Table of contents

INTRODUCTION

1. DISCUSSION ON FOOD SECURITY AT THE 1ST NTC CONFERENCE
2. FOOD SECURITY ISSUES IN NEGOTIATING PROPOSALS BY WTO MEMBERS
3. Possible Issues for Discussion at the 2nd NTC Conference

INTRODUCTION

1.Food is a most essential good as it is indispensable for maintenance of human life and health. The World Food Summit hosted by FAO in 1996 defines that "Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life". With high volatility in prices for agricultural commodities and uncertainties in food supplies, which result from the intrinsic nature of agricultural production, food security has been one of the major non-trade concerns in agricultural policy debate to a number of countries. With more than 800 million people currently suffering from malnutrition in the world, which indicates that the objective set out in FAO Plan of Action in 1996 to halve the number of malnourished people by 2015 would be most unlikely to be met without further international efforts, food security is high on the agenda also for the WTO agricultural negotiations: indeed, the objective of food security can only be met if implementation instruments enjoy the necessary legal safety under the various WTO rules.

1 Discussion on Food Security at the 1 ^st NTC Conference

2.Food security was one of the main items that were discussed at the NTC Conference held in July 2000, in Ullensvang, Norway. The discussion paper prepared jointly by Japan and the Republic of Korea stressed the following points:

1. There are a number of factors affecting short-term instability of food supply and demand, which may increase in the future;
2. The increasing world population and changes in dietary habits will increase demand for food. On the other hand, there are a number of constraints on increases in production;
3. To attain food security effectively at the lowest cost, the optimum combination of imports, stockholding and domestic production is essential;
4. The optimum solution for each country varies according to its specific situation and cannot be found by relying only on the market mechanism. In order to find this optimum solution, external effects and public goods aspects of food security as well as the element of risk (uncertainty in supply) must be fully taken into account. Also, multi-functions of agriculture other than food security (such as land conservation, fostering water resources, protection of environment, strengthening socio-economic viability and the development of rural areas, etc.) should be properly and simultaneously taken into consideration;
5. Each country has a right to pursue the optimum combination of domestic production, importation and public stockholding to ensure its food security. A desirable international framework should allow countries to pursue their respective goals based upon their domestic production, access to stable and predictable world market and the diversity of resources of food imports. At the same time, the problem and needs of developing countries should be fully taken into consideration and properly reflected in the outcome of the WTO negotiations.

3.The Chair of the session summarised the discussion that the debate on food security illustrated the diversities of agricultural situations and policies in least-developed countries, developing countries, small-island developing states, economies in transition and developed countries. Food security has to ensure at least the supply of essential commodities and can be best obtained by a combination of domestic production, imports and stockholding. In this context the impact of new production methods and possibilities for transfer of technology should be also examined in a WTO context. Given the challenge of demographic evolution in many countries, a dynamic approach to the issue of food security is required.

2 Food Security Issues in Negotiating Proposals by WTO Members

4.Most of the negotiating proposals submitted so far to the Special Session of the WTO Committee on Agriculture refer to food security in one way or another, reflecting the importance of the issue in the negotiations. In general, it seems that no country insists that food security can be achieved by market forces alone. Countries like those of the Cairns Group and the United States also admit the necessity of flexibility in rules for developing countries to attain food security. In more detail, the points concerning food security raised by various countries in their negotiating proposals are summarised below.

5.At the outset it should be stressed that most of the proposals are of a comprehensive nature, comprising a package in which the various elements are inter-linked. Country proposals can therefore only be understood in this context. The proposals are grouped here not by country, but by relevance to the three types of measures for ensuring food security identified in the Ullensvang paper: the measures for ensuring domestic production, those for ensuring stable imports and those for sufficient stockholding. In this respect, the inter-linkages among issues in country negotiating proposal might not be adequately reflected (A full description of the proposals is available on the WTO website: http://www.wto.org). Also, it should be noted that some elements of the proposals may be beneficial to a certain aspect of food security while at the same time may be detrimental to other aspects (e.g. export subsidy may hinder the development of local production while it has a positive instance on the food procuring capacity of food-importing developing countries).

