There were unmistakable signs that the 11th World Trade Organization (WTO) Ministerial Conference (MC), dubbed “MC11,” would disappoint rich and poor countries. Months before trade and agriculture ministers headed to Buenos Aires, Argentina, for the biennial gathering, countries like India and the Philippines made it clear that they are prepared to walk away from talks that will not include their priorities.
The Philippines had pushed for substantial reduction and eventual elimination of “trade distorting” subsidies, as well as the inclusion of a special safeguard mechanism (SSM) in a new agricultural trade deal. During MC5 in Hong Kong, developing and least-developed countries (LDCs) even formed an alliance to pressure rich countries to abolish their export subsidies. Twelve years after banding together to push for the removal of trade-distorting subsidies, rich countries led by the United States and the European Union remained noncommittal on the issue.
What made it more difficult for the Philippines to return to the negotiating table in Argentina was the refusal of rich countries to give developing countries the SSM—a scheme that will allow developing countries and LDCs to raise tariffs temporarily to deal with import surges or price falls. The SSM would help discourage the dumping of cheap agricultural products from rich countries that provide huge subsidies to their producers. The current special safeguards (SSG) regime, Manila reasoned out, is not adequate to protect their farm sectors from import surges.
Philippine trade officials noted that the country’s current trigger price, or trigger level, for corn is 5 cents per kilogram (kg) and $36 per kg for pork imports. This means that Manila could only slap additional tariffs on imported corn and pork if the price falls below 5 cents and $36, respectively. But the government noted that in the past three years, the average price of corn imports is 31 cents, while the average price of imported pork is $1.65 per kg. This makes it virtually impossible for the Philippine government to impose more duties on cheap imports.
Manila noted that the formula used to compute a country’s trigger price is still based on 1986 to 1988 prices. These figures are ridiculous, to say the least. Despite the obvious need to scrap the current SSG scheme and replace it with SSM, rich countries remain lukewarm to it.
Under the Philippines’s SSM proposal, the trigger price would be computed using a rolling three-year average price of imports. Once the SSG is invoked, affected countries could slap an additional tariff of as much as 90 percent of the difference between the trigger price and the imported price. Apart from making local produce more competitive, the additional tariffs that would be collected by developing countries and LDCs would boost government revenues, which can be used to fund social programs.
Trade negotiators achieved practically nothing during the WTO ministerial conference, which concluded last week. But the work does not stop and negotiations would continue. WTO Director General Roberto Azevêdo called on member-countries to show some “flexibility” to come up with new agreements on issues affecting global trade. Poor countries like the Philippines had contended with rules that placed their producers at a disadvantage. It is time for other WTO members to do their part and keep the multilateral trading system going.