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Binding the Hand that Feeds Them: The Agreement on Agriculture, Transnational Corporations and the Right to Adequate Food in Developing Countries

May 2008

Authors:

University of Ottawa

This chapter seeks to clarify the impact of the WTO agricultural trade regime and the related unregulated activities of transnational corporate actors on food security in developing states. It investigates the link between the structure of the WTO Agreement on Agriculture, corporate concentration in agricultural markets and food insecurity in developing countries. It does this through an analysis of the right to adequate food, the key tenets of the current agricultural trade regime and related state practice and corporate activities. It concludes by considering proposals for reform in the current Doha Round of WTO negotiations, and the implications for the sovereignty of developing countries, in terms of national policy space to protect and develop their agriculture sector and the right to food.

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Binding the Hand that Feeds Them:

The Agreement on Agriculture,

Transnational Corporations

and the Right to Adequate Food in

Developing Countries

PENELOPE SIMONS*

I. INTRODUCTION

In the 1920s, when the ‘market juggernaut’ was rolling at full steam, John Maynard

Keynes called for a ‘new wisdom for a new age’ with ‘new policies and new instru-

ments to adapt and control the workings of economic forces, so that they do not intol-

erably interfere with contemporary ideas as to what is ﬁt and proper in the interests of

social stability and social justice’.

EYNES’ CALL TO ‘adapt and control the working of economic

forces’ is echoed in the current global concern over the human rights

impacts of the World Trade Organisation (WTO) regime. One of the

key social justice and human rights issues we face today is the problem of global

hunger—a lack of access to adequate food by a large proportion of the world’s

population. For many developing, and in particular low-income states, the

development of the agriculture sector is crucial to reducing the numbers and

prevalence of malnourished people. A fair and balanced agricultural trade

regime that eliminates trade distorting subsidies and protectionist market access

* Associate Professor at the Faculty of Law, University of Ottawa, Canada. Versions of this paper

were presented at a conference at Oxford Brookes University, UK in May 2006 and at the ILA British

Branch Conference in Mar 2006, and I have beneﬁted from comments from participants. I gratefully

acknowledge the ﬁnancial assistance of the Canadian Consortium on Human Security, the

Department of Foreign Affairs and International Trade and the University of Toronto, Faculty of

Law. I am indebted to Robert McCorquodale and Evadné Grant for their very helpful comments

and suggestions, and to Adila Abusharaf, Asher Alkoby, Cameron Hutchison, Christu Rajamony

and Rob Rastorp for their excellent research assistance.

UNCTAD, Trade and Development Report, 2003: Capital Accumulation, Growth and

Structural Change, Doc UNCTAD/TDR/2003 at I.

(R) Shan Ch16 25/2/08 10:19 Page 399

policies, and allows states at the early stages of economic development sufﬁcient

policy space to protect their agriculture sector, can have an important role to

play in the reduction of poverty levels and in addressing food security. On the

other hand,

Opening national agricultural markets to international competition—especially from

subsidized competitors—before basic market institutions and infrastructure are in

place can undermine the agriculture sector, with long-term negative consequences for

poverty and food security.

This chapter seeks to clarify the impact of the WTO agricultural trade regime and

the related unregulated activities of transnational corporate actors on food secu-

rity in developing states. It investigates the link between the structure of the WTO

Agreement on Agriculture, corporate concentration in agricultural markets and

food insecurity in developing countries. It does this through an analysis of the

right to adequate food, the key tenets of the current agricultural trade regime and

related state practice and corporate activities. It concludes by considering pro-

posals for reform in the current Doha Round of WTO negotiations, and the

implications for the sovereignty of developing countries, in terms of national pol-

icy space to protect and develop their agriculture sector and the right to food.

II. STATE OBLIGATIONS TO PROTECT THE RIGHT TO

ADEQUATE FOOD AND FOOD SECURITY

There are an estimated 854 million undernourished

people in the world, 820

million of whom live in developing states.

The Food and Agriculture

Organisation of the United Nations (FAO) notes that, ten years after the Rome

Declaration of the World Food Summit, in which governments pledged to halve

the number of malnourished people from 1990 levels by 2015, ‘[v]irtually no

progress has been made towards [this] target’.

The highest prevalence of under-

nourishment exists in some of the least developed states, many of which fall into

the category of least-developed countries (LDCs) under the WTO agreements

and most of which are low-income states. In sub-Saharan Africa, for example,

one in every three people does not have access to sufﬁcient food.

FAO estimates

that by 2015 ‘sub-Saharan Africa will be home to around 30 per cent of the

400 Penelope Simons

Food and Agriculture Organisation of the United Nations (FAO), State of Food and Agriculture

2005: Agricultural Trade and Poverty—Can Trade Work for the Poor? (Rome, FAO, 2005) at 6

(hereinafter, FAO, State of Food and Agriculture 2005).

‘Undernourishment or malnourishment’, is a measure of dietary intake related to energy needs

and is one of the key indicators of food insecurity and vulnerability: see FAO, Focus on Food

Insecurity and Vulnerability: A review of the UN System Common Country Assessments and World

Bank Poverty Reduction Strategy Papers (FAO, Rome, 2003) at 56.

FAO, The State of Food Insecurity in the World 2006: Eradicating World Hunger—Taking Stock

Ten Years After the World Food Summit (FAO, Rome, 2006) at 8 (hereinafter FAO, SOFI 2006).

Ibid, at 8.

Ibid, at 5.

(R) Shan Ch16 25/2/08 10:19 Page 400

undernourished people in the developing world, compared with 20 per cent in

1990–92’.

It is widely recognised that one of the main causes of malnourishment is the

lack of access to adequate food caused by poverty, and not the global food sup-

ply.

Moreover, according to the FAO, ‘hunger is not only a consequence but

also a cause of poverty, and . . . it compromises the productive potential of indi-

viduals, families and entire nations’.

1. The Right to Adequate Food

The right to adequate food is a fundamental human right that is essential for the

enjoyment of all other human rights.

It is recognised in the International

Covenant on Economic and Social Rights 1966 (ICESCR), among other inter-

national instruments,

as a component of the right to an adequate standard of

living. Article 11(2) of the ICESCR imposes binding legal obligations on states

parties to take action to address the global problem of hunger:

The States Parties to the present Covenant, recognizing the fundamental right of

everyone to be free from hunger, shall take, individually and through international co-

operation, the measures, including speciﬁc programmes, which are needed:

(a) To improve methods of production, conservation and distribution of food . . .

(b) Taking into account the problems of both food-importing and food-exporting

countries, to ensure an equitable distribution of world food supplies in relation to

need.

This right has been interpreted by the Committee on Economic, Social and

Cultural Rights (CESCR) in its General Comment No 12, which notes that the

Binding the Hand that Feeds Them 401

Ibid.

According to the Committee on Economic, Social and Cultural Rights, ‘the roots of the prob-

lem of hunger and malnutrition are not lack of food but lack of access to available food, inter alia

because of poverty, by large segments of the world’s population’. CESCR, ‘Substantive Issues

Arising in the Implementation of the International Covenant on Economic, Social and Cultural

Rights: General Comment No 12’ in ‘Note by the Secretariat, Compilation of General Comments

and General Recommendations Adopted by Human Rights Treaty Bodies’ (12 May 2004) UN Doc

HRI/GEN/1/Rev.7 at [5]. See also UNGA, ‘The Right to Food: Report of the Special Rapporteur on

the Right to Food’, (28 Aug 2003) UN Doc A/58/330, at [29]; and FAO, SOFI 2006 n 4, at 4 where it

states: ‘The knowledge and resources to reduce hunger are there. What is lacking is sufﬁcient polit-

ical will to mobilize those resources to the beneﬁt of the hungry’.

FAO, SOFI 2006, n 4 above at 13.

CESCR, ‘General Comment No 12’, n 8 above, at [4].

The right to adequate food is recognised in the Universal Declaration of Human Rights

(adopted 10 Dec 1948) UNGA Res 217 A(111) (UDHR) Art 25. It is also protected under the

Convention on the Rights of the Child (adopted 20 Nov 1989, entered into force 2 Sept 1990) 1577

UNTS 3 (CRC); Article 27 of the CRC recognises the ‘right of every child to a standard of living ade-

quate for the child’s physical, mental, spiritual, moral and social development’. Article 27(3)

imposes an obligation on states to assist parents, within their means, in providing for children’s

needs, ‘particularly with regard to nutrition, clothing and housing’.

International Covenant on Economic, Social and Cultural Rights (adopted 16 Dec 1966,

entered into force 3 Jan 1976) 993 UNTS 3 (ICESCR) Art 11(2).

(R) Shan Ch16 25/2/08 10:19 Page 401

right to adequate food must be interpreted broadly and is realised when each

individual ‘alone or in community with others, [has] physical and economic

access at all times to adequate food or means for its procurement’.

Article 2 of the ICESCR imposes an obligation on states parties ‘to take steps,

individually and through international assistance and co-operation’, ‘to the

maximum of [their] available resources’ and ‘by all appropriate means’ towards

the progressive realisation of the rights protected under the Covenant. These

steps must be ‘deliberate, concrete and targeted’ and states have an immediate

‘minimum core obligation to ensure the satisfaction of, at the very least, mini-

mum essential levels of each of the rights’.

Thus although the right to food will

be fully realised over time, states must ‘take the necessary action to mitigate and

alleviate hunger’ and work expeditiously towards this goal.

Article 11 imposes a three-part obligation, to respect, protect and fulﬁl the

right to adequate food. States are prohibited from taking action that prevents

the access to adequate food of persons within their territorial jurisdiction. States

are further obliged ‘to ensure that enterprises or individuals do not deprive indi-

viduals [such] access’.