The measures for ensuring domestic production

6.The necessity of developing and maintaining a certain level of domestic production in order to ensure food security is shared by a wide number of countries. For example, the proposal jointly submitted by 11 developing countries (G/AG/NG/W/13) insists that food security is related to national security, and that domestic production gives more benefits to the society even if it seems less economic efficient from a pure economic point of view. India (W/102) states that physical access to food in developing countries can be ensured only through a certain minimum level of self-sufficiency. The proposals by Egypt and Nigeria (W/107 and 130) also advocate maintaining a certain level of food sufficiency.

7.In order to develop and ensure domestic production, a number of proposals call for flexibility in disciplines on domestic support. Among them, Norway especially proposes that domestic support for products to be consumed domestically and to be exported should be differentiated, the latter being put under more strict disciplines. The revision of Green box is proposed from the viewpoint of food security (e.g. Japan (w/91), Switzerland (w/94)). Many countries also propose that flexibility should be given to developing countries from the viewpoint of their food security, including ASEAN (w/55), Japan (w/91), Korea (w/98), Norway (w/101), Poland (w/103), Nigeria (w/130): Revision of the criteria of Green Box from the viewpoint of food security (e.g. the US (w/15), Cairns Group (w/35), EC (w/90), Norway (w/101)) is proposed, as well as exemption of all the measures to encourage domestic production by developing countries (e.g. India (w/102), Nigeria (w/130)) and a revision of the level of de minimis for developing countries (e.g. 11 developing countries (w/13), EC (w/90)).

8.Flexibility is also called for in the rules on market access in order to prevent cheap imports from adversely affecting local production and farmers. Countries such as Japan (w/91), Korea (w/98) and Norway (w/101) propose flexibility in tariff reduction and/or the size of tariff quota for important products, both for developing and developed countries. Flexibility in tariff reduction by developing countries is proposed by Cairns Group (w/54), Japan (w/91), Korea (w/98), Switzerland (w/94), Poland (w/103), the Democratic Republic of the Congo (w/135), Kenya (w/136), Turkey (w/106), while the US (w/15) calls for flexibility for LDCs. Other proposals include adjustment of tariff level by developing countries (e.g. 11 countries (w/13), India (w/102)), different modality for developing countries (e.g. ASEAN (w/55), Morocco (w/105)) or small developing economies (e.g. CARICOM (w/100), Jordan (w/140)), exemption of sensitive products from reduction commitments (e.g. Mauritius (w/96)). In addition, many developing countries propose the expansion of SSG or similar safeguard measures to cover their products regardless of whether such products were subject to tariffication in the UR or not (e.g. 11 countries (w/13), India (w/102), Morocco (w/105), CARICOM (w/100), and also Norway (w/101)). Related to this issue, Japan (w/91) and Korea (w/98) propose a new safeguard mechanism for seasonable and perishable agricultural products. Switzerland has suggested simplifications of SSG inter alia by way of a uniform additional proportional charge (w/94).

9.In the area of export competition, most countries propose that export subsidies, as well as export credit and other export encouraging measures should be either eliminated or reduced.

10.A number of developing countries propose that technical assistance for enhancement of their domestic production and their productivity should be strengthened, which is in turn echoed by many developed countries’ proposals. The proposed assistance includes in the context of implementation of various WTO agreements, access to relevant agricultural technology etc. The creation of an international fund for technical and financial assistance is put forward by a proposal by 16 countries’ concerning the implementation of the Marrakesh Decision (G/AG/W/49), while a special agricultural investment fund is proposed by Senegal (w/137). Morocco (w/105) proposes a world fund for the purpose of financing multifunctionality, including ensuring food security by supporting domestic production.

