets thatcan continue to absorb production increaseswithout large falls in produce prices.143 Only ifsuch a framework is in place, export earningscould effectively be used to upgrade and diver-sify the agrarian production base, and at thesame time considerably improve sustainablerural development.

Small farmers will be better positioned to reappotential benefits from exports where theseframework conditions are in place. Currently thebest export opportunities emerge from small-scale production of high value commodities, suchas fruits or vegetables. Indeed in recent years, incases where farmers were successful in produ-cing crops for foreign markets, they have experi-enced the fastest pace of poverty reduction.144

Despite the fact that men are the primary face ofthe export business, in some cases women couldimprove their income base, such as in the produc-tion of shea butter or smoked fish.145 Thesefarmers were able to diversify their income,create employment opportunities, and reducetheir vulnerability. For example, in Ghana low-income female farmers have been able toincrease their income and extend their land rightsby participating in cocoa production for exportthrough an inter-cropping system that includesfood staples. Again public policy holds the key toa fair distribution of benefits from exports. In theabsence of institutions that make markets work

“In Latin America the export-oriented model that replaced themodel of import substitution has enslaved the economy to theprimary sector with production concentrated on raw materials. We must reverse this export-led strategy and work towardscatalyzing more diversified and balanced economic development.”

Juan Luis Díaz, FUNDAPAZ, Argentina, at the South American Regional Consultation, August 2006

A national policyframework needsto ensure that theproduction ofexport goods isnot based on cost-externalization

Public policy holdsthe key to a fairdistribution ofbenefits fromexports

72

for the poor, globalization can be expected toincrease return to scale and exacerbate inequali-ties. Therefore, trade policy has to be seen as anintegral part of national poverty reduction strate-gies, in which land redistribution, recognition ofcommunal land rights, development of marketinginfrastructure, and provision of services in parti-cular to women farmers, all play a key role inextending opportunities. Measures to reducecosts to small farmers through improved trans-port infrastructure, access to market information,and credit are also vital.

Systemic Differential Treatment

Ever since developing countries started joiningthe GATT, they requested a special treatmentbased on their economic weaknesses and disad-vantages. This special treatment was acknow-ledged for the first time in the 1979 GATT rules.The ‘Enabling Clause’ was adopted to allow a‘Special and Differential Treatment’ (SDT) tocertain developing countries, such as quota- ortariff-free market access for Least DevelopedCountries. However, since it was enacted, SDT hasfailed to meet expectations.146 In many cases, SDTprovisions offered by developed countries consi-sted of ‘best endeavor’ language, which wasbound to further developing country concessionsin other policy areas. In other cases, SDT provi-sions were never implemented. Neverthelessthose SDT provisions that did favor developingcountries merely consisted of corrective measuresto the common agenda. Longer periods for theimplementation of agreements, for instance, orslightly smoother tariff reduction formulae did notchange the course, but only the timing of tradeliberalization vis-à-vis the stronger players. At theend of the day, however, weak and strongcountries were treated alike, with the same ‘one-size-fits-all’ approach.

In a rush of sarcasm, the writer Anatole Franceonce mocked “the majestic egalitarianism of thelaw, which forbids rich and poor alike to sleepunder bridges, to beg in streets, and to stealbread”. The aphorism pinpoints to the injusticesthat can arise when everyone is treated equally,emphasizing that the end result actually dependson the starting conditions. The concept of SDTcontains some kernel of this wisdom. For it impliesthat recognizing every nation as equal does notnecessarily imply treating them in equal fashion;on the contrary, it is fair to treat equally only thoseof equal strength, and to treat unequally those ofunequal strength. From this perspective, SDT is animportant key to greater fairness in traderelations. However, it must evolve from an end-of-the-pipe corrective measure to a ‘Systemic Diffe-rential Treatment’, i.e. it must become a systemicstructural characteristic of the trade regime.

Identifying criteria for differentiating betweendeveloping countries is a thorny issue. Currently,the WTO Agreement on Agriculture distinguishesNet Food-Importing Countries as well as LeastDeveloped Countries from the remaining develo-ping countries. Providing special treatment toLeast Developed countries, as is practiced for

Guidelines for a sustainable export policy

■ Place priority for national food security aboveexports, and give priority to the production forsubsistence and domestic markets overproduction for foreign markets;

■ Discourage the export sector from occupying land and natural resources if such occupationnegatively impacts on the domestic sector;

■ Avoid the concentration of export benefits in thehands of a few large-scale farm operations orcorporations;

■ Involve rural small producers and farmercooperatives, as well as landless laborers, in the export economy as much as possible, whileensuring fair trade relations and decent workingconditions;

■ Promote the empowerment of women in theexports business, and ensure gender equity inreaping export benefits;

■ Prevent the industrialization of agriculture, and foster the spread of knowledge-and labor-intensive agricultural production practices, such as biodiversity farming andagroecology;

■ Effectively link export agriculture to othereconomic sectors, and embed it in the wider rural economy.

Special anddifferential

treatment mustbecome a systemic

structuralcharacteristic ofthe trade regime

73

example in the EU’s ‘Everything But Arms’ initia-tive is highly appropriate. But what happens if acountry has just graduated out of that group andis now being treated equally vis-à-vis the moreadvanced developing countries? Indeed a moresophisticated differentiation would ensure agreater degree of fairness in the system.

A one-by-one grading of countries wouldensure the necessary nuances in differentiationwhereby potential trade benefits could be distri-buted on a progressive basis among all countries.One criterion could be the amount of GNP percapita. Such a differentiation could binddeveloped and developing countries alike,thereby departing from the tendency of distribu-ting rights and obligations along the North-Southaxis. For example, a middle-income country likeAlgeria would be granted special treatment by theEU, but would itself be required to grant specialtreatment to Niger. This way the provision not onlycontributes to closing the North-South gap, butalso helps balance rapidly evolving asymmetriesamong developing countries.147 However, thereare important drawbacks of a GNP-based systemof differentiation. Smaller countries might loseout against larger ones. Moreover, GNP as anindicator provides neither information on thedistribution of income in a given country, norinsights into the real needs of these countries –apart from their desire to increase incomes.

As a middle ground approach, the Board ofSwedish Agriculture proposed the creation of fivegroups of developing countries based on multiplecriteria.148 These consisted of: food insecure, foodneutral and food secure countries, as well as abroader category of poor countries based on theirrural development needs, and a number of excep-tions to countries that would not qualify forspecial treatment, such as advanced developingcountries and significant net agricultural expor-ting countries. In any case, whatever classificationis chosen in the end, it should enable a systematicyet nuanced differentiation, which is objective,relevant and highly robust in light of the widearray of asymmetries that dominate agriculturaltrade relations.

What would be the constituent elements of aregime of systemic differential treatment? It isself-evident that any policies introduced in thename of greater equity among nations have to becompatible with policies for livelihood securityand environmental protection. Increasing thequantitative flow of exports from South to Northwill undermine these goals unless quality is also

secured. For these reasons, this report recom-mends that social and environmental process andproduction standards should be developed underthe rubric of multilaterally agreed meta-standards(chapter 3.4). In addition, this report suggeststhat countries should be enabled to qualify theaccess to their markets upon compliance withthese standards – for instance through lower orzero tariffs for socially and environmentally soundproducts. However, the key question remains as towhether a scheme of qualified market accessbased on strict sustainability process and produc-tion standards could be compatible with the needto foster trade opportunities for the poorest andmost needy countries?