Finally, states are required both to take positive action

‘to strengthen people’s access to and utilization of resources and means to

ensure their livelihood, including food security’, and to fulﬁl the right to ade-

quate food in instances where individuals or groups ‘for reasons beyond their

control’ do not have access to adequate food.

While states are ultimately accountable under the ICESCR, the responsibility

for the realisation of the right to adequate food also falls on all members of soci-

ety including business entities. ‘The private business sector—national and transna-

tional—should pursue its activities within the framework of a code of conduct

conducive to respect of the right to adequate food’.

States are required to take

action in the protection of the resource base for food, ‘to ensure that activities of

the private business sector and civil society are in conformity’ with this right.

The CESCR notes that violations of the right to adequate food include the:

. . . adoption of legislation or policies which are manifestly incompatible with pre-

existing legal obligations relating to the right to food; and failure to regulate activities

of individuals or groups so as to prevent them from violating the right to food of

others, or the failure of a State to take into account its international legal obligations

regarding the right to food when entering into agreements with other States or with

international organizations.

402 Penelope Simons

CESCR, ‘General Comment No 12’, n 8 above, at [6].

CESCR, ‘General Comment No 3’ in ‘Note by the Secretariat, Compilation of General

Comments and General Recommendations Adopted by Human Rights Treaty Bodies’ n 8 above, at

[2] and [10].

CESCR, ‘General Comment No 12, n 8 above, at [6] and [14].

Ibid, at [15]

Ibid.

Ibid, at [20].

Ibid, at [27].

Ibid, at [19].

(R) Shan Ch16 25/2/08 10:19 Page 402

All states parties to the ICESCR have extraterritorial obligations in relation to

the rights protected in the Covenant.

The right to adequate food imposes

obligations of an extraterritorial nature on states to take action to respect, pro-

tect and fulﬁl the right to adequate food in other countries. This includes an

obligation to ‘ensure that the right to adequate food is given due attention’ in

international agreements where it is pertinent and to ‘consider the development

of further international legal instruments to that end’.

This responsibility was underlined in the Rome Declaration of the World

Food Summit in which participant governments agreed to ‘strive to ensure that

food, agricultural trade and overall trade policies are conducive to fostering

food security for all through a fair and market-oriented world trade system’.

Among other things the World Food Summit Plan of Action calls on exporting

countries to ‘reduce subsidies on food exports in conformity with the Uruguay

Round Agreement in the context of the ongoing process of reform in agriculture

conducted in the WTO’.

It requests that exporting states: ‘[a]dminister all

export-related trade policies and programmes responsibly, with a view to avoid-

ing disruptions in world food and agriculture import and export markets, in

order to improve the environment to enhance supplies, production and food

security, especially in developing countries’.

Finally, states commit to

‘[s]upport the continuation of the reform process in conformity with the

Uruguay Round Agreement and ensure that developing countries are well

informed and equal partners in the process, working for effective solutions that

improve their access to markets and are conducive to the achievement of sus-

tainable food security’.

States parties to the ICESCR also have extraterritorial obligations in some

circumstances to regulate the activities of corporate nationals.

According to

the Special Rapporteur on the Right to Food, the obligation to take action to

respect, ensure respect for, and fulﬁl the right to food in other countries includes

a responsibility to regulate and monitor the extraterritorial activities of cor-

porate nationals that may violate or contribute to the violation of the right to

adequate food. The Special Rapporteur notes that:

Binding the Hand that Feeds Them 403

Unlike Art 2 of the International Covenant on Civil and Political Rights (adopted 16 Dec 1966,

entered into force 23 Mar 1976) 999 UNTS 171 (ICCPR), Article 2 of the ICESCR does not expressly

limit the reach of state obligations. Under Art 2(1), states parties undertake ‘to take steps, individu-

ally and through international assistance and co-operation . . . with a view to achieving progres-

sively the full realization of the rights recognized in the present Covenant by all appropriate means

. . .’.

CESCR, ‘General Comment No 12 n 8 above, at [36].

World Food Summit, Rome Declaration on World Food Security and World Food Summit

Plan of Action, (13–17 Nov 1996) <http://www.fao.org/docrep/003/w3613e/w3613e00.htm> (last

visited Jun 10, 2007).

Ibid, at [40(c)].

Ibid, at [40(d)].

Ibid, at [41(b)].

R McCorquodale and P Simons, ‘Responsibility Beyond Borders: State Responsibility for

Extraterritorial Violations by Corporations of International Human Rights Law’ (2007) 70 MLR

599 at 619.

(R) Shan Ch16 25/2/08 10:19 Page 403

. . . it is becoming increasingly clear that monopoly control of the food system

by transnational corporations can be directed towards seeking monopoly proﬁts,

beneﬁting the companies more than the consumer. The actions of transnational cor-

porations can sometimes directly violate human rights standards, including the right

to food.

Therefore, home states of these corporations should establish regulatory and

monitoring mechanisms, as well as effective remedies for violations of this right.

One hundred and thirty-two of the one hundred and ﬁfty WTO member states

have ratiﬁed the ICESCR and therefore have obligations to respect, protect and

fulﬁl the right to adequate food both within their own territory and in other

states. This includes obligations to take the right to adequate food into account

in international treaties where relevant and to take steps to ensure that the activ-

ities of corporate nationals do not violate this right in other states. It has also

been argued that the right to adequate food is now part of customary inter-

national law and, therefore, that all states have obligations to respect, protect

and fulﬁl this right.

III. THE TRADE IN AGRICULTURE AND FOOD SECURITY

1. Agricultural Development and Food Security

Food security represents the realisation of the right to adequate food.

As noted

above, poverty rather than world food supply is one of the primary causes of

undernourishment or food insecurity. For a large number of developing states,

development of their agricultural economy is essential for tackling food insecur-

ity. As FAO notes:

Some 70 per cent of the poor in developing countries live in rural areas and depend on

agriculture for their livelihoods, either directly or indirectly. In the poorest of countries,

agricultural growth is the driving force of the rural economy. Particularly, in the most

food-insecure countries, agriculture is crucial for income and employment generation.

404 Penelope Simons

UNGA ‘Report of the Special Rapporteur on the Right to Food’ n 8 above, at [31].

See UNGA, ‘Interim Report of the Special Rapporteur on the Right to Food’ (12 Sept 2005) UN

Doc A/60/350 [48]; but see also S Narula, ‘The Right to Food: Holding Global Actors Accountable

under International Law’ (2006) 44 Colum J Transnat’l L 691 at 795–796, who distinguishes between

the right to be free from hunger as a right under customary international law and the right to ade-

quate food, for which ‘additional steps must be taken to elevate the broader right to adequate food

to this status’. The US, however, has constantly objected to the development of this right and there-

fore would not be bound by the rule of customary international law (see ibid).

See CESCR, ‘General Comment No 12’, n 8 above at [6]ff. Cf the FAO deﬁnition of food secu-

rity in World Food Summit, n 23 above at [1]: ‘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’.

FAO, SOFI 2006, n 4 above, at 28. See also H Thomas and J Morrison, ‘Trade Related

Reforms and Food Security: A Synthesis of Case Study Findings’ in H Thomas (ed), Trade Reforms

and Food Security: Country Case Studies and Synthesis (Rome, FAO, 2006) at 56 and 64; and

(R) Shan Ch16 25/2/08 10:19 Page 404

Trade in agriculture can play an important role in the reduction of poverty

levels and in addressing food security. However, FAO cautions that the ‘gains

from trade liberalization are neither automatic nor universal’.

Developing

states, particularly those in the early stages of economic development and which

have the highest incidence of hunger, such as sub-Saharan African states, need

to retain the ﬂexibility to implement policies to ensure they can pursue develop-

ment of their agriculture sector in order to address food security issues and other

development goals. The extent to which the current WTO regime for agricul-

tural trade supports and facilitates these ends, and thus the fulﬁlment of state

obligations with respect to the right to adequate food, will be examined below.

2. The WTO Agreement on Agriculture (AoA)

The AoA

creates binding legal obligations for WTO member states in relation

to three areas of government intervention in agricultural markets, aimed at

increasing market access and reducing domestic support and export subsidies

for agricultural products. The commitments were to be implemented over a

given period (which was longer for developing countries) beginning in 1995.

a) Market Access

Articles 4 and 5 and Annex 5 set out the provisions relating to market access.

Under these provisions all member states were required to convert all non-tariff

barriers

to tariffs and to bind them according to the rates set in the base period

between 1986 and 1988.

The reduction commitments are set out in the schedules

of each member as speciﬁed in Article 4(1). Developed countries were required to

reduce these tariffs by 36 per cent over 6 years, with a minimum reduction of 15

per cent per tariff. Developing countries were required to reduce their tariffs by

24 per cent over 10 years, with a minimum reduction per tariff of 10 per cent.

LDCs were required to convert non-tariff barriers to tariffs and to bind the tar-

iffs, but were exempted under Article 15(2) from reduction commitments.

Binding the Hand that Feeds Them 405

M Stockbridge, ‘Agricultural Trade Policy in Developing Countries During Take-Off’, Oxfam

Research Report, Jul 2006, at 7 and 10.

FAO, SOFI 2006, n 4 above, at 29.

Agreement on Agriculture (15 Apr 1994) LT/UR/A-1A/2 <http://docsonline.wto.org> (last vis-

ited Jun 6, 2007).

These are deﬁned in Article 4(2) n 1 to include ‘quantitative import restrictions, variable

import levies, minimum import prices, discretionary import licensing, non-tariff measures main-

tained through state-trading enterprises, voluntary export restraints, and similar border measures

other than ordinary customs duties, whether or not the measures are maintained under country-

speciﬁc derogations from the provisions of GATT 1947’. They do not include ‘measures maintained

under balance-of-payments provisions or under other general, non-agriculture-speciﬁc provisions of

GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A of the WTO Agreement’.

