Tropical Products, Trade, Natural Resources Management and Poverty
2nd – 4th December 2007 • Co-organised with Institute for International Trade Negotiations (ICONE)
Although agricultural production has increased significantly over the decades, the number of hungry people around the world has grown in recent years, indicating that the problem is not related to food quantity, but to ensuring adequate income to the poor who rely on agriculture. Further, the agricultural production expansion witnessed around the world came with a heavy cost to the environment, meaning that the sustainable use of natural resources needs to taken into account.
The reform of the global agriculture trading system currently being negotiated in the context of the Doha Round - with the objective of establishing a “fair and market-oriented trading system” - will play a major role in this process. Over the last fifteen years, world agriculture trade has grown almost twice as fast as production. However, highly subsidised agricultural production and exports from Organisation for Economic Cooperation and Development (OECD) countries as well as the anti-competitive behaviour of trading firms are depressing world prices, thereby affecting development prospects in the South. Exports from developing countries, of tropical products in particular, continue to face a variety of specific challenges, ranging from non-tariff barriers, and technical barriers to trade (such as sanitary and phytosanitary requirements), tariff escalation, preference erosion, and price volatility.
The importance of tropical products for developing countries is undeniable. Their significance has been recognised in an array of studies, fora and organisations. As indicated in a document by the Common Fund for Commodities (2004): “The livelihoods of hundreds of millions of the world’s poorest people in developing countries, and in particularly in the least developed countries, are heavily dependent on commodities. Commodities form the backbone of the economies and account for the bulk of the export earnings of these countries. The development of commodities is thus vitally important in the global struggle to alleviate poverty.” However, there are no studies estimating the importance of tropical and other commodities using economic, social and foreign trade indicators. Nonetheless, the participation of such products in exports from developing countries is significant: the fifteen main tropical products account for 37 percent of developing countries’ incoming foreign currency from agricultural exports. This proportion reaches 62 percent for low income developing countries.
Many of these products are grown primarily by small farmers in developing countries - as in the case of coffee, cocoa, tobacco and cotton. Others are vital in the generation of rural employment (i.e. sugar, rubber and rice). Therefore, besides their considerable contribution to foreign currency generation, they also play an important role from a social point of view.
There is still no agreed definition as to which agricultural commodities should be considered as tropical and diversification products in the agricultural negotiations at the World Trade Organization (WTO). In addition, WTO Members still have to agree on the way in which the long-standing commitment to achieve the fullest liberalisation of trade in tropical agricultural products contained in the July 31, 2004 Framework Agreement will be worked out.
There have been persistent differences between WTO Members, more specifically a group of Latin American (LA) countries and the African, Caribbean and Pacific (ACP) countries, on how to liberalise trade in tropical products while also addressing the effects of trade preference erosion. The two mandates have neatly placed them in opposing camps: while some want developed countries to remove all tariffs and quotas on ‘tropical products’ such as sugar and bananas, others have long benefited from trade preferences for these very commodities, and thus stand to lose from across-the-board liberalisation. While the preference beneficiaries would like rich countries to be able to separate these products for lower tariff cuts, thus preserving more of their margin of preference, the others would like to prohibit the same products from being designated as ’sensitive.’
In this context, the objective of the dialogue was to determine a better sense of how the WTO agricultural negotiations on tropical products can increase benefits for developing country exporters of these products and identify elements of a pro-poor, pro-sustainable development agenda for tropical commodities. It addressed issues of interest to all developing country exporters of tropical products, in Latin America, Asia and Africa.
More particularly, the dialogue addressed challenges ranging from tariffs, tariff escalation, preference erosion and possible trade adjustments, non-tariff barriers, sanitary and phytosanitary requirements, sensitive products and domestic support. The dialogue will also address other imperatives of a global strategy for sustainable development in agricultural trade. This included supply chain, value chain, bio-fuels and the environment.