There are two possible solutions. First,countries that wish to import a certain commoditycould set up a qualified tariff rate quota system.Under such a system they would first classifyimports according to tariff levels under their quali-fied market access scheme. Sustainably producedmangos, for instance, would pay zero or a very low

tariff, while higher tariffs would be placed onconventionally produced mangos. Second, ineach tariff class, quotas would be established andgranted to countries on the basis of the differen-tiation criteria. In other words, quotas would beallocated to weaker countries first, and wouldonly allow imports from stronger countries whenthose quotas were exhausted. For example,Algeria would not be allowed to export its millet tothe EU until Niger had exhausted its quota formillet exports to the EU. This would be an optioneven in sectors where countries had implementeda supply management scheme. As a matter ofTrade Justice, for instance Northern countries withthe capacity of self-sufficiency could reducedomestic supply to a level at which they leave acertain share of demand open for imports.Second, poor countries will require assistance toimplement quality standards and to comply withthe standards enacted by richer countries undertheir qualified market access schemes. As sugge-

“Small farmers from our region have had very mixed experienceswith exports to Europe. In many cases, too much export-ledagriculture has created unhealthy dependencies. Developing fairand sustained trade relations with our neighboring countriesshould be a primary concern.”

Assétou Kanouté, ADAF/Gallè, Mali, at the West African Regional Consultation, February 2006

74

sted above, an ‘International Rural DevelopmentFund’ could facilitate such assistance by suppor-ting producers in the global South in producingsustainable goods (chapter 3.4).

Solidarity exchanges

It is not set essential for international economicexchange networks to embrace both North andSouth, just as it is not a natural law that theirevolution be governed solely by the profit motive.Instead Southern country groupings may well bemore effective in addressing shared concerns forhuman well-being and sustainable development.Trade across borders does not need to be drivenprimarily by the pursuit of economic gain. Interac-tions can also consolidate around endeavors thataim at carrying out socially important projects inareas like health, infrastructure, housing, orsustainable production. However, an essentialparadigm shift is indispensable, namely thatcross-border links must be forged for the purposeof cooperation, and not for the purpose of compe-tition.

There are essentially three approaches forovercoming inequalities: beating the hegemon ontheir own terms; garnering a greater share in thedistribution of benefits; or retreating from the raceby redefining the terms for success. Solidarityexchanges imply the latter option. They bidfarewell to the idea that every country in the endis expected to turn into a ‘developed country’ bycompeting its way to the top. As soon as one inter-prets ‘development’ in much broader terms thanGDP and per capita incomes, by including strongcommunities and communal ties, a rich connec-tion with nature and the environment, and thethriving of cultures, languages and customs, diffe-rent avenues of cooperation open up. The realiza-tion of human rights would be an obvious startingpoint for such cooperative exchanges, based onthe important assumption that all countries mustbe able to secure their citizens’ economic, social

and cultural rights. Resources and investmentsmust be mobilized and goods must be exchangedto ensure the universal access to food, drinkingwater, housing, employment, health and educa-tion. In addition, it is obvious that a broad-scaletransition to sustainable production andconsumption patterns will offer considerableopportunities for cooperation and cross-bordercollaboration.

A fair trading regime will facilitate solidarityexchanges. It would prompt a fundamental changein the framework that currently fosters competitionto one that fosters cooperation. A great deal ofdevelopment cooperation during the past 50 yearshas been conducted in this spirit, and there isabsolutely no reason why such cooperativenetworks should necessarily be built around theNorth-South axis. Presently, for instance, TheBolivarian Alternative for the Americas (ALBA),championed by Hugo Chavez and leaders in Cuba,Bolivia, Argentina, and Ecuador, can be read as anattempt at regional integration that is not primarilybased on trade liberalization, but on a new visionof welfare and social equity.149 Whatever one mightthink about the ambivalent exchanges betweenVenezuelan oil and Cuban doctors or betweenBolivian natural gas and Venezuelan infrastructureknow-how, it is sufficiently clear that the profitmotive has been replaced by an ethos of solidarity.Why should it be so unthinkable that economicorganizations such as the South Asian Associationof Regional Cooperation (SAARC) or the AfricanUnion reflect this shift in values? After all, even theEuropean Union, on close examination, is muchmore than just a free trade zone. It has constructeda political and social architecture that is intendedto balance the profit motive with important socialand environmental values. Indeed, embeddingthese values into the global trade frameworkwould not only serve the cause of trade justice, butit would protect the global environment andguarantee the sustainable livelihoods of millionsof farmers around the world.

Cross-bordertrade links should

be forged for thepurpose of

cooperation, andnot for thepurpose of

competition

75

The authors of this document maintain thata multilateral framework for trade isindispensable. However the WTO in itspresent institutional shape fails to meet

the requirements for such a framework. As aconsequence, the WTO faces the challenge toreinvent itself or to leave the institutionalization oftrade rules to other settings in the context of theUnited Nations. Below we set out a number ofpreliminary suggestions for new agriculture tradearchitecture based on the key issues and recom-mendations put forth in this report.

On principles

GATT and WTO have been established on the basisof the principles of ‘Most Favored Nation’ and‘National Treatment’, both expressions of thegeneral principle of Non-Discrimination. In ourview, non-discrimination should continue to be anunderlying principle so long as it is properly quali-

fied by the principle of Democratic Sovereignty(see chapter on Principles). Yet we suggest toeliminate the National Treatment rule, at least inthe context of agriculture. We believe that theethos of global solidarity and the principle ofExtra-territorial Responsibility require thatnations should not be discriminated against,either in a positive or negative sense. However,they justify protection of domestic producers overforeign competitors at the border. In this light, weconcur with the principle expressed in the 2004Draft Peoples’ Convention on Food Sovereigntythat: “Food sovereignty becomes the right ofpeople and communities to decide and implementtheir agricultural and food policies and strategiesfor sustainable production and distribution offood”.150 Indeed, the proposed policies to governimports are grounded in the principles ofDemocratic Sovereignty and Economic Subsi-diarity, which themselves are incompatible withthe National Treatment principle.

ConclusionTowards a post-WTO Architecture of Agricultural Trade

76

Furthermore, the concept of ‘non-tariff barriers’is difficult to reconcile with the principle ofDemocratic Sovereignty. The concept was intro-duced during the transition from the GATT to theWTO. It has led to major interventions in supportpolicies, patenting rules, basic services, andproperty laws, extending the influence of traderules into domestic politics far behind borders.But the weight given to the concept of ‘non-tariffbarriers’ undermines the right of people andcommunities to organize their affairs – e.g.support to farmers, intellectual property rights,and land tenure laws – according to their prefe-rences. The language of ‘non-tariff barriers’ has areductionist effect; it boils down complex anddiverse political arrangements to mere obstaclesto trade. In accordance with the principle ofDemocratic Sovereignty, trade policy rule-makingshould not interfere with domestic politics, butshould concentrate instead on market accessissues and on quality standards for internationalexchanges.

However the principle of Democratic Sover-eignty is circumscribed by the right of otherpeople and communities to their own right tosovereignty. In other words, the freedom of anation ends where the freedom of another nationbegins. This is where the principle of Extra-terri-torial Responsibility comes into play i.e. nationshave to be held accountable for the external trans-border effects of their policies that might harmother countries. The most obvious examples areexport subsidies, domestic support influencingexport prices, food aid etc. that lead to dumpingon international and foreign markets. It is on thebasis Extra-territorial Responsibility that suchpolicies must be abolished, and not on thegrounds of establishing a global level-playingfield.