AoA, Attachment to Annex 5.

S Murphy, Trade and Food Security: An Assessment of the Uruguay Round Agreement on

Agriculture (London, Catholic Institute for International Relations, 1999) at 12.

(R) Shan Ch16 25/2/08 10:19 Page 405

In addition, a time-bound Tariff Rate Quota (TRQ) system was established

to ensure minimum access of imports at a reduced tariff level from the high rates

set during the tarifﬁcation process. Developed states were required to allow

access of products ‘equal to 3 per cent of domestic consumption [and] rising to

5 per cent’ over 6 years and developing states were required to allow access

equal to 1 per cent of domestic consumption, rising to 4 per cent over 10 years.

Article 5 created a special safeguard mechanism (SSG) which allows parties

that have applied tarifﬁcation to a product (conversion of non-tariff barriers)

and marked it in their schedules as an SSG product, to apply an increase in duty

to protect domestic production from surges in import volumes or a sudden fall

in world prices.

The SSG can be triggered either when a predetermined price

or volume of goods in relation to speciﬁed commodities is reached.

b) Domestic Support

Articles 3, 6 and 7, and Annexes 2, 3 and 4 deal with domestic support (farm

subsidies). Under Article 3(1) and (2), members agreed not to provide domestic

support above the levels set out in their respective schedules. Different types of

domestic subsidies were accorded different treatment under the AoA and were

classiﬁed in various ‘boxes’.

‘Amber box’ subsidies were subject to reduction. Article 7(2) requires that all

domestic subsidies that do not satisfy the criteria in Annex 2 or other exemption

provisions be included in the calculation of members’ Current Total Aggregate

Measurement of Support (AMS). Article 6(1) provides for the reduction of

domestic subsidies based on the total AMS, which is deﬁned as the ‘sum of all

domestic support provided in favour of agricultural producers’

during the

1986–1988 base period.

Developed countries were required to reduce their

total AMS by 20 per cent over 6 years and developing countries by 13.3 per cent

over 10 years.

LDCs were again exempt from reduction commitments under

Article 15(2).

Article 6(5), the ‘blue box’, allowed member states to exclude from the calcu-

lation of the current total AMS, the value of direct payment made under

government production-limiting support programmes, where such payments

406 Penelope Simons

Ibid, at 13.

AoA, Article 5(1). See also CG Gonzalez, ‘Institutionalizing Inequality: The WTO Agreement

on Agriculture, Food Security, and Developing Countries’ (2002) 27 Colum J Envtl L 433 at 454; and

S Murphy, CAFOD Policy Brief: Food Security and the WTO (Sept 2001) at 12 <http://www.ukfg.

org.uk/docs/CAFOD%20Trade%20Food%20security%20and%20the%20WTO.htm> (last visited

Jun 10, 2007).

AoA, Article 5(1)(a) and (b).

AoA, Article 1(h).

AoA, Annex 3, [11].

In the ﬁnal year of the respective implementation periods, the Current Total AMS for devel-

oped countries will be the Total Base AMS minus 20 per cent, and, for developing countries, the

Total Base AMS minus 13.3 per cent: see K Jackson, Sectoral Uruguay Round Agreement: The

Agricultural Sector (26 Jul 1995) UN Doc UNCTAD.TD/B/WG8/2/Add.1, at 21.

(R) Shan Ch16 25/2/08 10:19 Page 406

satisﬁed one of three listed conditions.

Annex 2, the ‘green box’, allowed for

listed support programmes that were designated as non-trade-distorting subsi-

dies to be excluded from calculations of the current total AMS.

These

included, among other things, certain government services, public stockholding

for food security, food aid programmes, decoupled income support, income

safety nets and disaster relief programmes.

Article 6(2), the ‘Special and Differential Treatment box (SDT)’, exempted

developing countries from reduction requirements for investment subsidies for

agriculture, input subsidies for low-income or resource-poor producers and

subsidies ‘to encourage diversiﬁcation from growing illicit narcotic crops’.

Article 6(4), also referred to as the de minimus exception, allowed developed

countries to exclude from the calculation of their current total AMS both prod-

uct-speciﬁc and non-product-speciﬁc subsidies that did not exceed ﬁve per cent

of a state’s annual production. Developing countries could exclude such subsi-

dies that did not exceed 10 per cent of annual production value.

c) Export Subsidies

The ﬁnal area of government intervention that the AoA seeks to regulate is the

subsidisation of exports. Article 1(e) deﬁnes ‘export subsidies’ as ‘subsidies con-

tingent upon export performance’.

Article 3 makes export subsidy reduction

commitments set out in members’ schedules binding under the AoA.

Under

Article 8, members undertook not to subsidise exports except in conformity with

the AoA and scheduled commitments.

Developed countries were required to

reduce (but not eliminate) the value of export subsidies by 36 per cent and to

reduce the quantity of subsidised exports by 21 per cent within six years.

Developing countries were required to reduce the value of such subsidies by 24 per

cent and the volume by 14 per cent over ten years.

As with tariff rates and

domestic subsidies, LDCs were exempted from reductions under Article 15(2). All

export subsidies that were not listed in country schedules are now prohibited and,

except in a few cases, new subsidies, even for LDCs, may not be introduced.

Binding the Hand that Feeds Them 407

Payments must be either based on ﬁxed area yield, or made on a maximum of 85 per cent of the

base level of production, or be payments for a ﬁxed number of livestock head (Article 6(5)(a)(i–iii).

Gonzalez (n 38 above, at 457) notes that this exemption includes certain US and EU subsidy pro-

grammes such as ‘U.S. deﬁciency payments and E.U. compensation payments, both of which pay

farmers the difference between a government target price . . . and the corresponding market price’.

AoA, Annex 2.

AoA, Article 6(2).

AoA, Article 6(4).

AoA, Article 1(e).

AoA, Article 3.

AoA, Article 8.

C Stevens, R Greenhill, J Kennan and S Devereux, The WTO Agreement on Agriculture and

Food Security, Economic Paper 42 (London, Commonwealth Secretariat, 2000) 38.

See Murphy, n 36 above, at 14 who notes that: ‘However, certain subsidies related to market-

ing costs and internal and international transport charges for export producers are allowed for

developing countries’.

(R) Shan Ch16 25/2/08 10:19 Page 407

Article 9(1) enumerates the type of export subsidies subject to reduction. These

include, among other things, direct subsidies conditioned on export performance,

below-cost sale of non-commercial agriculture stocks, subsidies for the reduction

of export market costs and internal transport charges.

There are no speciﬁc reduction commitments for ‘export credits, export credit

guarantees or insurance programmes’.

However, Article 10(2) requires mem-

bers to work toward agreement on disciplines for these latter types of subsidies,

and Article 10(1) prohibits the circumvention of the reduction commitments

through recourse to non-listed export subsidies or through non-commercial

transactions. These provisions have been interpreted as prohibiting export

credit, export credit guarantees and insurance programmes where such pro-

grammes by their terms constitute export subsidies.

In addition, Article 10(4)

prohibits members from tying food aid to commercial exports either directly or

indirectly. It also requires, inter alia, that the provision of food aid be ‘carried out

in accordance with the FAO “Principles of Surplus Disposal and Consultative

Obligations” ’.

3. The Structural Inequality of the AoA

As some commentators predicted, the market access provisions have not effec-

tively enhanced market access for agricultural products.

In the ﬁrst place, states

were allowed ‘considerable latitude in setting the level of these tariffs’.

Since

reduction requirements referred to an average maximum reduction (subject to a

minimum reduction per tariff), OECD states made strategic reductions and

tended to reduce tariffs on products not produced domestically.

Some devel-

oped countries engaged in ‘dirty tarifﬁcation’, setting tariffs so high that they

nulliﬁed the beneﬁts of tariff bindings and tariff reduction by creating tariff equivalents,

to which subsequent reductions apply, that were at times more import-restrictive then

the non-tariff barriers they replaced.

In other words, where this took place, not only was market access not increased

it was actually restricted.

408 Penelope Simons

Jackson, n 42 above, at 26. See also Murphy, ibid.

In US–Subsidies on Upland Cotton, it was held that export credits and export credit guaran-

tees and insurance programmes could in certain circumstances constitute export subsidies and

would contravene Article 10(1) where such programmes were used in a way so as to circumvent

export subsidy commitments: see WTO, US: Subsidies on Upland Cotton—Report of the Panel

(8 Sept 2004) WT/DS267/R [7.935]ff and WTO, US: Subsidies on Upland Cotton—Report of the

Appellate Body (3 Mar 2005) WT/DS267/AB/R [623]–[626].

AoA, Art 10(4). See Gonzalez, n 38 above, at 456.

Stevens et al, n 50 above, at 38.

Ibid.

Gonzalez, n 38 above, at 461. See also FAO, The State of Food and Agriculture 2005 n 2 above,

at 40–41.

Gonzalez Ibid, at 460.

(R) Shan Ch16 25/2/08 10:19 Page 408

In addition, the highest tariffs were imposed on the commodities most

important to developing country exporters.

For example, UNCTAD reported

that Canada set initial tariffs on certain dairy products at between 230 and 360

per cent. The EU set initial tariffs on beef at 213 per cent and on wheat at 167.7

per cent, while Japan set tariffs on wheat at 352.7 per cent, and the US set tar-

iffs on sugar at 244.4 per cent.

According to the FAO, 38 WTO member states

(few of whom were developing countries) ‘established TRQ commitments for a

total of 1379 quotas and claimed SSG privileges on 6072 individual tariffed

items’. The combination of TRQs and SSG privileges has allowed these states

greater ﬂexibility in protecting sensitive products.