The measures for ensuring stable imports

11.The issue is related to the necessity of economic development of developing countries, which calls for improved market access for their products to acquire sufficient foreign exchanges. At the same time, while countries such as the United States and Cairns Group insist on the necessity of improved market access in order to enhance the global food security, a number of developing countries, especially those depending on a small number of products for their export earnings, emphasise the importance of preferential agreements (e.g. EC (w/90), Mauritius (w/96), SIDS (w/97), CARICOM (w/100), Kenya (w/136), African Group (w/142), Namibia (w/143)). CARICOM (w/100) proposes a technical assistance fund to help developing countries comply with standards and regulations in the exporting markets.

12.In order to secure necessary imports, many countries, including Cairns Group (w/11), the US (w/15), Japan (w/91), Switzerland (w/94), Korea (w/98), the Democratic Republic of the Congo (w/135) and Jordan (w/140) propose strengthening disciplines on export prohibition and restriction, which may hinder the food security of importing countries.

13.Although many countries call for reduction/elimination of export subsidies and other export enhancing measures, Mauritius (w/96) proposes a cautious and pragmatic approach on the issue because such measures have a positive incidence on the food procurement capacity of those countries which can only produce one or two commodities due to agro-climatic factors. Senegal (w/137) also expresses the necessity of preventing the adverse impact of the reduction of export subsidies, and many countries emphasise the importance of the implementation of the Marrakesh Decision in this context, including 16 countries’ proposal (G/AG/W/49).

14.While a number of proposals call for stricter disciplines on food aid in order to avoid the circumvention of export subsidy commitments, there are calls from developing countries for a higher and more stable level of international food aid. 16 countries’ proposal for the implementation of Marrakesh Decision (G/AG/W/49) calls for an international fund that can be used in times of high world market prices, and Egyptian proposal (w/107) also calls for a fund to help NFIDC and LDCs to purchase their requirements on the open market at unsubsidised prices.

The measures for sufficient stockholding

15.While there are few proposals concerning domestic stockholding, as the measure is already listed in the Green Box, Mauritius (w/96) proposes that an international reserve of food should be established by donor countries. Japan (w/91) proposes that the idea of a possible framework for international food stockholding should be examined, in order to enable loan of food in the case of temporary shortage. Sixteen countries’ proposal for the implementation of Marrakesh Decision (G/AG/W/49) proposes that the producing countries commit to put aside sufficient national food reserves in accordance with the normal import requirements of the NFIDCs and LDCs.

3 Possible Issues for Discussion at the 2 ^nd NTC Conference

16.With the above background in mind, participants may wish to discuss the following points, which may contribute to the process of technical discussions envisaged in WTO Committee on Agriculture this year:

1. Do participants agree with the necessity of an appropriate combination of domestic production, imports and stockholding in order to achieve food security? What is the relation between food security and a more liberalised trade environment?
2. What will be the necessary measures to maintain a certain level of domestic production?
3. What measures will contribute to ensure stable imports? What mechanism will best contribute to ensuring the sufficient and timely provision of food aid without jeopardising the capacity of local production in recipient countries?
4. Is the current Green Box provision on stockholding sufficient for food security? What is the view of the participants on the idea of international food stockholding, and on a related international fund?
5. The situation concerning food security varies, reflecting the diversities of agricultural situations among least developed countries, developing countries, small island developing states, land locked countries, economies in transition and developed countries. While food security is a common concern for all the countries, there will be no single "one-size-fits-all" solution. Uniform S&D measures will also not suffice. What kind of approach will be most effective to respond to various countries’ needs to maintain and enhance food security?
6. In light of the discussion on 1) to 5) above, what kind of flexibility is needed in the disciplines on a) domestic support, b) market access and c) export measures?

Note: Document numbers (w/ --) stand for W/AG/NG/W/--, which were submitted to the Special Session of the WTO Committee on Agriculture, while 16 countries’ proposal for the implementation of Marrakesh Decision (W/AG/W/49) was submitted to the Regular Session of the Committee.