Moreover, the principle of Democratic Sover-eignty is also circumscribed by the principle ofTrade Justice. The latter principle, especially ifunderstood as a systemic differential treatment ofcountries, seeks to address the drastic inequali-ties among nations in the world; it systematicallyprivileges less powerful nations over morepowerful ones and requires that rights and dutiesmust be distributed unequally, i.e. according torespective needs and capacities.

Finally, any new multilateral institution onagricultural trade would have to be establishedunder the auspices of the United Nations. There-fore the foundational principles enshrined in theUN Charter would naturally govern the new trade

institution. As a result, all of the UN instrumentson human rights, most notably the UN Declarationon Human Rights would underpin the new tradeinstitution as well. By contrast with the goal ofeconomic efficiency that is currently the dominantobjective of the WTO, the new multilateral tradeinstitution would be governed by the principles ofHuman Rights, Environmental Integrity, TradeJustice and Economic Subsidiarity. The goal ofeconomic efficiency would step back to becomeone among other means available to maximizeemployment opportunities and to achieve decentlivelihoods, as well as environmental security andsocial justice.

On functions

The WTO currently performs three functions. It isthe central forum for intergovernmental negotia-tions, it promulgates legally-binding rules, and itsettles trade disputes. Any new institutionalarrangement will have to fulfill these functions aswell, adding, however, some more while alsochanging the overall objectives. At least threeadditional functions would have to be developed.These include the control of international marketprices through a cooperative mechanism basedon supply management, the quality control oftrade flows based on multilateral meta-standards,and the supervision of competition through anti-trust measures. While the current objective of theWTO is the removal of tariffs and non-tariff barriersto trade for the sake of creating a unified globalmarket place, any new institution would have toprioritize reconciling of competing interestsamong nations. Its primary objective would be tomanage and not deregulate international trade.

We propose that the new institution would atleast be comprised of five branches: the Coordi-nation Branch, the Quality Branch, the PriceManagement Branch, the Anti-trust Branch, andthe Dispute Settlement Branch.

The primary task of the Coordination Branchwould be to balance domestic preferences andinternational interests. The branch would have tooversee the restoration of national policy space intrade. Furthermore, it would have to evaluate theinternational effects of domestic policies especi-ally with regard to possible harmful effects ininternational and foreign markets. For example,the coordination branch would host the ‘DumpingAlert Mechanism’ (chapter 3.2). In this context, itwill have to establish measures to ensure that theexercise of democratic sovereignty will not negati-

77

vely affect the legitimate interests of othernations. It will, therefore, be mandated to host the‘Centre for Dispute Mediation in Conflicts OverStandards’ (chapter 3.4), a body that wouldmediate conflicts between different sets ofnational quality standards before a complaintwould be brought to the dispute settlementbranch. The body would also ensure thatcountries did not use national quality standardsas a disguised form of trade discrimination.Furthermore, the Coordination Branch wouldsupport the negotiations on ‘Systemic DifferentialTreatment’ (chapter 3.6), to ensure that thespecial needs and considerations of weakercountries were addressed. It would also monitortrade flows with a view to upholding the TradeJustice principle.

The objective of the Quality Branch would be toensure a minimum quality standard in globalmarkets. The branch would support negotiationson a set of ‘Meta-standards’ that would providethe overarching framework for domestic sustain-ability process and production standards (chapter3.4) to prevent the destruction of social andenvironmental commons. The Quality Branch willalso have to establish monitoring and verificationmechanisms. Additionally, it would host a numberof ‘Development Contract Boards’ (chapter 3.5) tosupervise fairness in trans-border businesscontracts along specific commodity chains. Accre-ditation to these boards would be a condition thatcompanies would have to meet in order to partici-pate in world trade. Since all of these functionsdescribed above could not be discharged by thetrade policy body alone, collaboration would beessential with key United Nations bodies, such asthe UN Food and Agriculture Organization, the UNEnvironment Programme, the respective multila-teral environmental treaty regimes, as well as theWorld Health Organization, the InternationalLabor Organization, and, finally, bodies such asthe proposed ‘Sustainable Rural DevelopmentFund’ (chapter 3.4), which would channelrevenues from qualified market access schemesat the national border to support marginal produ-cers to transition to sustainable farming practices.As well, the Quality Branch would be responsiblefor ensuring systematic consultation with NGOsand the private sector, in addition to facilitatingtheir participation in decision-making.

The task of the Price Management Branch wouldbe to control the swings between price peaks andprice declines on the world market by coordinatingsupply management of agricultural goods. More

specifically, the branch will support the negotia-tions on the ‘Multilateral Cooperative Frameworkfor Balancing the World Market Supply’ (chapter3.3) to manage the use of production capacity inthe North and in the agricultural export nations ofthe South. This will help to control radical swingprices. The observation of price fluctuations, thenegotiation among partners concerned, the defini-tion of price bands, and the identification ofsuitable instruments for influencing productioncapacity will be other areas of focus for the PriceManagement Branch. In addition, the PriceManagement Branch will collaborate with theQuality Branch to oversee fair producer prices in‘Development Contracts’ throughout the entirecommodity chain (chapter 3.5).

The Anti-Trust Branch will be responsible fornegotiating and deciding competition policies atthe global level. In particular, it will have toaddress market concentration in the input produc-tion, processing, trading, and retailing sector. Thebranch will maintain a publicly accessibledatabank containing information on the size andactivities of transnational businesses, includingmergers and acquisitions. With the ‘Anti-trustBody’ (chapter 3.5) at its core, the branch will –similar to national anti-trust policies – monitor themarket power of corporations, define marketshares beyond which oligopolistic conditions areassumed to exist, implement measures to curbthe disappearance of competition in particularmarkets, and scrutinize mergers and acquisitions.Its activity will have to be linked to some juridicalbody like the dispute settlement mechanism or aninternational court for trade law.

Finally the Dispute Settlement Branch will beresponsible for the settlement of disputes amongmember states, and between member states andthird parties such as corporations and NGOs.Overall, this branch will continue establishingpanels on trade disputes, as is currently the casewithin the WTO. If one of the panels is unable tosecure agreement acceptable to all parties, thenthere would have recourse for appeal to anindependent judicial body. Ensuring the impartia-lity of the dispute settlement mechanism will beessential since it will be adjudicating conflictsbetween social, environmental, and commercialvalues. For this reason it is advisable to move theappeal body – equivalent to the standing Appel-late Body in the WTO – out of the institution mainlyconcerned with trade. In addition, this will benecessary to ensure that non-state actors will beable to exercise their to right to complaint.