Many developing countries had already liberalised their agricultural markets

under the structural adjustment programmes (SAPs). Since most of these states

opted to set tariff ceilings rather than using tarifﬁcation to convert non-tariff

barriers,

only a small number of them (22) have access to the SSG.

This is in

contrast to OECD countries, in which access to the SSG provisions is notiﬁed

for almost 80 per cent of tariffed items.

It has also been alleged that the EU

‘manipulated’ the calculation of its trigger prices for safeguard protection under

the AoA, allowing them more frequent access to the mechanism.

A 1999 FAO

study found that a number of the developing countries surveyed reported difﬁ-

culties for domestic producers in competing with cheaper imports. The FAO

Binding the Hand that Feeds Them 409

Ibid.

Jackson, n 42 above, at 14. The FAO 2002 Synthesis of Case Studies notes that although there

was a general growth in exports in the countries studied, ‘few case studies were able to make a link

to improved market access under the AoA’. Indeed, market access improvement tended ‘to occur

under regional trade agreements or as a result of preferential schemes . . . rather than resulting from

the Uruguay Round’. A number of countries reported market access difﬁculties in particular in rela-

tion to ‘dairy products, fruits and vegetables and their preparations, meat and processed foods’.

However, Indonesia reported improved market access for its agricultural exports in the US, Japan

and EU. See FAO, ‘Developing Country Experience with the Implementation of the Uruguay Round

Agreement on Agriculture: Synthesis of the Findings of 23 Country Case Studies’ (Oct 2002), Paper

No 3, FAO Geneva Symposium on The Experience with Implementing the WTO Agreement on

Agriculture, and Special and Differential Treatment to Enable Developing Countries to Effectively

Take Account of Their Development Needs, Including Food Security and Rural Development, at

[62]–[63], [65] (hereinafter FAO, Developing Country Experience).

See FAO, State of Food and Agriculture 2005 n 2 above, at 40.

Developing countries had the option in the conversion of non tariff barriers of whether to use

the tarifﬁcation process or to set tariff ceilings and many chose the latter and set a single bound tar-

iff rate for all agricultural products: see FAO, State of Food and Agriculture 2005 ibid, at 39–40.

FAO, Issues at Stake Relating to Agricultural Development, Trade and Food Security (23–24

Sept 1999) Paper No 4, FAO Symposium on Agriculture, Trade and Food Security: Issues and

Options in the Forthcoming WTO Negotiations from the Perspective of Developing Countries, at

[34], n 22 (hereinafter FAO, Issues at Stake). See also Murphy, n 38 above, at 12, who states there

are only 21 developing countries with access to the SSG; and C Dommen, ‘Raising Human Rights

Concerns in the World Trade Organisation: Actors, Processes and Possible Strategies’ (2002) 24

HRQ 1 at 36.

FAO, ibid, at [34].

A Kwa for Southeast Asian Food and Fair Trade Council, Towards Food Security: A Position

Paper for Developing Countries in the Review of the WTO Agreement on Agriculture (1999) 2

<http://www.focusweb.org/publications/1999/Towards%20Food%20Security.htm> (last visited

Jun 10, 2007). See also Gonzalez, n 38 above, at 463.

(R) Shan Ch16 25/2/08 10:19 Page 409

states that in many cases this problem related to ‘the very commodities that are

vital for the economy of these countries—in terms of food supply, employment,

economic growth and poverty reduction’.

Developing countries now have lower tariffs for agricultural products than

developed states

and those without access to the SSG for key agricultural

products are exposed to highly subsidised products entering their markets at

prices that undercut local producers. Thus, for example, the FAO reported that

import surges have had a negative impact on Jamaican domestic production of

poultry, beef, dairy products and rice.

Developing countries have also encountered market access difﬁculties arising

from the application of the Agreement on the Application of Sanitary and

Phytosanitary Measures (SPS). The 1999 FAO report noted that ‘trade harass-

ment’ with respect to the application of SPS standards ‘was considered a com-

mon problem’ where some large importing countries required ‘ “sameness” in

the process rather than “equivalence” ’.

Some of these concerns were reiter-

ated in the 2002 FAO report.

Murphy notes that the imposition of these stand-

ards under the agreement ‘continues to pose problems for developing country

exporters, as such rules can often change unexpectedly and devastate the

exporting industry in the process’.

In terms of farm subsidies, the ‘amber box’ reduction requirements (AMS)

made little difference since developed-country domestic subsidies were already

lower than those in the base period against which reductions were measured.

Many developed countries found ways around the reduction provisions to the

effect that farm support programmes in developed countries were not included

under the AMS quantiﬁcations

or were ‘recharacterised’ and included under

‘green box’ exemptions.

Developed country subsidies to agriculture actually

410 Penelope Simons

FAO, Synthesis of Country Case Studies, Paper No 3 (23–24 Sept 1999), FAO Symposium on

Agriculture, Trade and Food Security: Issues and Options in the Forthcoming WTO Negotiations

from the Perspective of Developing Countries, at [19] (hereinafter FAO, Synthesis of Country Case

Studies). SSG rights are more common for ‘meat, cereals, fruit and vegetables, oilseeds and oil prod-

ucts and dairy products’: see FAO, Issues at Stake, n 63 above, at [34].

J Morrison and A Sarris, ‘Determining the Appropriate Level of Import Protection Consistent

with Agriculture Led Development in the Advancement of Poverty Reduction and Improved Food

Security’ in J Morrison and A Sarris (eds), WTO Rules for Agriculture Compatible with

Development (Rome, FAO, 2007), 21.

FAO, Developing Country Experience, n 60, at [33].

FAO, Synthesis of Country Case Studies, n 66, at [13].

FAO, Developing Country Experience, n 60, at [69]–[71].

Murphy, n 36 above, at 15.

Gonzalez, n 38 above, at 467–8.

Murphy n 36 above, at 16. Gonzalez (ibid, at 466–7) argues that since ‘blue box’ compatible

subsidies (such as US deﬁciency payments) were not required to be included in the Current Total

AMS but were included in the calculation of Total AMS, the US, among others, was not required to

reduce a large portion of its subsidies.

Gonzalez notes (ibid, at 467) that the US 1996 Farm Bill ‘replaced deﬁciency payments with

direct income payments to farmers decoupled from agricultural prices or current production’, and

were claimed to be ‘fully compatible with the ‘green box’ exemptions’. See also Murphy, n 36 above,

at 16; FAO, State of Food and Agriculture 2005 n 2 above, at 31; and W Phillips, Why Children Stay

(R) Shan Ch16 25/2/08 10:19 Page 410

rose signiﬁcantly during the 1995–2004 period.

Moreover, some of these

highly subsidised products are of critical importance to developing country

farmers, and the subsidies, which allow the products to be sold below pro-

duction costs on the global market, have negated the latter’s comparative

advantage.

Many developing countries claimed zero or below de minimus levels of total

AMS (total domestic support for producers) and are now prevented from

employing these forms of direct subsidy above de minimus levels allowed, or

will have to rely on the limited Article 6(2) Special and Differential Treatment

(SDT) exemptions.

The reality is, however, that many developing countries

and LDCs do not have the ﬁnancial resources, whether due to general budgetary

constraints or the requirements of SAPs,

to invest in domestic agricultural sup-

port programmes even up to the permitted de minimus levels.

The FAO stated

in its 2002 report that AMS for the sample countries was ‘well below commit-

ted or permitted levels’. Moreover, in a number of countries studied, both AMS

and ‘green box’ subsidies had declined because of lack of resources or policy

changes.

In addition, because developing states were excluded from key nego-

tiations on the ‘green box’ during the Uruguay Round, many of their subsidy

programmes, where they existed, were not even included in the green box crite-

ria and are therefore not exempt from reduction commitments.

Binding the Hand that Feeds Them 411

Hungry: Agricultural Trade, Food Security and the WTO (Nov 2001) 15 <http://www.global-

poverty.org> (last visited, Jun 10, 2007) who argues that certain countries, including Canada,

‘reworked some elements of their domestic support structures so they ﬁt into the Green Box provi-

sions’. However, certain cotton subsidies characterised by the US as green box subsidies have now

been declared illegal by the Dispute Settlement Body: see WTO, US: Subsidies on Upland Cotton

n 53 above.

See Dommen, n 63 above, at 36 where she notes that subsidies of OECD states ‘increased from

US $182 billion in 1995 to over $300 billion in 1998’. See also FAO, The State of Food Insecurity in

the World 2005: Eradicating World Hunger—Key to Achieving the Millennium Development Goals

(Rome, FAO, 2005) n 4 at 27 which shows an increase in OECD state subsidies between 2002 and

2004 from US$226 billion to US$280 billion.

See, for example, ‘Kicking the Habit’, editorial, The Guardian Weekly, 21–27 Aug 2003, at 14:

US subsidies to its cotton farmers are equal to the total market output, creating unfair competition

for cotton from West Africa that can be produced for two-thirds of US production costs. US subsi-

dies undercut the world price for cotton by 40 per cent. This also means that developing countries

earn less to pay for expensive food imports. See also WTO, US: Subsidies on Upland Cotton—

Report of the Panel, n 53 above; and FAO, The State of Food Insecurity in the World 2003:

Monitoring Progress Towards the World Food Summit and Millennium Development Goals

(Rome, FAO, 2003), at 21 (hereinafter FAO, SOFI 2003), where it notes that in 2002, the EU pro-

vided US$2.3 billion in subsidies for domestic sugar production where ‘production costs are more

than double those in many developing countries’.

See Jackson, n 42 above, at 25. See also Dommen, n 63 above, at 35; and Phillips, n 74 above,

at 15. The FAO states that of a selection of 100 developing countries, only 12 reported a base Total

AMS above de minimus levels, 8 claimed positive base Total AMS but below de minimus levels and

80 claimed zero or negative base Total AMS. See FAO, Issues at Stake, n 63, at [14] and Table 2.

