A TWO-DAY conference of parliamentarians of South Asia held in Islamabad on August 29-30 to discuss WTO-related issues and their impact on the region’s economies and people is a momentous development. Apparently, it is for the first time that the WTO has been addressed in a bold manner by South Asia where pro-West bureaucracies still prefer to sweep these issues under the carpet for personal aggrandizement.

What makes the event unique is the resolve of the legislators of South Asian countries, who had hitherto been either ignorant of, or indifferent to, the long-term implications of whatever happens at the WTO, to play a pro-active role in the on-going WTO negotiations, particularly in the context of the WTO ministerial scheduled to take place at Hong Kong in December.

This ministerial is of crucial import because the previous one held at Cancun was an utter failure and had since stalled any progress in the Doha round.

For the purpose, they have formed South Asian Parliamentarians Forum on WTO (SAPFOW) which will meet at Dhaka before the Hong Kong ministerial. No notable figure represented India at the forum. But it was of little importance as India already plays a leading role at Geneva on behalf of G-20 bloc. What mattered most was the participation of legislators from Pakistan and Bangladesh.

The conference adopted a document called ‘Islamabad Declaration’ which, more or less, reiterates the G-20 position on various WTO-related issues. It urges, inter alia, the developed countries to stop dumping of their agricultural and industrial products in the Third World countries, eliminate all subsidies and export credits, forthwith, from agricultural products; provide wider market access to exports from developing countries as well as the LDCs.

The declaration strongly criticizes both the WTO and rich countries for pursuing practices such as mini-ministerial meetings, green room processes, five interested parties (FIPs), etc., (which puts the interests of the developing countries on the back burner) and demands that the process of consultations should be made transparent and inclusive.

The declaration takes notice of the fact that during the last decade, poor nations have been “forced to submit to market fundamentalism and have been coerced through various agencies into opening their markets to foreign corporations and foreign produce, privatizing their services and abandoning the measures which helped small domestic companies to compete with overseas competitors.” This observation is a bold departure from the position South Asian governments generally maintain. Even the incumbent ruling coalition in India is hardly unfavourably disposed towards multinationals.

However, a major concern of the forum has been the dumping of farm goods in the Third World countries and subsidies to the farmers by the rich countries. Their concern gathers weight if one looks at the past and current practices of the affluent states.

Since the WTO’s inception, widespread agricultural dumping —- the selling of products at prices below their cost of production —- by global agri-business companies based in the United States and European Union has wreaked havoc on Third World countries’ agricultural markets, particularly in Africa. The dumped commodities push the farmers off the lands they till as tilling becomes unviable.

The Institute for Agriculture and Trade Policy (IATP), a US-based private think-tank, has documented export dumping by US-based multinational corporations on the world agricultural markets of five commodities during the last 14 years. These are wheat, corn (maize), soybean, rice and cotton.

Data from the US Department of Agriculture (USDA) and the Organization for Economic Cooperation and Development (OECD) are used to compare the cost of production, including producer input costs paid by the government (a portion of subsidies) with the export price.

The latest figures show the continuing trend of widespread dumping. In 2003, wheat was exported at an average price of 28 per cent below the cost of production, soybeans at ten per cent below the cost of production, corn at ten per cent, cotton at 47 per cent and rice at an average price of 26 per cent below the cost of production. Dumping levels are expected to be higher when final figures are available for 2004.

Dumping is one of the most damaging of all current distortions in world trade. Agriculture in developing countries — vital for food security, rural livelihoods and farm exports — gets crippled when a flood of low-priced farm products enters them, denying to the local produce its well-established market.

The structural price depression associated with dumping has two major effects on developing country farmers. First, below-cost imports drive farmers out of their local markets. If the farmers do not have an access to a safety net of subsidies and credit, they have to abandon their land.

When this happens, the farm economy shrinks, in turn shrinking the rural economy as a whole. Second, developing country farmers who sell their products to exporters find their global market share undermined by the West’s policy of a depressed “global price.”

The farm bill adopted by the US in 1996 had caused a significant leap in dumping. As a result, wheat dumping levels increased from an average of 27 per cent per year in pre-1996 farm bill period to 37 per cent per year post-1996 farm bill period.

In case of soybean, it was from two per cent to 11.8 per cent, for maize from 6.8 per cent to 19.2 per cent, for cotton from 29.4 per cent to 48.4 per cent and in case of rice from 13.5 per cent to 19.2 per cent.

Big agribusiness companies, which are now dominant in financing trade, processing and shipping, are the key beneficiaries of dumping. They buy agricultural commodities at extremely cheap prices, control various stages of production and make significant profit from final sales.

The multinationals which dominate the entire exercise are a few. Over 80 per cent of US corn is exported by three firms: Cargill, ADM and Zen Noh. The top four beef-packers are Tyson, Con Agra, Cargill and Farmland.

Article 6 of the General Agreement on Tariffs and Trade (GATT) sets rules that prohibit dumping but these are complicated enough for poor countries. The Anti-Dumping Agreement of the WTO clarifies and expands Article 6, and the two operate together. What in fact inhibits the use of WTO rules to discipline dumping is the political reality of the multilateral trading system.

When the ultimate threat against dumping is to impose prohibitive tariffs, it may be easier for a big country such as the US to do so but not for a small country like Bangladesh whose about half of exports are destined for the US.

Hence, most of the anti-dumping complaints registered at the WTO secretariat are not against the US or the EU but of other members against each other. There were, in all, 208 anti-dumping cases in 2004. During second half of 2001 earlier, 19 members had initiated 186 anti-dumping investigations against exports from 55 countries.

Recently, the WTO, accepting Pakistan’s complaint, has established a panel to hear the case against imposition by Egypt of anti-dumping duty on export of Pakistani matchboxes. Pakistan contends that the Egyptian measure is inconsistent with WTO rules. The anti-dumping duty of 26 per cent to 29 per cent was imposed by Egypt on November 29, 2003.

China has so far launched 39 anti-dumping investigations against imported goods since 1997, when the country started the first anti-dumping case. It imposed anti-dumping taxes in 22 cases.

Meanwhile, India has initiated anti-dumping investigations into 185 cases involving 35 countries. The major product categories on which anti-dumping duty has been levied are chemicals and petrochemicals, pharmaceuticals, fibre/yarns, steel and other metals and consumer goods.

To eliminate dumping of agricultural commodities, the foremost essential measure has to be elimination of farm subsidies in the US and EU. There is no doubt that subsidies are the cause of excessive supply in the world markets and thus of low prices as well.

The G-20 members should make elimination of dumping a central plank of any new agreement on agricultural trade to be negotiated at the forthcoming WTO ministerial.