1 O’Neill 2000

2 Smaller et al. 2005

3 Petersmann 2003

4 UNCHR 2005

5 FAO 2005b

6 Kunstler 2005

7 Fairhead/Leach 2005

8 Millennium EcosystemAssessment 2005

9 Millennium EcosystemAssessment 2005, p. 67

10 Millennium EcosystemAssessment 2005, p. 13

11 Kotschi/Müller-Sämann 2004;Riethmuller 1999; Tisdell 1999

12 Schuh 2002

13 Georgescu-Roegen 1981, p.303

14 De La Torre Ugarte 2007

15 Berndes 2003;Schütz/Bringezu 2006

16 Hobsbawm 1994, p. 289

17 FAOSTAT 2006

18 Glipo/Ignacio 2005

19 see Glipo 2006

20 FAOSTAT 2006

21 Glipo 2006; Raman 2004

22 FAO 1995; Ong’wen/Wright2007

23 UN DESA 2004

24 Croll and Ping 1997; Gächter2000

25 Nyangito 2003; World Bank2004; Obschatko 2006

26 Ministry of AgrarianDevelopment of theFederative Republic of Brazil2005

27 Sen 1964; Cornia 1985;Tomich/Kilby/Johnston 1995;Gilligan 1998; Heltberg 1998;Raghbendra/Chitkara/Gupta2000;Singh/Kumar/Woodhead2002; for a compilation, seeOng’wen/Wright 2007

28 Clay 2004

29 Altieri/von der Weid 2000;Pretty/Hines 2001; Rosset1999

30 GDPRD 2005

31 Pretty et al. 2006

32 IPCC 2001b

33 European Energy Agency2006

34 Steffen et al. 2004, pp.170

35 Saunders 2004;Kotschi/Müller-Sämann 2004

36 Saunders 2004

37 Hendrickson 2004

38 Millstone/Lang 2003;Horrigan/Lawrence/Walker2002; Lang/Heasman 2004

39 IPPC 2007

40 IPPC 2007

41 IPCC 2001a; Parry et al. 2004

42 Rosenzweig et al. 2004

43 Kotschi/Müller-Sämann 2004;Stolze et al. 2000

44 FAO 2002b

45 Horrigan et al. 2002

46 Shiva 2002

47 Kimbrell 2002

48 Sachs/Santarius 2007b

49 WTO 2004; Lingard 2002

50 OECD 2000

51 CBD 2003

52 CBD 2002

53 WTO 2004

54 CBD 2003

55 Figueroa 1999, p. 28

56 Steger 2005

57 Hoekstra 2003

58 Chapagain/Hoekstra 2003

59 Schütz/Bringezu 2006;Worldwatch 2006

60 UNCTAD 2003

61 Murphy 2006

62 ETC Group 2003

63 Heffernan/Hendrickson 2002

64 Vander Stichele/van derWal/Oldenziel 2005

65 Vorley 2003

66 Cainglet 2006

67 Murphy 2006

68 see for exampleTallontire/Vorley 2005

69 Development Policy Reviewcited in Action AidInternational 2005

70 Lorenzen 2007

71 Porter 1999

72 UNCTAD 2003

73 Murphy 2006

74 Burch 2006

75 Vander Stichele 2006

76 Vellema 2002; Haantuba 2003

77 Murphy 2006

78 Opondo 2000

79 De La Torre Ugarte 2007

80 Fanjul 2006

81 Oxfam 2002

82 Fanjul 2006

83 FAO 2004

84 see for example, Mayrand/Paquin/Dionne 2005; Vorley 2002

85 FAO 2005a

86 National Farmer Union 2005

87 Chomthongdi 2004

88 Asian Development Bank2001

89 Oxfam 2004

90 Kwa/Bassoum 2007

91 Oxfam 2004, p. 30

92 Wade 2005

93 South Centre 2006

94 International Commission onthe Future of Food andAgriculture 2003

95 Malhotra 2006

96 for greater detail see Glipo2006

97 Glipo 2006; Malhotra 2006

98 WSSD 2002, § 63

99 Baldwin 2005

100 Baldwin 2005

101 Pretty 1995, pp. 238

102 Ong’wen/Wright 2007; Korten1999

103 Tansey 2004

104 Cottier 1998

105 for more details, seeSachs/Santarius 2007b

106 see Pretty 1995, pp. 267

107 Reichert 2006

108 OECD 2001; ActionAid et al.2005; Stuart/Fanjul 2005

109 Berthelot 2005; UNCTAD India2006

110 see Pretty et al. 2000

111 Ray/De La Torre Ugarte/Tiller2003

112 De La Torre Ugarte 2007

113 De La Torre Ugarte 2007

114 see also Rosset 2006

115 FAOSTAT 2006

116 Fanjul 2006

117 Hawken et al. 1999

118 Dahlberg 2002

119 IFOAM 2002

120 see for example, Barret et al.2001

121 see IFOAM 2006

122 Maynard/Green 2006;Dabbert/Häring/Zanoli 2002;Offermann/Nieberg 2000

123 Lorenzen 2007

124 see also Clay et al. 2005, pp.210

125 see statistics from FAO 2005b

126 Sachs/Santarius 2007b

127 Vocke/Allen/Ali 2005

128 Ash/Livezey/Dohlman 2006

129 Lorenzen 2007

130 Kotschi 2005

131 www.isealalliance.org

132 Murphy 2006

133 Cainglet 2006

134 ActionAid 2003;Singh/Dhumalie 1999

135 Cainglet 2006

136 quoted in Tallontire/Vorley2005, p. 5

137 Sachs/Santarius 2007a

138 for such strategies see Joneset al. 2000

139 Monbiot 2003

140 see for details Glipo 2006

141 FAO 2002a; Glipo 2006;Murphy 2006

142 Hines 2000; Woodin/Lucas2001

143 FAO 2005a

144 GDPRD 2005

145 Kwa/Bassoum 2007

146 Stevens 2003

147 Stiglitz/Charlton 2005

148 see Kasteng et al. 2003

149 Harris/Azzi 2006

150 §1.2, cited in Windfuhr/Jonsen2005

Endnotes

A

B

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D

E

79

Action Aid International (2005): Power Hungry: Six Reasons to Regulate Global Food Corporations. South Africa.

ActionAid (2003): Competition Policy and the WTO.http://www.actionaid.org.uk/_content/documents/competition2_3132004_122256.pdf

ActionAid/Caritas/CIDSE/Oxfam (2005): Green but not clean. Why a comprehensive review of Green Box subsidies isnecessary. Joint NGO Briefing Paper from Action Aid International, Caritas Internationalis, CIDSE and Oxfam International.

Asian Development Bank (2001): Thailand: Country Environmental Policy Integration Analysis Report. Available atwww.adb.org/Environment/old/AEO/pub/documents/thailand.pdf

Altieri, A./von der Weid, J. (2000): Prospects for agroecologically based natural-resource management for low-income farmersin the 21st century. http://agroeco.org/fatalharvest/articles/agroeco_resource_mgmt.html

Ash, M./Livezey, J./Dohlman, E. (2006): Soybean Backgrounder. Economic Research Service (ERS) of U.S. Department ofAgriculture. USA.

Baldwin, Richard E. (2005): Who finances the Queen’s CAP payments? CEPS Policy Brief, No. 88, December.

Barrett, H.R./Browne, A.W./Harris, P.J.C./Cadoret, K. (2001): Smallholder Farmers and Organic Certification: Accessing the EUMarket from the Developing World. In: Biological Agriculture and Horticulture, Vol. 19, pp. 183-199.

Berndes, Göran et al. (2003): The contribution of biomass in the future global energy supply: a review of 17 studies. In:Biomass and Bioenergy, No.25, pp.1-28.

Berthelot, Jacques (2005): The green box a black box which hides the gold box. December 9, 2005. Available atwww.wto.org/english/forums_e/ngo_e/posp55_solidarite_e.doc

Burch, David (2006): Presentation by David Burch of the Griffith University, Brisbane, Australia, during the AgrobusinessAccountability Initiative Asia Forum, Chiang Mai 27-29 May.