For more on the relationship between SAPs and agricultural trade, see J Madeley, Trade and

Hunger: An Overview of Case Studies on the Impact of Trade Liberalization on Food Security

(Stockholm: Forum Syd, 2000) at 7.

Murphy, n 36 above, at 16; FAO, State of Food and Agriculture 2005 n 2 above, at 32.

FAO, Developing Country Experience, n 60, at [40].

Phillips, n 74 above, at 15.

(R) Shan Ch16 25/2/08 10:19 Page 411

As with the market access and domestic subsidy provisions, the articles

requiring the reduction of export subsidies have not led to signiﬁcant beneﬁts

for developing countries, including LDCs. In addition, many developing coun-

tries that did provide export subsidies eliminated them under SAPs.

Since the

introduction of new subsidies is prohibited under the AoA provisions, ‘only 25

. . . WTO members have the right to subsidise exports [of agricultural products]

and only two to three exporters account for most export subsidies’.

Where

developed states, such as the US, the EU and Canada, have reduced these subsi-

dies, they have found other ways, such as the use of export credits to promote

exports and to give exporters an unfair competitive advantage.

The US, for

example, uses export credits, which, along with export subsidies, facilitate

undercutting by US exporters of global prices for key agricultural commodi-

ties.

However, since the Cotton Subsidies decision, it is clear that in some cases

these programmes will fall foul of AoA rules.

Export subsidy levels remain high, and many developing countries have been

unable to compete against subsidised products released onto the global market

by developed country corporations.

This can be particularly problematic

where subsidised products compete with domestically produced commodities

that are crucial to a developing country’s economy.

412 Penelope Simons

Phillips, n 74 above, at 16.

Murphy, n 36 above, at 16. This number includes the EC 15 as one member: see US: Subsidies

on Upland Cotton—Panel Report n 53 above, at n 843. Murphy (ibid) further states that ‘[t]hree

exporters account for 93 per cent of subsidised wheat exports, two for 80 per cent of subsidised beef

exports and two for 94 per cent of subsidised butter exports’. See also Gonzalez, n 38 above, at 464.

The lack of recourse to export subsidies was raised as an issue by India and Indonesia in the FAO

2002 study. These countries use stock-holding schemes as mechanisms for price stabilisation. The

FAO stated that for India,

. . . the inability to sell abroad at less than the domestic price has become a binding constraint

in the light of its huge surplus stocks of cereals, which are currently much above the stipulated

norms for buffer stocks. Holding such a high level of stocks is expensive, but the options are

limited. Releasing these stocks in the open market will lead to a signiﬁcant fall in prices, which

may beneﬁt consumers in the short run, but will have signiﬁcant implications for future output

growth and food security in the long run. Similarly, exporting at such low prices is also not fea-

sible without resorting to direct subsidies which are not permissible. (FAO, Developing

Country Experience, n 60, at [46]).

Gonzalez, n 38 above, at 464–5. See also Murphy, n 36 above, at 16–17.

See G Monbiot, ‘Africa’s Scar Gets Angrier’, Guardian Weekly (12–18 Jun 2003) at 13, where

he states that export credits allow US exporters to undercut global prices for wheat and maize by

10 to 16 per cent, and for cotton by 40 per cent.

The US GSM 102, GSM 103 and SCGP export credit guarantee programmes for cotton and

other unscheduled commodities, as well as for rice where the subsidy exceeded US reduction com-

mitments were found to have contravened Art 10(1): see US: Subsidies on Upland Cotton

WT/DS267/R [7.943] and [7.949] WT/DS267/AB/R [623]–[627] n 53 above.

Phillips, n 74 above, at 17.

FAO, Synthesis of Country Case Studies, n 66, at [19].

(R) Shan Ch16 25/2/08 10:19 Page 412

4. AoA Implementation and Food Security

It is widely argued that the AoA has been a bad bargain for developing states.

The AoA creates a legal regime for agricultural trade that effectively sanctions

the developed states’ subsidies and protectionist policies on market access and

has done little to assist many developing states to gain an increased share of the

global market for key agricultural products which compete with those from

developed states. But whether this bad bargain translates into a food security

issue is another question.

Because of the many factors that contribute to food security,

and the rela-

tively short period of implementation of the AoA, commentators suggest that it

can be difﬁcult to establish ‘simple causal relationships’ between the implemen-

tation of the AoA and an increase or decrease in food insecurity.

The impact

of trade reform on poverty and food security depends on the circumstances of

each country.

However, according to the US–based Institute for Agriculture

and Trade Policy (IATP), while ‘[t]he direct causal chains in these scenarios are

complex and speciﬁc to each country and commodity . . . a broad trend [of

impacts on food security] is observable and documented by numerous institu-

tions and organizations’.

In order to assess these impacts, it is necessary ﬁrst

to examine the role played in this story by transnational corporations (TNCs)

active in global agricultural markets.

Binding the Hand that Feeds Them 413

See KH Cross, ‘King Cotton, Developing Countries and the “Peace Clause”: The WTO’s US

Cotton Subsidies Decision’ (2006) 9 JIEL 149 at 150. See also the variety of commentaries on the

AoA by Oxfam, ActionAid, and the Institute for Agricultural Trade Policy, for example.

The FAO states that ‘[t]o date, both adherence to the AoA and its impact on food security have

proven hard to measure’: see FAO, SOFI 2003, n 76 above, at 20. In fact, of the sample of 23 coun-

tries studied, the number of undernourished declined and in only 4 did the number increase between

1990–1992 and 1997–1999. The FAO noted, however, that it was ‘not possible to isolate the impact

of the AoA in contributing to this improvement’. See FAO, Developing Country Experience’ n 60,

at [83].

There are a wide variety of factors that can inﬂuence the food security of different populations.

These include: the commitments of a state under structural adjustment programmes; a country’s

debt; currency ﬂuctuations; domestic policies on agriculture, consumers, health and nutrition; trade

policy (both international and domestic); along with policies on supply, distribution and access to

food: see Murphy, n 36 above, at 8–9.

Ibid, at 4 and 17. Murphy states that ‘any qualitative, and even quantitative analysis must be

tentative. Assessments are further complicated . . . by other policy pressures, ranging from structural

adjustment programmes negotiated with the World Bank to economic and environmental shocks,

such as the recent crises in some Asian countries or the drought caused by El Niño’ (at 6)). See also

Dommen, n 63 above, at 34.

FAO, State of Food and Agriculture 2005, n 57 above, at 6.

M Ritchie, S Murphy and MB Lake, United States Dumping on World Agricultural Markets,

Institute for Agriculture and Trade Policy, Cancun Series Paper No 1 (2003), at 14–15. Despite the

inconclusive ﬁnding in its 2002 report, this view is supported by the FAO. See FAO, SOFI 2003, n 76

above, at 20–1.

(R) Shan Ch16 25/2/08 10:19 Page 413

IV. TNC ACTIVITY AND FOOD SECURITY

1. TNCs and the Negotiation of the AoA

The negative impact of liberalisation on certain developing countries was pre-

dicted. As Murphy states, ‘[t]he AoA was expected to hurt African countries’

interests, while the wealthiest countries were expected to proﬁt most from the

new rules. This was openly acknowledged and accepted as the probable out-

come of the agreement and is one of the few predictions that has been borne out

by experience’.

Securing the interests of big business was one of the goals of the negotiations

on agriculture. Ritchie and Dawkins allege that the US and the EU used their

political clout in the Uruguay Round negotiations to ensure that, among other

things, the AoA rules would serve the interests of their major corporate actors

by facilitating an increase in trade volume of agricultural products.

This was

accomplished by requiring member states to reduce domestic prices to that of

global prices, reducing subsidies to farmers to remove tariff and non-tariff bar-

riers while protecting export subsidies.

The end result has been more or less as expected: increased volumes of production to

try to make up in volume traded what was lost to lower prices and less government

support—and thus increased export dumping.

It is possible to surmise that transnational agribusinesses and integrated

livestock companies played a signiﬁcant role (albeit behind-the-scenes) in this

outcome. In the domestic sphere, these business entities are able to exert signiﬁc-

ant inﬂuence on public policy and lawmaking both through political donations

and well-ﬁnanced lobby groups.

The UNDP maintains that the agricultural

industry has been successful in inﬂuencing ‘national positions in international

trade negotiations’.

Some corporate executives in the agricultural industry

have served in high-ranking government positions and subsequently returned to

work in the private sector. For example, a former vice-president of Cargill acted

as the US negotiator on agriculture in the initial stages of the Uruguay Round

negotiations before returning to work in the grain industry.

100

Moreover, a

study of the composition of US trade advisory committees found that of the 111

members of the three committees reviewed, 92 were from individual companies

and 16 from trade associations, compared with only two from labour unions.

101

414 Penelope Simons

Murphy, n 38 above, at 13.

M Ritchie and K Dawkins, ‘WTO Food and Agricultural Rules: Sustainable Agricultural and

the Human Right to Food’ (2000) 9 Minn J Global Trade 9 at 16.

Ibid, at 16–18.

UNDP, Human Development Report 2002: Deepening Democracy in a Fragmented World

(New York, Oxford: Oxford University Press, 2002) 68.

Ibid.

100

Murphy, n 36 above, at 11.

101

UNDP, Human Development Report 2002, n 98 above, at 68.

(R) Shan Ch16 25/2/08 10:19 Page 414

2. Concentration of Agricultural Markets

The activity of TNCs in agricultural markets is not regulated under the AoA or

by any WTO agreement. There are no provisions to deal with market structure

and concentration of corporate power.

102

This fact, and changes in domestic

government policies towards freer markets appear to have facilitated the devel-

opment of oligopolies in agricultural markets; much of the consolidation of

market power in this area has taken place since the end of the Uruguay Round

in 1994.

