Toward a New Foreign Policy.

Multilateral organizations need to be more responsive to the food security concerns of developing countries. To ensure that this happens, U.S. officials and policymakers should support the following two initiatives:

First, there needs to be consistency among U.S. policies in various multilateral organizations to ensure that trade policy does not undermine commitments to protect food security, eradicate poverty, and protect the environment. Food security is a dear example of an objective that requires intersectoral cooperation. The WTO needs to work with other multilateral institutions experienced in specific dimensions of the nontrade concerns that touch the WTO's work. The cooperation exhibited by the IMF, the International Trade Commission, the UNCTAD, the UN Development Program, and the World Bank at the 1997 High Level Meeting on LDCs provides a useful model. Such collaboration requires resources and a commitment from governments to integrate trade policy into other areas of international development planning.

Second, the U.S. government should fund (and otherwise support) capacity-building to strengthen the participation of poor members of the WTO. Many member countries of the WTO cannot afford an office in Geneva, let alone enough staff to attend all the meetings that occur (often three or more simultaneously). There has been an increase in the training and other assistance offered to developing country officials since 1994, but the problem remains serious. The proposal to create a legal office in Geneva to service developing countries' disputes at little or no cost exemplifies the kind of innovations needed to make the system more balanced.

More specifically with respect to the AoA and its implementation, there are two chief recommendations:

The first is to create a "food security box" within the agreement, either as a stand-alone item or as a series of amendments to the existing AoA articles. Using the principle of the "blue box," the food security box would list policies that are protected from the requirement of distorting trade as little as possible whenever these policies meet important social objectives. The food security box would aim to ensure that developing countries have the flexibility to support domestic agricultural production and food security. Tariffs and other kinds of taxes, for example, could be allowed as a way to protect domestic agriculture without incurring new expenditures. Policies to protect poor consumers from the sudden price swings of international commodity markets and to ensure the availability of staple crops not generally traded internationally (white maize, sorghum, and others) could also be considered. The box would be for developing countries only.

Related to this, special measures are necessary to address the needs of net food-importing developing countries. A price trigger should be established that automatically releases resources to buy food in the world market when prices are high and exceed poor countries' abilities to pay. This would bypass any discussion of what caused the price increase and would move straight to resolving what has been accepted as an undesirable outcome. The price trigger should not be set at less than the cost-of-production prices.

Second, antidumping policies specific to agriculture should be considered. The U.S. should look at the discrepancy between cost-of-production prices and world market prices and should determine (with other WTO members) how to curb the persistence of extremely low prices for agricultural commodities in world markets. U.S. farmgate prices for many crops are consistently less than many countries' cost of production, and producers all over the world find themselves in competition with these prices as border protections are removed.

With increasing vertical integration in the food and agriculture sector at the U.S. and global level, the scope for distorted world prices has remained unchlanged, if not worsened, since 1994. The consolidation of U.S.-based multinational companies in the food sector has been justified to (and by) the Justice Department on the grounds that international competition demands a relaxation of antitrust laws at home. Ironically, few companies anywhere in the world are able to compete with U.S.-based grain multinationals such as ADM and Cargill. The structure of international food markets requires international examination, monitoring, and regulation.

The lack of rules in agricultural trade that preceded the AoA contributed directly to food insecurity in the world. The right rules could make a difference. However, those who face persistent hunger in the world do not have the money at exercise effective demand in a "free" market. The trend toward increased trade in processed food, a demand made by relatively wealthy consumers in mostly urban areas, is indicative of this problem. While in some regions this is indicates a real decrease in the number of people living in hunger (they can afford to spend more on food), in many others, it reflects the (normal) preference of food merchants for rich over poor consumers. Public action is essential to redress these problems.

Nobody needs to go hungry--each person that does is the victim of conscious policy choices and policy failures. The U.S.--richest country in the world, home to the largest grain traders in the world, and producer of enormous agricultural surpluses--is failing to play a leadership role. We all have a responsibility to ensure that U.S. policy helps end rather than increase world hunger.

Key Recommendations

* The integrity of the global trading system depends on improved policy coherence and creating new institutions to ensure that developing countries can participate fully.

* Trade rules need to be specifically designed to give developing countries flexibility in deciding their agriculture and trade policies.

* The new negotiations on agriculture need to address the dumping of food from developed countries (including the U.S.), which unfairly competes with developing country producers.

Sophia Murphy, Institute for Agricultural and Trade Policy