Cainglet, Jayson (2006): From Bottleneck to Hourglass: Issues and Concerns on the Market Concentration of Giant AgrifoodRetailers in Commodity Chains and Competition Policies. Global Issues paper No. 29. Berlin: Heinrich Böll Foundation.

CBD (Convention on Biological Diversity) (2003): Domestic Support Measures and their Effects on Agricultural BiologicalDiversity. Note by the Executive Secretary. COP 7, 9-20 February 2004.

CBD (2002): Assessing the Impact of Trade Liberalization on the Conservation and sustainable use of agricultural biodiversity.Note by the Executive Secretary, COP 6, 7-19 April.

Chapagain, A.K./Hoekstra, A.Y. (2003): Virtual water flows between nations in relation to trade in livestock and livestockproducts. Value of Water Research Report Series No. 13. Delft.

Chomthongdi, Jacques-chai (2004): Challenging the Market Access Agenda: A Case Study on Rice from Thailand. Bangkok:Focus on the Global South.

Clay, Jason (2004): World Agriculture and the Environment. A Commodity-by-Commodity Guide to Impacts and Practices.Washington.

Cornia, G. (1985): Farm size, land yields and the agricultural production function: an analysis for fifteen developing countries.In: World Development No. 13, Iss. 4, pp. 513-534.

Cottier, Thomas (1998): The protection of genetic resources and traditional knowledge in international law. In: Past, presentand future. Journal of International Economic Law, No.1, Iss.4, pp. 555-584.

Croll, Elisabeth J./Ping, Huang (1997): Migration For and Against Agriculture in Eight Chinese Villages. In: China Quarterly, No.149, pp. 128-146. United Kingdom.

Dabbert, S./Häring, A./Zanoli, R. (2002): Politik für den Öko-Landbau. Stuttgart.

Dahlberg, Kenneth A. (2002): Green Revolution. In: Ted Munn (ed.), Encyclopedia of Global Environmental Change. Chichester:Wiley, vol. 3, 347-352.

De La Torre Ugarte, Daniel (2007): The Contributions and Challenges of Supply Management in a New Institutional AgriculturalTrade Framework. EcoFair Trade Dialogue Discussion Paper No.6. www.ecofair-trade.org

European Energy Agency (2006): Integration of environment into EU agriculture policy – the IRENA indicator-basedassessment report. Brussels. http://reports.eea.europa.eu/eea_report_2006_2/en/IRENA-assess-final-web-060306.pdf

ETC Group (2003): Communiqué No. 82, November/December 2003.http://www.etcgroup.org/documents/Comm82OligopNovDec03.pdf

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Participants of the regional consultations

West African Regional Consultation, Mbour, Senegal; February 2006Bah, Macky Agency for Cooperation and Research in Development – Guinée

(ACORD) Guinea

Bangré, Françoise Fédération Nationale des Femmes Rurales du Burkina (FENAFER\B) Burkina Faso

Coulibaly, Ismael Coordination Nationale des Organisations Paysannes (CNOP) Mali

Diop, Abdoulaye Agral Export Senegal

Goita, Mamadou Institut de Recherche et de Promotion des Alternatives en Développement (IRPAD) Mali

Hama Garba, Mohamed Environment Development Action in the Third World, Protection Naturelle des cultures (ENDA Pronat) Senegal

Kama, Joseph Mouvement des Adultes Ruraux Catholiques du Sénégal (MARCS) Senegal

Kanouté, Assétou Association pour Développement des Activités de Production et de Formation (ADAF-Gallè) Mali

Kèita, Modibo Cabinet d’Études Kéita – Kala Saba (CEK- Kala Saba) Mali

Marone, Sadibou Le Soleil Senegal

Mayaki, Ibrahim HUB, réseau de développement rural et agricole pour l’Afrique / WCA, Conference of West and Central African Ministers of Agriculture (CMA) Senegal

Millogo, René Service de Dialogue et de Concertation (SEDICO) Burkina Faso

Ndao, Babacar Fédération des ONG du Sénégal (FONGS) / Réseau des Organisations paysannes et des producteurs de l’Afrique de l’Ouest (ROPPA) Senegal

Ndione, Emmanuel Environment Development Action in the Third World, Groupe de Recherche Action Formation (ENDA GRAF) Senegal

Niang, Thiendou Réseau d’Expertise des Politiques Agricoles (REPA) Senegal

Nombré, Eloi Conféderation Paysanne du Burkina Faso Burkina Faso

Ouattara, Bernadette Institut Africain pour le Développement Economique et Sociale (INADES Formation) Burkina Faso

Oudet, Maurice Service D’Édition en Langues Nationales (SEDELAN) Burkina Faso

Thees, Wilhelm Service de Dialogue et de Concertation (SEDICO) Burkina Faso

Asian Regional Consultation; Chiang Mai, Thailand; May 2006Aguja, Mario Phil. Congress/ AKBAYAN Party-List Philippines

Bernardino, Naty Asia Gender and Trade Network-Asia (IGTN) Philippines

Cainglet, Jayson Regional Consultant on Agriculture and Trade Philippines

Chomthongdi, Jacques-Chai Focus on the Global South/ Free Trade Agreements – Watch (FTA-Watch) Thailand

Cruzada, Elisabeth Magsasaka at Siyentipiko Para sa Pag-unlad ng Agrikultura (MASIPAG) Philippines

Dhar, Biswajit Indian Institute of Foreign Affairs, WTO-Center India

Francis, Sheelu Tamil Nadu Women’s Collective India

Francisco, Josefa Asia Gender and Trade Network-Asia (IGTN) Philippines

Geppert, Meike Local Act Thailand

Gronski, Robert National Catholic Rural Life Conference USA

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Hasri Azahari, Delima Expert to Minister for Institutional Relations and Foreign Cooperation, Ministry of Agriculture Indonesia

Hoang Thi Huyen Center for Sustainable Production and Promotion of Rural Trade, Gov.of Vietnam Vietnam

La Van Ly Agriculture Extension Centre – Lang Son province Vietnam

My Lan Vredeseilanden Country Office – Vietnam (VECO-Vietnam) Vietnam

Napitupulu, Tina Bina Desa Indonesia

Narintarakul, Kingkorn Thai Action on Globalization/ Free Trade Agreements – Watch (FTA-Watch) Thailand

Nguyen Viet Khoa National Agriculture Extension Centre, Ministry of Agriculture and Rural Development Vietnam

Ofreneo, René Fair Trade Alliance Philippines

P.V. Satheesh Deccan Development Society (DDS) India

Pascual, Francisco International South Group Network (ISGN) Philippines

Pasimio, Judy Asia Pacific Forum on Women, Law and Development (APWLD) Thailand

Pham Thi Thuy Vredeseilanden Country Office – Vietnam (VECO-Vietnam) Vietnam

Setiawan, Bonnie Institute for Global Justice (IGJ) Indonesia

Singh, Anil South Asian Network for Secularism and Democracy (SANSAD) India

Soe, Valentina Asia Pacific Forum on Women, Law and Development (APWLD) Thailand

Soentero, Titi Asia Pacific Forum on Women, Law and Development (APWLD) Thailand

Surono, Sulastri University of Indonesia Indonesia

Taneewut, Supanee Rural Reconstruction Alumni and Friends Association (RRAFA), Southeast Asian Council for Food Security and Fair Trade (SEACON) Thailand