103

Statistics

104

show that small groups of TNCs control almost every

sector of the agricultural industry—from farm inputs such as seeds, pesticides

and fertilisers to exporting, shipping and processing, and food retailing. An

UNCTAD study on market concentration in the agricultural input industry

found that six major agrochemicals companies control approximately 77 per

cent of the global market (with the top three companies controlling 50 per cent),

and the top four seed companies control an estimated 30 per cent of the global

market for seeds, while ﬁve corporate groups control a signiﬁcant percentage of

the agricultural technology market.

105

This concentration of market share is also reﬂected in global agricultural

trade. For example, global trade in cereal is controlled by ﬁve TNCs,

106

and it

is estimated that the US company Cargill controls 60 per cent of that trade.

107

The US exports two-thirds of the world supply of corn

108

and Cargill’s corn

exports provide for approximately half of US exports or 30 per cent of the world

market.

109

Similarly, six TNCs control 40 per cent of the world coffee trade,

110

Binding the Hand that Feeds Them 415

102

S Murphy, Market Power in Agricultural Markets: Some Issues for Developing Countries,

Trade-Related Agenda, Development and Equity, Working Paper 6, South Centre (1999) at 1

<http://www.southcentre.org/publications/publist_category_WorkingPapers_index.htm> (last

visited Jun 9, 2007).

103

Ritchie and Dawkins, n 96 above, at 19. Even if the AoA has not caused or contributed to the

current market structure, the fact that it is oligopolistic and thus will affect competition means that

it should be addressed within the WTO.

104

These statistics have been taken from a variety of reports issued and studies conducted over

the last 8 years and may not represent current ﬁgures. Rather, they should be seen as illustrative of

a general picture of the global food system. For an excellent study of concentration of global mar-

kets for cash crops see B Vorley, Food, Inc—Corporate Concentration from Farm to Consumer

(London, IIED, 2003). See also WD Heffernan, Consolidation in the Food and Agriculture System,

Report to the National Farmers Union (5 Feb 1999).

105

UNCTAD, ‘Tracking the Trend Towards Market Concentration: The Case of the

Agricultural Input Industry’ (20 Apr 2006) UNCTAD/DITC/COM/2005/16 at 3, 8 and 25ff.

106

B Chatterjee, Trade Liberalisation and Food Security, Brieﬁng Paper No 6, CUTS Centre for

International Trade, Economics & Environment (Jul 1998).

107

Murphy, n 36 above, at 11.

108

See DE Ray, DG De La Torre Ugarte and KJ Tiller, ‘Rethinking US Agricultural Policy:

Changing Course to Secure Farmer Livelihoods Worldwide’, Agricultural Policy Analysis Centre,

The University of Tennessee (2003) 25 <http://www.agpolicy.org/blueprint.html> (last visited Jun

10, 2007).

109

See Murphy n 38 above, at 6.

110

E Neuffer, ‘The Coffee Connection Thousands of Miles from Boston’s Breakfast Tables and

Fast-Food Restaurants, at the End of a Global Trade Network, Guatemala’s Farmers Are Barely

Scraping By’, Boston Globe, 29 Jul 2001, A1.

(R) Shan Ch16 25/2/08 10:19 Page 415

on which the livelihoods of an estimated 20 to 25 million small farmers and

workers in developing countries depend.

111

Three companies control 85 per cent

of the global trade in cotton.

112

Two US companies market 50 per cent of the

world supply of bananas.

113

The FAO states that ‘the production, distribution

and trade in oil seeds and oils’ is now controlled by a small group of TNCs.

114

In addition, Cargill and another company are the leading exporters of soybeans

from Argentina, Brazil and the US, and supply a substantial amount of the

global market.

115

Corporate control of agricultural markets is also highly integrated.

According to Heffernan, ‘[t]he emerging global food system is characterized by

a few dominant ﬁrms that have developed a variety of different alliances with

other ﬁrms in the system’.

116

These include mergers and acquisitions, joint ven-

tures and other less formal strategic alliances, making this consolidation hori-

zontal (ownership or control of an agricultural sector) and vertical (control over

more than one stage in the food production chain, such as providing inputs,

processing and/or exporting outputs), as well as global.

117

Through these rela-

tionships, a small number of corporate actors are able to inﬂuence every aspect

of the food chain. For example, with respect to cereals, a TNC and its partners

might develop the gene, sell the seeds, collect, process, export and import the

grain. In terms of meat production they might produce animal feed, raise and

slaughter the animal, and process the meat.

118

416 Penelope Simons

111

See G Dicum and N Luttinger, The Coffee Book: Anatomy of an Industry from Crop to Last

Drop (New York, The New York Press, 1999) at 38. According to Oxfam, the livelihood of approxi-

mately 25 per cent of the population of Uganda depends on coffee sales. Oxfam International, Mugged:

Poverty in Your Cup (2001) at 8 <http://www.maketradefair.com/assets/english/mugged.pdf> (last

visited Jun 10, 2007).

112

S Suppan, ‘The WTO’s Cotton Crisis and the Crisis in Commodities’, IATP Trade and Global

Governance Program, Aug 2006, at 2 <http://www.tradeobservatory.org/library.cfm?refID=88936>

(last visited Jun 7, 2007).

113

MM McLaughlin, World Food Security: A Catholic View of Food Policy in the New

Millennium (Washington DC: Center of Concern, 2002) at 86.

114

FAO, FAO Support to the WTO Negotiations: Major Constraints to Trade in Processed

Agricultural Products Confronting Developing Countries (2003), <http://www.fao.org/docrep/005/

y4852e/y4852e02.htm> (last visited Jun 10, 2007).

115

See Murphy, n 38 above, at 6.

116

WD Heffernan, The Inﬂuence of the Big Three—ADM, Cargill and ConAgra (1999) 5,

<http://www.foodcircles.missouri.edu/coop.pdf> (last visited Jun 10, 2007). UNCTAD also cites

this report, see n 105 above at 41–2.

117

Heffernan, ibid. Thus, for example, Cargill has corn export, import, milling and shipping

operations in over 160 countries: see Murphy, n 38 above, at 6. A number of the leading corporate

groups in the agricultural biotechnology industry are also the major players in the seed and agro-

chemical industries: see UNCTAD n 105 above; and ETC Group, Globalization, Inc.—

Concentration in Corporate Power: The Unmentioned Agenda, Communiqué, Issue #71 (Jul/Aug

2001) at 6–9 <http://www.etcgroup.org> (last visited Jun 10, 2007).

118

Heffernan refers to these alliances as food system clusters and identiﬁes three such clusters of

companies that are among the dominant actors in the global food system. See Heffernan, n 116

above, at 5. These include Novartis/Archer Daniels Midland (ADM), Cargill/Monsanto and

ConAgra. For diagrams illustrating these clusters see <http://www.foodcircles.missouri.edu/

consol.htm> (last visited Jun 10, 2007).

(R) Shan Ch16 25/2/08 10:19 Page 416

Ritchie and Dawkins argue that although it may be too soon to understand

the full implications of this market concentration, ‘it is evident that higher prices

are being charged to farmers for inputs and lower prices paid to them for their

production’.

119

A report on corporate concentration in the Canadian agricul-

tural industry shows that despite the fact that farmers in Canada have upgraded

their technology and have tripled their gross incomes over the last three decades,

their net incomes have declined. The increase in gross revenues has been paral-

leled by an increase in costs of inputs. Companies that produced fertiliser, for

example, increased their prices 75 per cent as grain prices rose, despite the fact

that the cost of fertiliser production did not change.

120

Similarly, the report

states that in 1998 when hog prices fell below the cost of production, pork pack-

ers earned huge proﬁts (these were record proﬁts in the case of Maple Leaf and

double the annual average for the preceding three years for Fletchers).

121

Farmers have little negotiating power in a system where they have increasingly

fewer choices among sellers of inputs and buyers of outputs (who may even be

the same company or family of companies).

This concentration of market power in agricultural markets has a number of

effects that can be linked to food security issues in developing countries.

3. Subsidies, Oversupply and Depressed Agricultural Commodity Prices

Many argue that overproduction in domestic agricultural markets, leading to

increased supply in global markets, which in turn contributes to low world

prices, is caused by domestic subsidies paid to farmers. This is the rationale

behind the structure of the AoA, which purportedly aims to create a fair trade

regime by, inter alia, removing trade-distorting production subsidies.

122

While

production subsidies do play a role, a report from the Agricultural Policy

Analysis Center at the University of Tennessee argues that subsidies themselves

are not the cause of over-production, and therefore oversupply and depressed

global commodity prices. Rather, it is low global farm gate prices (prices paid

to farmers for their outputs) that trigger government subsidies. In markets such

as Canada, Australia and Mexico, where domestic subsidies have been reduced,

these reductions have not led to lower production levels. Farmers have contin-

ued ‘to produce as much as they can—even in the face of declining prices and

declining subsidies—as long as they can’.

123

The drastic decline in global agricultural commodity prices can be partially

attributed to changes in US policy, away from price support and supply

Binding the Hand that Feeds Them 417

119

Ritchie and Dawkins, n 96 above, at 19–20.

120

D Qualman, The Farm Crisis and Corporate Power (Apr 2001) 23–4 <http://policyalternatives.

ca/index.cfm?act=news&call=469&do=article&pA=BB736455> (last visited Jun 10, 2007).

121

Ibid, at 26–7.

122

Although, as has been demonstrated, in practice the agreement actually institutionalises and

protects both the EU and US domestic subsidy programmes.

123

Ray, Ugarte and Tiller, n 108 above, at 41. See also Ritchie and Dawkins, n 96 above, at 13.

