Can poor Africa take on mighty Europe?
Oct 22, 2003
At the end of 2003, the ‘peace clause’- Article 13 of the World Trade Organisation (WTO) Agreement on Agriculture is due to expire. While in force, the peace clause ensures that WTO members will not challenge countries using agricultural subsidies under other WTO agreements
By Olu Fasan
At the end of 2003, the ‘peace clause’- Article 13 of the World Trade Organisation (WTO) Agreement on Agriculture is due to expire. While in force, the peace clause ensures that WTO members will not challenge countries using agricultural subsidies under other WTO agreements.
However, if the world fails to eliminate subsidies or extend the peace clause, Africa and the developing world could launch a wave of disputes and retaliate using Article XVI of the General Agreement on Tariffs and Trade (GATT) and the Subsidies and Countervailing Measures Agreement. Clearly, Africa has been badly damaged by subsidies and other forms of domestic support by developed countries.
Will the European Union (EU), which is pushing hard for extension of the peace clause, let it go? And if the clause does expire, should African countries rush to challenge EU agricultural subsidies? The Cairns Group of agricultural exporting countries has stridently objected to keeping the peace clause.
“We have paid a very high price for that clause, and developing countries will not approve its extension,†said Gilman Rodrigues a Brazilian farmer, at pre-Cancun talks in Montreal, Canada in July.
The EU remains the main beneficiary of the peace clause, given that it has an annual share of no less than 85% of all notified agricultural subsidies among WTO members. Powerful farm lobbies and agro-businesses in developed countries had successfully ensured that their governments kept agriculture out of multilateral trade negotiations until the Uruguay Round (1986-1994), and the peace clause was one of the political costs of agriculture’s inclusion.
In current WTO agricultural negotiations, the EU, influenced by France, is dragging its feet and making only minimal movement. As Africa is the biggest loser from EU (and US) agricultural subsidies, one would expect the continent to present a united front and vigorously oppose any extension of the peace clause.
But cleavages between African agricultural exporters and African net food importers (who fear higher food prices) have weakened this position. But what if the peace clause does expire?
WTO law then allows any member whose rights have been nullified or impaired by another to seek redress through the dispute settlement mechanism. Yet it is questionable whether African countries would or even could initiate dispute settlement actions against the EU on its agricultural subsidies.
Most African countries are beholden to the EU for aid and special trade concessions. To openly challenge agricultural subsidies, Africa must be willing to bear the risk that a legal battle will spark retaliatory cuts in aid or special bilateral trade access.
African countries that feel sufficiently harmed by the agricultural policies of the EU or US are not completely without any recourse. WTO law allows counter measures, by which a member can withdraw concessions (under certain conditions and after due process) in an agreement other than the one from which the complaint arose. This should enable a weak state to hit the powerful.
In the Bananas case, a WTO arbitration panel affirmed that Ecuador could retaliate against EU banana quotas by refusing to protect the exclusive copyrights of EU music producers and artists. Ecuador successfully argued that, given its relative economic weakness, this was the only way it could hurt the EU. Other developing countries could similarly threaten to end protection of intellectual property as a ‘retaliatory weapon’.
However, Africa must be prepared in the event that developed countries react disproportionately, using all sorts of economic pressure. Consequently such an aggressive strategy would be best supported by a broad coalition of developing countries, including heavyweights like Brazil and India.
However, retaliation may not always be necessary. The mere fact of an African country winning a WTO case against a developed country may suffice. The US acceptance of a WTO panel decision in favour of Costa Rica came about because the US did not want to be accused of trampling on a small and poor country.
So the court of international public opinion may be more powerful than self-help in terms of retaliation. All that an African country may require is the confidence to take on any major trading nation or bloc. Another obstacle to this strategy is the high cost of litigation.
The formation of the Advisory Centre for WTO Law (ACWL) in Geneva in 2001 partly addresses concerns about enormous legal costs. The ACWL provides advice in WTO dispute settlement proceedings. It charges modest fees for legal services, varying with the size and standard of living of the user.
NGOs like the UK Consumers Association take on cases on behalf of developing countries and, if successful, ensure that the developed country concerned changes its laws or policy accordingly. Developing countries have proposed that should a developed country lose a WTO dispute settlement case against a developing country, the former should pay the legal fees and costs of the latter, as one way of addressing inequities in the WTO legal system.
But the African Union (AU) could be more proactive. Clearly, a united front would accomplish more than any single African country. During the Uruguay Round, France could not make headway on a provision protecting its cultural industry against perceived ‘American invasion’ until the European Commission made the issue part of its negotiating position.