Tañada, Lorenzo Phil. Congress Liberal Party of the Philippines Philippines

Tutu, Ashraf-Ul-Alam Coastal Development Partnership (CDP) Bangladesh

van Grisven, Marco Vredeseilanden Country Office – Vietnam (VECO-Vietnam) Vietnam

Weerapong, Dararat Stockholm Environment Institute Thailand

South American Regional Consultation; Curitiba, Brazil; August 2006Ahumada, Mario Movimiento de Agricultura Ecológica en Latino América (MAELA) Chile

Armas, Benjamín Confederación Nacional Agraria (CNA) Peru

Batista, Germano Departamento de Estudos Sócio-Econômicos Rurais (DESER) Brazil

Bona, Luis Claudio Assessoria e Serviços a Projetos em Agricultura Alternativa (AS-PTA) Brazil

Brito, Jorge Fundación CRATE Chile

Cal, Daniel Centro Latinoamericano de Economía Humana (CLAEH) Uruguay

Campolina, Adriano ActionAid Brazil

Cardozo, David Sobrevivencia Paraguay

Cedro, Rafael Ministério do Desenvolvimento Agrário (MDA) Brazil

Amorim, Maria da Graça Federação dos Trabalhadores na Agricultura Familiar da região Sul (Fetraf-Sul) Brazil

Delgado, Nelson Universidade Federal Rural do Rio de Janeiro (UFRRJ) Brazil

Díaz, Juan Luis Fundación para el Desarrollo en Justicia y Paz (FUNDAPAZ) Argentina

Dilger, Gerhard Journalist Brazil

Elías, Bishelly Centro de Investigación y Promoción de Campesinado (CIPCA) Bolivia

Gomes, Rosemarie Fórum Brasileiro Economia Solidária Brazil

Hidalgo, Francisco Sistema de Investigación de la Problemática Agraria Ecuatoriana (SIPAE) Ecuador

Lazo, Lalo Foro Boliviano Medioambiente y Desarrollo (FOBOMADE) Bolivia

López, Gualberto Fundación Acción Cultural Loyola (ACLO) Bolivia

Machado Aráoz, Horacio Bienaventurados Los Pobres (BePe) Argentina

Mello, Ladislao Pastoral Social Paraguay

Mineiro, Adhemar Rede Brasileira Pela Integração dos Povos (REBRIP) / Departamento Intersindical de Estatística e Estudos Socioeconômicos (Dieese) Brazil

Nobre, Míriam Sempreviva Organização Feminista – Mulheres em solidariedade Norte-Sul (SOF- MMM) Brazil

Pedace, Roque Argentina Sustentable Argentina

Pereira, Sixto Centro de Capacitación y Desarrollo Agrícola (CCDA) Paraguay

Piepenstock, Anne AGRECOL-Andes Bolivia

Pinto, Francisco Fundación Terram Chile

Revers – Galego, Isidoro Comissão Pastoral da Terra (CPT) Brazil

Rivas, Mario Departamento de Acción Social, Obispado de Temuco (DAS) Chile

Rodríguez, Graciela Instituto Eqüit Brazil

Rodríguez, Francisca Asociación Nacional de Mujeres Rurales e Indígenas (ANAMURI) Chile

Santos, José Antonio Associação de Agricultura Orgânica do Paraná (AOPA) Brazil

Schlesinger, Sergio Federação de Órgãos para Assistência Social e Educacional (FASE) Brazil

Soto, Sergio Programa Argentina Sustentable (PAS) Argentina

Tortelli, Altemir Federação dos Trabalhadores na Agricultura Familiar da região Sul (Fetraf-Sul) Brazil

Vélez, Hildebrando Amigos de la Tierra Colombia – CENSAT Colombia

Wehrle, Andrés Centro de Educación, Capacitación y Tecnología Campesina (CECTEC) Paraguay

Zanotto, Rita Movimento dos Trabalhadores Rurais Sem Terra (MST) Brazil

Zerbini, Fabíola Fórum de Articulação para o Comércio Ético e Solidário do Brasil (FACES do Brasil) Brazil

North American Regional Consultation; Washington D.C., USA; September 2006Alpert, Emily Oxfam America USA

Anderson, Molly Agribusiness Accountability Initiative USA

Bramble, Barbara National Wildlife Federation USA

Dubois, James Georgetown University Law Center USA

Gronski, Robert National Catholic Rural Life Conference USA

Hansen-Kuhn, Karen ActionAid USA USA

Harkness, Jim Institute for Agriculture and Trade Policy USA

Hebebrand, Charlotte International Food and Agricultural Trade Policy Council USA

Hunt, Suzanne Worldwatch Institute USA

Kuhlmann, Katrin Women’s Edge Coaliton USA

Leduc, Yves Dairy Farmers of Canada Canada

Mitchell, Larry American Corn Growers Association USA

Muller, Mark Institute for Agriculture and Trade Policy USA

Ozer, Kathy National Family Farm Coalition USA

Porterfield, Matt Georgetown University Law Center USA

Qualman, Darrin National Farmers Union Canada

Riley, Maria Center of Concern USA

Sampson, Kristin Center of Concern USA

Small, Reverend Andrew US Conference of Catholic Bishops USA

Spieldoch, Alexandra Institute for Agriculture and Trade Policy USA

Steenblik, Ronald Institute for International Sustainable Development Canada

Strickner, Alexandra Institute for Agriculture and Trade Policy Switzerland

Tucker, Todd Global Trade Watch USA

Waskow, David Friends of the Earth – US USA

Wise, Timothy Tufts University USA86

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Mexico and Central America Regional Consultation; Teotihuacan, Mexico; October 2006Aguilar, José Luis Pastoral de la Tierra Interdiocesana Guatemala

Benítez, Sigfredo FUNDACAFE El Salvador

Carazo, Eva Movimiento de Agricultura Orgánica Costarricense (MAOCO) Costa Rica

Carlsen, Laura International Relations Center (IRC) Mexico

Castillo, William Pastoral Social, Limón Costa Rica

de Ita, Ana Centro de Estudios para el Cambio en el Campo Mexicano (CECCAM) Mexico

Espinoza, Juliana Movimiento de Mujeres Campesinas Costa Rica

Fernández, Mario Universidad de Costa Rica Costa Rica

Funes, Fernando Grupo de Agricultura Orgánica (GAO) / Instituto de Investigaciones de Pastos y Forrajes Cuba

Galicia, Luis Asociación para el Avance de las Ciencias Sociales (AVANCSO)/ Plataforma Agraria Guatemala

Garóz, Byron Coordinación de ONG y Cooperativas (CongCoop) Guatemala

Gauster, Susana Alianza Social Continental Guatemala

Guerrero, Marcela Consejo Consultivo Soceidad Civil PAC Costa Rica

Guzmán Ordáz, Adolfo Autogestión de las Comunidades de la Región Tojolabal Alta Mexico

Iñiguez, Felípe Movimiento Agroecológico Latinoamericano (MAELA) Mexico

Keleman, Alder El Colégio de México (colmex) Mexico

Marielle, Cati Grupo de Estudios Ambientales (GEA) Mexico

Oliva Martínez, Leonides Centro de Asesoría y Capacitación Integral Donajiac (CACID) Mexico

Monterroso, Alberto Comercializadora Aj Ticonel Guatemala

Morales, Raúl Federación Nacional de Cooperativas (Fenaccoop) Nicaragua

Nadal, Alejandro El Colégio de México (colmex) Mexico

Pleitez, Jorge Ministerio de Agricultura y Ganadería de El Salvador El Salvador

Saldaña, Francisco Foro Agropecuario El Salvador

San Vicente, Adela Partido de la Revolucíon Democrática, Congreso de México Mexico