(R) Shan Ch16 25/2/08 10:19 Page 417

management programmes and towards a free-market approach, the goal of

which is to drive down US commodity prices to make them more competitive on

the global market.

124

It is this form of governmental intervention, along with the

oligopolistic structure of the markets, that contributes to the distortion of global

agricultural market prices.

125

Because US corporations are among a small group

of dominant players in the global market, low US prices have the effect of

driving down world commodity prices as these commodities enter the global

market.

126

In US cereal markets, for example, prices are set by the dominant sell-

ers, and these prices have a strong inﬂuence on global commodity prices, even

in relation to commodities where the US is not a dominant exporter in terms

of volume.

127

In the case of coffee, prices are set by big transnational roasting

companies.

128

Commentators argue that the real beneﬁciaries of low prices are big corpora-

tions such as integrated livestock producers, who are able to ‘purchase [animal]

feed from the market at below production cost’ (while small farmers produce

feed themselves and therefore bear production costs), and agribusinesses

129

who

can purchase commodities at below production cost and be guaranteed ‘an

unrestricted availability of commodities . . . [in] the absence of supply control

mechanisms’.

130

For every pound of coffee sold in the US, the transnational

roasting company receives (depending on quality) between US$2.69 and $8.49,

while a Guatemalan farmer earns less than 35 cents and a farm worker less than

14 cents.

131

Low prices and the lack of production control mechanisms are also beneﬁcial

for companies that supply farm inputs and machinery, since it ensures ‘an

inﬂated demand for their products, since the government no longer removes any

acreage from production through set-asides’.

132

In addition, these transnational

418 Penelope Simons

124

Ray, Ugarte and Tiller, ibid, at 9. The change in policy was partially inﬂuenced by the

agribusiness lobby (at 18). Ray et al argue that deregulation in the agricultural sector does not work

since agricultural markets have not historically been self-correcting: ‘. . . neither the quantity of

crops demanded nor the quantity supplied is signiﬁcantly responsive to changes in price, so timely

market self-correction does not take place. Total annual output remains relatively constant irre-

spective of prices, the level of subsidies, or other sources of revenue’ (at 21).

125

Ritchie, Murphy and Lake, n 94 above, at 8.

126

Ray, Ugarte and Tiller (n 108 above, at 11) argue that while the ‘US does not hold a mono-

poly [in agricultural commodities]—it is one of a few major players in the oligopolistic world

markets—low US prices consistently drive down world prices’.

127

Ibid, at 24–7.

128

J Draeger ‘Perking Up the Coffee Industry through Fair Trade’ (2002) Minn J Global Trade

337 at 357.

129

FAO notes that most farm subsidies in the US and EU are paid to large producers: See FAO,

SOFI 2005, n 75 above, at 27. See also Oxfam International, ‘Finding the Moral Fiber: Why Reform

is Urgently Needed for a Fair Cotton Trade’, Oxfam Brieﬁng Paper 69 (Oct 2004) at 17–18, where

it notes that 10 per cent of US farms receive 79 per cent of cotton subsidy payments and one per cent

of those receive 25 per cent of such payments.

130

Ray, Ugarte and Tiller, n 108 above, at 13.

131

Neuffer, n 110 above.

132

Ray, Ugarte and Tiller, n 108 above, at 13. Proponents of free trade argue that low prices ben-

eﬁt consumers. However, according to Ray et. al, even in developed countries it is not clear that con-

sumers beneﬁt from lower commodity prices, since consumer beneﬁt ‘depends on the ability of the

(R) Shan Ch16 25/2/08 10:19 Page 418

actors beneﬁt from export subsidies and export credits in the many different

countries in which they operate, giving them an even greater competitive advan-

tage over small producers in developing countries.

133

4. Dumping and Food Security

TNCs that are able to purchase at below the cost of production and beneﬁt from

an unlimited supply of commodities, as well as production and export subsidies,

are then able to sell onto the world market at below production costs and

thereby signiﬁcantly undercut foreign competition. This practice of corporate

dumping (the sale of goods at below production cost) is facilitated by the provi-

sions and structure of the AoA.

134

Not only are US and EU production and

export subsidy programmes protected under the agreement, dumping is not ade-

quately disciplined under the AoA—even now that the Peace Clause has

expired

135

and subsidies can be, and are being, challenged in the WTO Dispute

Settlement Body.

136

A background paper on the AoA, prepared by IATP for the Cancun

Ministerial Meeting in September 2003, states that ‘[t]he impact of agricultural

dumping from the US and EU on developing states has been well documented as

the most harmful effect of current agriculture trade rules’.

137

While the impact

of trade reforms and dumping will depend on the circumstances of each state,

Binding the Hand that Feeds Them 419

marketing system to transfer the lower prices to them. In some cases, agribusinesses and middlemen

are able to capture some or all of the beneﬁts of low prices’. This observation is echoed by Qualman

(n 120 above, at 26) who argues that despite the fact that hog prices in Canada have remained the

same over a 23-year period, and are currently below the cost of production, consumer prices have

risen by over 200 per cent.

133

Murphy, n 102 above, at 10 and 21–2.

134

As is dumping in the form of food aid (providing food aid when global prices are low to cer-

tain states in order to open future markets).

135

Under Article 13 (the Peace Clause) which expired in Dec 2003, certain AoA subsidies could

not be challenged. Thus, conforming ‘green box’ subsidies, a certain level of ‘blue box’ subsidies and

conforming export subsidies were exempt from challenges normally allowed under Article XVI

GATT 1994 and Part III of the WTO Agreement on Subsidies and Counterveiling Measures (SCM).

Conforming green box measures where also exempt from counterveiling duty and non-violation

nulliﬁcation and impairment actions. Articles 13(b) and (c) allowed conforming ‘blue box’ and

export subsidies to be subject to counterveiling duties but required members to show a threat or

injury in conformity with Article VI GATT 1994 and Part V of the SCM and to exercise due restraint

in initiating any counterveiling duty investigation.

136

Cross (n 89 above, at 190) notes that the US Cotton Subsidies decision has laid the ground for

further challenges of US, EU and other subsidy programmes. On Jun 8, 2007 Canada requested a

panel in the case of US: Subsidies and Other Domestic Support for Corn and Other Agricultural

Products: See Inside US Trade, ‘Canada Brings WTO Panel Against US Farm Subsidies’ Jun 8 2007

<http://www.insidetrade.com/> (last visited Jun 10, 2007). It should be noted that the Cotton

Subsidies Decision has not yet been implemented and that the use of the DSB to challenge subsidies

is not a viable means for most developing countries to address the inequalities of the agreement,

given the complexity and cost (both ﬁnancial and political) of such cases and the difﬁculties of

enforcement: see Murphy, n 36 above, at 14; see also Cross at 192–3.

137

S Murphy, ‘WTO Agreement on Agriculture Basics’, Institute for Agriculture and Trade

Policy, WTO Cancun Series Paper No 2 (2003) at 14.

(R) Shan Ch16 25/2/08 10:19 Page 419

this practice of corporate dumping can be said to undermine the food security

of vulnerable populations in two ways. First, for developing countries that have

opened up their markets pursuant to SAP commitments and/or AoA market

access commitments, these commodities enter the domestic market at prices

well below the cost of production. As discussed above, only a few developing

countries have access to the SSG provisions that would allow them to protect

domestic markets from import surges by imposing higher tariffs on certain key

agricultural commodities. These cheap imports compete with domestic produc-

ers and can prevent local producers of similar products in developing countries

from being able to meet their production costs, let alone make a marginal

proﬁt.

138

This can lead to a loss of livelihood and a cycle of poverty, as dispos-

sessed farmers and unemployed farm labourers cannot afford to buy less expen-

sive imports. In its 1999 case study analysis of the impacts of trade, the FAO

reported that liberalisation had contributed to ‘the concentration of farms, in a

wide cross section of countries. While this led to increased productivity and

competitiveness with positive results, in the virtual absence of social safety-nets,

the process also marginalised small producers and added to unemployment and

poverty’.

139

Second, many developing countries depend on imports to satisfy part of their

food supply and thus require foreign exchange revenues to purchase on the

global market. For those countries that rely on agricultural exports to generate

such exchange, highly subsidised commodities released onto the global market

may undercut their earnings and thereby jeopardise food security.

140

Coffee

exports, for example, constitute a substantial part of foreign exchange earnings

for many countries. Thus, when the market is ﬂooded with excess, low-cost cof-

fee and global prices drop as a result, those countries that rely on such exports

may be unable to ﬁnance their dept payments and/or purchase sufﬁcient food to

meet the needs of their populations. In addition, in countries whose economies

rely on the production of a few commodities for export, the oversupply of the

products on the global market can result in a loss of livelihood for many thou-

sands of small farmers and farm labourers, and lower wages for those who are

still able to ﬁnd employment in the industry. The dramatic fall in coffee prices

in 2001, for example, led to major losses of income in Guatemala, from lower

420 Penelope Simons

138

See Ritchie, Murphy and Lake, n 94, above, at 2–3, where it is noted that the US undercuts

world prices by 40 per cent for wheat, 25–30 per cent for maize and nearly 30 per cent for soybeans.

The authors further argue that EU dumping of beef onto the market destroyed the cattle industries

of Burkina Faso and Côte d’Ivoire (at 11). See also Oxfam International, ‘Stop the Dumping! How

EU Agricultural Subsidies Are Damaging Livelihoods in the Developing World’, Oxfam Brieﬁng

Paper No 31 (Oct 2002).

139

FAO, Synthesis of Country Case Studies, n 66 above, at [18]. The 2002 FAO study is much

more tentative in its conclusion, stating that ‘[t]he most likely groups to beneﬁt from the reduction

of trade barriers in foreign markets and the expansion of exports are commercial producers. Small

farmers may not be able to participate in growing export-oriented crops and may experience greater

competition in accessing resources, including land, marginalizing their position even further’: see

FAO, Developing Country Experience, n 60 above, at [92].