If the AU is modelled on the EU, it is time to start speaking with one voice on major global trading and economic issues that affect the continent. None is more pressing than the agricultural subsidies.
The writer lectures in WTO law at Birkbeck College, University of London
At the end of 2003, the ‘peace clause’- Article 13 of the World Trade Organisation (WTO) Agreement on Agriculture is due to expire. While in force, the peace clause ensures that WTO members will not challenge countries using agricultural subsidies under other WTO agreements.
However, if the world fails to eliminate subsidies or extend the peace clause, Africa and the developing world could launch a wave of disputes and retaliate using Article XVI of the General Agreement on Tariffs and Trade (GATT) and the Subsidies and Countervailing Measures Agreement. Clearly, Africa has been badly damaged by subsidies and other forms of domestic support by developed countries.
Will the European Union (EU), which is pushing hard for extension of the peace clause, let it go? And if the clause does expire, should African countries rush to challenge EU agricultural subsidies? The Cairns Group of agricultural exporting countries has stridently objected to keeping the peace clause.
“We have paid a very high price for that clause, and developing countries will not approve its extension,†said Gilman Rodrigues a Brazilian farmer, at pre-Cancun talks in Montreal, Canada in July.
The EU remains the main beneficiary of the peace clause, given that it has an annual share of no less than 85% of all notified agricultural subsidies among WTO members. Powerful farm lobbies and agro-businesses in developed countries had successfully ensured that their governments kept agriculture out of multilateral trade negotiations until the Uruguay Round (1986-1994), and the peace clause was one of the political costs of agriculture’s inclusion.
In current WTO agricultural negotiations, the EU, influenced by France, is dragging its feet and making only minimal movement. As Africa is the biggest loser from EU (and US) agricultural subsidies, one would expect the continent to present a united front and vigorously oppose any extension of the peace clause.
But cleavages between African agricultural exporters and African net food importers (who fear higher food prices) have weakened this position. But what if the peace clause does expire?
WTO law then allows any member whose rights have been nullified or impaired by another to seek redress through the dispute settlement mechanism. Yet it is questionable whether African countries would or even could initiate dispute settlement actions against the EU on its agricultural subsidies.
Most African countries are beholden to the EU for aid and special trade concessions. To openly challenge agricultural subsidies, Africa must be willing to bear the risk that a legal battle will spark retaliatory cuts in aid or special bilateral trade access.
African countries that feel sufficiently harmed by the agricultural policies of the EU or US are not completely without any recourse. WTO law allows counter measures, by which a member can withdraw concessions (under certain conditions and after due process) in an agreement other than the one from which the complaint arose. This should enable a weak state to hit the powerful.
In the Bananas case, a WTO arbitration panel affirmed that Ecuador could retaliate against EU banana quotas by refusing to protect the exclusive copyrights of EU music producers and artists. Ecuador successfully argued that, given its relative economic weakness, this was the only way it could hurt the EU. Other developing countries could similarly threaten to end protection of intellectual property as a ‘retaliatory weapon’.
However, Africa must be prepared in the event that developed countries react disproportionately, using all sorts of economic pressure. Consequently such an aggressive strategy would be best supported by a broad coalition of developing countries, including heavyweights like Brazil and India.
However, retaliation may not always be necessary. The mere fact of an African country winning a WTO case against a developed country may suffice. The US acceptance of a WTO panel decision in favour of Costa Rica came about because the US did not want to be accused of trampling on a small and poor country.
So the court of international public opinion may be more powerful than self-help in terms of retaliation. All that an African country may require is the confidence to take on any major trading nation or bloc. Another obstacle to this strategy is the high cost of litigation.
The formation of the Advisory Centre for WTO Law (ACWL) in Geneva in 2001 partly addresses concerns about enormous legal costs. The ACWL provides advice in WTO dispute settlement proceedings. It charges modest fees for legal services, varying with the size and standard of living of the user.
NGOs like the UK Consumers Association take on cases on behalf of developing countries and, if successful, ensure that the developed country concerned changes its laws or policy accordingly. Developing countries have proposed that should a developed country lose a WTO dispute settlement case against a developing country, the former should pay the legal fees and costs of the latter, as one way of addressing inequities in the WTO legal system.
But the African Union (AU) could be more proactive. Clearly, a united front would accomplish more than any single African country. During the Uruguay Round, France could not make headway on a provision protecting its cultural industry against perceived ‘American invasion’ until the European Commission made the issue part of its negotiating position.
If the AU is modelled on the EU, it is time to start speaking with one voice on major global trading and economic issues that affect the continent. None is more pressing than the agricultural subsidies.
The writer lectures in WTO law at Birkbeck College, University of London