Stuart, Roberto Grupo de Promoción de Agricultura Ecológica (GPAE) Nicaragua

Suárez, Victor Asociación Nacional de Empresas Comercializadoras de Productores del Campo (ANEC) Mexico

Téllez, Ramiro Via Campesina Honduras

Ticehurst, Simon Oxfam Mexico

Tolentino, José Angel Fundación Nacional para el Desarrollo El Salvador

Trápaga, Yolanda Universidad Nacional Autónoma de México (UNAM) Mexico

Uribe, Vladimir Instituto Interamericano de Cooperación para la Agricultura (IICA) Mexico

Vanegas, Tania Centro Humboldt Nicaragua

German Regional Consultation; Berlin, Germany; October 2006Datcharry, Gilles Bundesministerium für Ernährung, Landwirtschaft und

Verbraucherschutz Germany

Graefe zu Baringdorf, Arbeitsgemeinschaft bäuerliche Landwirtschaft (AbL) GermanyFriedrich-Wilhelm

Höfken, Ulrike Member of Parliament, Green Party, Chair of Agriculture Committee Germany

Keyserlingk, Graf von Bundesministerium für Ernährung, Landwirtschaft und Sebastian Verbraucherschutz Germany

Knirsch, Jürgen Greenpeace e.V. Germany

Kroll-Schlüter, Hermann Katholische Landvolkbewegung (KLB) Germany

Reichert, Tobias Germanwatch Germany

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Thomsen, Berit Arbeitsgemeinschaft bäuerliche Landwirtschaft (AbL) Germany

Tovar, Margret Netzwerk Afrika-Deutschland (NAD) Germany

Wiggerthale, Marita Oxfam Deutschland Germany

Wilhelm, Birgit Naturland e.V. Germany

European Regional Consultation; Brussels, Belgium; November 2006Adams, Richard European Economic and Social Committee – Various Interests’ Group Belgium

Bode, Bart Broederlijk Delen Belgium

Choplin, Gérard CPE – European Farmers Coordination Belgium

Constantin, Anne-Laure IATP Switzerland

Engelen, Gert Vredeseilanden Belgium

Geier, Bernward COLABORA Germany

Gjengedal, Hildegunn Federation of Norwegian Agricultural Co-operatives Norway

Hoff, Eivind WWF-EPO Belgium

Lebessis, Notis European Commission – DG Agriculture Belgium

Légaut, Guillaume CIDSE Belgium

Lines, Tom Agribusiness Accountability Initiative United Kingdom

Maertens, Miet KU Leuven Belgium

Osterhaus, Anja Fair Trade Advocacy Office Belgium

Rodriguez Ortega, South Centre SwitzerlandLuisa Antonia

Ross, Bruce Ross Gordon Consultants Belgium

Schaps, Jens European Commission – DG Trade – Unit G2 Belgium

Steel, Gareth European Commission – DG Trade – Unit G3 Belgium

Vertriest, Isabel Oxfam Wereldwinkels Belgium

Vorley, Bill International Institute for Environment and Development United Kingdom

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EcoFair Trade Dialogue Discussion Papers

Murphy, Sophia (2006): Concentrated Market Power and Agricultural Trade.EcoFair Trade Dialogue Discussion Papers No. 1Sound markets depend upon competition, but the degree of concentrated market power in global agriculturalmarkets has already grown to an alarming size. Sophia Murphy shows ways for accountable agri-food markets.

Glipo, Arze (2006): Achieving Food and Livelihood Security in Developing Countries: The Need for a StrongerGovernance of Imports.EcoFair Trade Dialogue Discussion Papers No. 2Cheap influxes of agricultural imports have devasted farmer livelihoods in North and South. Arze Glipo analyseshow the governance of agricultural imports in developing countries has been seriously eroded due to tradeliberalization, and identifies main instruments and measures to restore countries’ policy space in the gover-nance of imports.

Fanjul Suárez, Gonzalo (2006): Agriculture and Trade in an Asymmetric World.EcoFair Trade Dialogue Discussion Papers No. 3Free trade plays into the hands of the strong. De-rigging the rules is therefore not sufficient for a fair tradingsystem. Gonzalo Fanjul explains in his discussion paper some major asymmetries, and how to redress theseasymmetries in order to systematically favor weak over strong players in the trade arena.

Malhotra, Kamal (2006): A Sustainable Human Development Approach to the Role of Exports in a NationalDevelopment Strategy.EcoFair Trade Dialogue Discussion Papers No. 4While exports can make a positive contribution to both poverty reduction and sustainable human development,they do so only if they are designed in accordance to the particular circumstances of a given country. KamalMalhotra outlines the macro-economic interrelationship between exports and human development.

Lorenzen, Hannes (2007): Qualified Market Access. How to include environmental and social conditions intrade agreements.EcoFair Trade Dialogue Discussion Papers No. 5The current free trade paradigm promotes a race to the bottom of environmental and social standards in agricul-tural production, in particular as transnational corporations relocate where standards are lowest. HannesLorenzen suggests »qualified market access« as an instrument that re-considers tariffs and quotas in terms oftheir suitability for protecting common goods.

De La Torre Ugarte, Daniel (2007): The Contributions and Challenges of Supply Management in a New Institu-tional Agricultural Trade Framework.EcoFair Trade Dialogue Discussion Papers No. 6Other than in many industries, in agriculture supply and demand are very inelastic. A trade regime that is basedon the assumption that free market adjustments in agriculture works, is ill-advised. Daniel De La Torre Ugartetherefore analyses the potential role of supply management in a future trade regime.

Ong’wen, Oduor/Wright, Sarah (2007): Small Farmers and the Future of Sustainable Agriculture.EcoFair Trade Discussion Paper No. 7The future of truly socially and environmentally sustainable agriculture lies in small farming systems, in parti-cular if they are practicing biodiversity farming. Odour Ong’wen and Sarah Wright analyse reasons why andopportunities how small farmers can be empowered – and how trade rules should look like in this regard.

Kwa, Aileen/Bassoum, Souleymane (2007): Exploring the Linkages Between Agricultural Exports andSustainable Development.EcoFair Trade Discussion Papers No. 8projected

Sachs, Wolfgang/Santarius, Tilman (2007): World Trade and the Regeneration of Agriculture.EcoFair Trade Dialogue Discussion Papers No. 9Ever since humans settled agriculture has generated environmental degradation and social tensions. Howeverindustrial agricultural farming practices particularly impact the environment, and are highly dependent onenvironmental resources that cannot be renewed. Tilman Santarius and Wolfgang Sachs investigate howindustrial agriculture is intertwined with the current trade regime, and discuss trade policies that may help toregenerate agriculture with the ecosphere.

Souleymane BassoumSenegal, Director of AGRECOL-Afrique and a recognized expert on sustainableagriculture policies in the West African region. His main areas of work are ecologicalagriculture and fair trade.He is a practitioner of organic farming and has a degree inagriculture.

Gonzalo Fanjul SuárezSpain, research coordinator at Intermón Oxfam. Having closely followed theagriculture negotiations at the WTO for the last several years as well as issuesconcerning the developmental impacts of the common agricultural policy of the EU,he has a profound expertise on agricultural trade issues.He has a degree in economics.

Arze GlipoPhilippines, director of the Integrated Rural Development Foundation of thePhilippines (IRDF), convenor of the Asia Pacific Network on Food Sovereignty(APNFS). She has developed a profound knowledge on trade related gender andpoverty issues. She has a Master’s in development economics.

Aileen KwaSingapore, currently stationed in Geneva, is a policy consultant on trade issues. She has been monitoring trade negotiations since the Singapore Ministerial in 1996and has also worked with developing country delegations in Geneva, especially onagricultural issues. She is co-author of the book “Behind the Scenes at theWTO:The Real World of Trade Negotiations”.

Hannes LorenzenGermany, is advisor to the Committee on Agriculture and Rural Development of theEuropean Parliament for the Greens/EFA Group and as such a specialist onEuropean agriculture policies. He has a Master’s in Sociology and Agriculture and apostgraduate degree in international rural development.

Sophia MurphyBritish and Canadian, currently living in Australia, Senior Advisor to the US-basedInstitute for Agriculture and Trade Policy (IATP) and an internationally recognizedexpert in food and trade issues. She has authored a number of papers on foodsecurity, multilateral trade rules and the structure of global agricultural markets.She has a Master’s Degree in social policy, planning and participation in developing countries.

Expert Panel

Oduor Ong’wenKenya, country director of SEATINI (Southern and Eastern Africa Trade Informationand Negotiations Institute). Former executive director of EcoNews Africa.He has a

Master’s degree in economic policy of developing countries and an undergraduatedegree in mathematics and chemistry. Expert in world trade issues and

sustainability.

Anna Luiza Ferreira PijnappelBrazil, consultant for the Department of International Affairs at the Brazilian Ministry

of Rural Development (MDA).In this context she follows closely the agriculturaltrade negotiations at the WTO and MERCOSUR. She has a special focus on the

effects of trade agreements on family farming in Brazil. She has a Master’s ininternational affairs.

Rita Schwentesius Rindermann,originally from Germany, since 20 years in Mexico, is research coordinator of

CIESTAAM (Research Center on Economic, Social and Technological Aspects ofInternational Agriculture at Chapingo University). Her specialization is the

agricultural chapter of the North American Free Trade Agreement (NAFTA). She hasa Master’s in plant production and a Ph.D. in international agricultural economics.

Daniel De La Torre UgartePeru, since 15 years in the USA, associate director of the University of Tennessee’s

Agricultural Policy Analysis Center. His primary research area is agricultural supplymanagement.Daniel De La Torre’s broad list of publications includes the report

“Rethinking US Agricultural Policy:Changing Course to Secure Farmer LivelihoodsWorldwide” (2003).He has a PhD in agricultural economics.

Wolfgang Sachs (Moderator)Germany, Senior Fellow at the Wuppertal Institute for Climate,Environment and

Energy.His primary areas of research are globalization and sustainability,environment and development as well as new models of wealth.He served as the

coordinator and lead author of “The Jo’burg Memo. Fairness in a Fragile World”(2002) He has a Master’s in sociology and theology and a PhD in social sciences.

Tilman Santarius (Co-Moderator)Germany, Senior research fellow at the Wuppertal Institute for Climate, Environment

and Energy. His main areas of work are economic instruments in climate policy,global governance and issues regarding trade and the environment. With Wolfgang

Sachs he co-authored the book “Fair Future. Limited Ressources, Security, andGlobal Justice” (2007). He has a Master’s in Sociology, anthropology and economics.

The Heinrich Böll Foundation is part of the Green political movement that has developed worldwide as a responseto the traditional politics of socialism, liberalism, and conservatism. Our main tenets are ecology and sustainabi-lity, democracy and human rights, self-determination and justice. We place particular emphasis on genderdemocracy, meaning social emancipation and equal rights for women and men. We are also committed to equalrights for cultural and ethnic minorities and to the societal and political participation of immigrants. Finally, wepromote non-violence and proactive peace policies.

To achieve our goals, we seek strategic partnerships with others who share our values. We are an independentorganisation, that is, we determine our own priorities and policies. We are based in the Federal Republic ofGermany, yet we are an international actor in both ideal and practical terms.

Our namesake, the writer and Nobel Prize laureate Heinrich Böll, personifies the values we stand for: defence offreedom, civic courage, tolerance, open debate, and the valuation of art and culture as independent spheres ofthought and action.

MISEREOR was founded in 1958 as an agency “against hunger and disease in the world”. In its capacity as theoverseas development agency of the Catholic Church in Germany, it offers to cooperate in a spirit of partnershipwith all people of goodwill to promote development, fight worldwide poverty, liberate people from injustice,exercise solidarity with the poor and the persecuted, and help create “One World”.

MISEREOR is mandated by the Catholic Church in Germany:

� to fight the causes of hardship and misery as manifested chiefly in countries of Asia, Africa and Latin Americain the forms of hunger, disease, poverty and other forms of human suffering,

� thus enabling the people affected to lead a life of human dignity,

�and to promote justice, freedom, reconciliation and peace in the world.

The assistance we provide in the South is designed to stimulate and support self-help and pave the way for sustain-able improvement in the living conditions of the poor. MISEREOR is also engaged in education, advocacy andcampaigning work in the North.

The Wuppertal Institute explores and develops models, strategies and instruments to support sustainabledevelopment at local, national and international level. Sustainability research at the Wuppertal Institute focuseson ecology and its relation to economy and society. Special emphasis is put on analysing and supporting techno-logical and social innovations that decouple prosperity and economic growth from the use of natural resources.«

This is how the Wuppertal Institute’s mission statement describes the Institute’s activities. Based on the classicscientific disciplines, the research conducted towards this end combines their approaches to generate practicaland actor-oriented solutions. Problems, solutions and networks are equally focused on global, national andregional/local levels.

The Institute was founded in 1991 under the direction of Professor Ernst Ulrich von Weizsäcker. Professor PeterHennicke heads the Institute as its President and Chief Research Executive. The Business Manager is BrigitteMutert-Breidbach. The Institute’s seat is in Wuppertal, and it has been represented in Germany’s capital by itsBerlin Office since 2004. In 2005, the Wuppertal Institute and the United Nations Environment Programme jointlyfounded the UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production (CSCP)in Wuppertal.

The Green PoliticalFoundation

The German Catholic Bishops’Organization forDevelopment Cooperation

The Institute for AppliedSustainability Research

The Organizations

The reform of agricultural trade rules is at the center of negotiations at the WorldTrade Organization (WTO) regarding a multilateral framework for the globaleconomy. However, the reforms envisaged do not bode well for the future ofagriculture across the globe. They will deepen the desperation of farmers acrossthe world and undermine local and global ecosystems. In contrast, this reportexplores new directions for trade rules beyond the free trade paradigm. Placingthe challenges posed to agriculture and rural communities at the center ofattention, it proposes political perspectives and policy instruments for a tradingsystem that offers genuine opportunities for the poor, preserves theenvironment, and helps agriculture leap into the post-fossil age.

This report is the result of the EcoFair Trade Dialogue, a two-years extensiveconsultation and exchange process that took place across all continents. Theproposals have been discussed and improved upon by a great number ofrepresentatives from farmer organizations and grass-roots initiatives, politics,the academic world, and civil society organizations. As it is high time to achievea paradigm shift and start trade negotiations towards a General Agreement onSustainable Trade, this report understands itself as a contribution to this aim.

www.ecofair-trade.org