140

Ritchie, Murphy and Lake, n 94 above, at 14.

(R) Shan Ch16 25/2/08 10:19 Page 420

wages and massive unemployment and thus increased food insecurity.

141

Equally, the falling prices in cotton have been linked with a substantial increase

in poverty among cotton farmers in Benin and an increase in rural poverty gen-

erally.

142

This situation may be compounded by market access barriers in developed

states. As mentioned above, many OECD countries engaged in ‘dirty tarifﬁca-

tion’, setting original tariff levels so high (sometimes exceeding 300 per cent)

that reduction commitments under the AoA did not signiﬁcantly improve

market access.

143

In many cases, the highest tariffs were set in relation to com-

modities most important to developing country exporters. In addition, of

OECD-member tariffed goods, almost 80 per cent are subject to the SSG provi-

sions and therefore can be protected if import prices go below the set trigger

price or if imports exceed the trigger volume.

144

Food prices rose dramatically following the entry into force of the Uruguay

Round agreements.

145

Although world prices subsequently subsided, many

LDCs are becoming more dependent, and are spending an increasing percentage

of their GDP, on food imports while their export revenues have stagnated,

reducing their purchasing power. In addition, the volumes of food aid to LDCs

and NFIDCs has dropped signiﬁcantly.

146

5. The AoA and the Right to Adequate Food (Food Security)

Andrew Lang has questioned the necessity of framing in human rights terms the

type of critique of the trade regime presented in this paper, stating that it adds

an ‘extra unnecessary layer of analysis’.

147

However, to examine the issue of

trade-related food security as a fundamental human right, is to treat it as a valid

legal interest (rather than simply as a policy consideration) which imposes inter-

national legal obligations on states.

It would be hard to maintain that in negotiating, ratifying and implementing

this treaty, states have taken into account their international legal obligations

Binding the Hand that Feeds Them 421

141

P Varangis, P Siegel, D Giovannucci and B Lewin, ‘Dealing with the Coffee Crisis in Central

America: Impacts and Strategies’, World Bank Policy Research Working Paper 2993 (2003) at 49–51

<http://www-wds.worldbank.org> (last visited Jun 10, 2007)

142

Oxfam, Finding the Moral Fiber, n 129 above at 13, citing a study prepared for the World

Bank by the International Food Policy Research Institute.

143

Gonzalez, n 38 above, at 460–1.

144

FAO, Issues at Stake, n 63, at [34].

145

Murphy, n 36 above, at 17–18.

146

FAO, FAO Support to the WTO Negotiations: Food Import Bills of Least Developed

Countries (LDCs) and Net Food Importing Developing Countries (NFIDCs) (2003)

<http://www.fao.org/docrep/005/y4852e/y4852e06.htm> (last visited Jun 10, 2007). See also

J Morrison and A Sarris, n 67 above, at 33. See also Monbiot, n 85 above, at 13 who argues that the

US tends to increase its food aid (which it provides in the form of agricultural products rather than

in funds to the World Food Programme) when global commodity prices are low.

147

See Andrew Lang’s contribution in this volume.

(R) Shan Ch16 25/2/08 10:19 Page 421

regarding the right to food.

148

Individual states do not appear to have taken any

steps to regulate the domestic and global business practices of corporate nation-

als which may contribute to violations of the right to food. In addition, as

discussed above, the structure of the AoA itself protects trade-distorting subsidy

programmes and market access policies and does not address the issue of

corporate concentration in global agricultural markets. As such, the treaty facil-

itates the dumping of agricultural commodities on global markets which can

undermine the food security of vulnerable populations in developing countries.

However, the AoA does incorporate provisions relating to food security and

thus arguably does recognise the right to adequate food. Food security is speci-

ﬁed as a ‘non-trade’ concern that should be taken into account and there are a

number of provisions that purport to address trade-related food security con-

cerns.

149

Article 16, the chief mechanism under the AoA to address food security issues,

imposes an obligation on members to take action as agreed under the Decision

on Measures Concerning the Possible Negative Effects of the Reform

Programme on Least-Developed and Net Food-Importing Developing

Countries (Marrakesh Decision).

150

As its title suggests, the decision acknowl-

edges the potential for negative impacts following the implementation of the

AoA on LDCs and Net Food-Importing Developing Countries (NFIDCs) that

may not be able to ﬁnance sufﬁcient food imports in the short term. It recognises

that reductions in export subsidies will result in a decreased ﬂow of food, and

that liberalisation in general will result in greater price volatility for food

imports.

151

Developed states agreed ‘to establish appropriate mechanisms’ to

ensure the availability of food aid sufﬁcient to meet developing country needs

and particularly the needs of LDCs and NFIDCs.

152

Members further recog-

nised that countries experiencing ﬁnancial difﬁculties in paying for food imports

were to be eligible for assistance from existing ﬁnancial institutions or other

institutions that might be established.

153

422 Penelope Simons

148

CESCR, ‘General Comment No 12’, n 8 above, at [19].

149

The preamble of the AoA notes that commitments under the treaty ‘should be made in an

equitable way . . . having regard to non-trade concerns, including food security . . . having regard to

the agreement that special and differential treatment for developing nations is an integral element

of the negotiations, and taking into account the possible negative effects of the implementation of

the reform programme on least-developed and net food-importing developing countries’. Article 12

requires members that wish to institute export prohibitions or restrictions on agricultural products

to ‘give due consideration to the effects’ such measures may have on the food security of importing

members, and requires written notice of such measures to be provided to the Committee on

Agriculture. Under Article 12(2), developing countries are exempt from this requirement except in

cases where they are net-food exporters of the speciﬁed foodstuff.

150

Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on

Least-Developed and Net-Food Importing Developing Countries in Final Act Embodying the

Results of the Uruguay Round of Multilateral Trade Negotiations, reprinted in (1994) 33 ILM 392.

151

Ibid at [2].

152

Ibid at [3].

153

Ibid at [5]. In addition, paragraph 4 requires that any agreement on agricultural export cred-

its ‘makes appropriate provision for differential treatment in favour of’ LDCs and NFIDCs.

(R) Shan Ch16 25/2/08 10:19 Page 422

However, the Marrakesh Decision, as well as other provisions relating

to food security, such as Article 6(2) (special and differential treatment) and

certain green box exemptions,

154

do not appear to have provided developing

countries with effective mechanisms to address the negative impact of the AoA

and TNC concentration in global agricultural markets on food security. In the

ﬁrst place, the term food security is not deﬁned in the AoA. Stevens et al note

that, within the WTO system, food security ‘is often taken to relate primarily to

the adequate supply of imported food to member states’.

155

This narrow con-

ception of food security does not conform with the FAO and UN CESCR deﬁn-

ition of food security.

156

Nor does it acknowledge the complexity of the issue.

As such, it negates the other ways that trade contributes to the problem of food

insecurity, for example by the undercutting of domestic agricultural markets in

developing countries and the consequent effects on small-scale farmers and farm

labourers.

157

Second, in terms of protecting domestic markets from surges in imports for

certain products, as noted above, most developing countries do not have access

to the SSG mechanism, and of those that do, few ‘have the resources and capa-

city to apply general safeguard measures, including providing evidence for the

obligatory proof of injury’.

158

Third, trade rights are not conditioned in any way on compliance with the

right to adequate food. The Marrakesh Decision, for example, applies only to

LDCs and NFIDCs and does not create enforceable rights for these countries.

Developed countries are not legally required ‘to make food or other assistance

available to countries adversely affected by the implementation of the Uruguay

Round commitments on agriculture’.

159

In addition, the decision has not been

sufﬁciently implemented.

160

Ritchie and Dawkins note that in 1996, the WTO

Committee on Agriculture decided not to activate the decision following the

release of an IMF report that questioned FAO’s projections of negative impacts

related to AoA implementation.

161

The FAO study had estimated that LDCs

Binding the Hand that Feeds Them 423

154

‘Public stockholding for food security purposes’, ‘domestic food aid’ and various structural

adjustment and regional assistance programmes are listed as exemptions in Annex 2, [3], [4], [9],

[10], [11] and [13] (green box), and are not, therefore, considered trade-distorting subsidies subject

to reduction or required to be included in calculations of AMS (total domestic support) Art 6(1). In

addition, developing countries are permitted to reasonably subsidise the purchase of food for the

public stockholding and domestic food aid programmes (Annex 2, [3] and [4]and notes 5 and 6).

Annex 5 [1(d)] also allows countries to restrict market access for designated products in their sched-

ules that are subject to special and differential treatment for food security purposes.

155

Stevens et al, n 50 above, at 3.

156

See n 30 above.

157

Phillips, n 74 above, at 7.

158

FAO, ‘FAO Support to the WTO Negotiations: The Need for Special Safeguards for

Developing Countries’ (2003) <http://www.fao.org/docrep/005/y4852e/y4852e05.htm> (last visited

Jun 10, 2007).

159

MG Desta, ‘Food Security and International Trade Law: An Appraisal of the World Trade

Organization Approach’ (2001) 35 J of World Trade 449 at 467.

160

Dommen, n 63 above, at 33.

161

Ritchie and Dawkins, n 96 above, at 25.

(R) Shan Ch16 25/2/08 10:19 Page 423

and NFIDCs would face huge increases in their food import bills, 14 per cent of

which could be attributed to the implementation of the WTO agreements.

162

While some countries appear to have taken steps to fulﬁl their commitments

under the decision in good faith,

163

FAO studies have reported that many

eligible developing countries have not received the assistance that should be

available.

164

Thus, these provisions fall far short of the requirement that states give ‘due

attention’ to the right to adequate food in international agreements ‘whenever

relevant’

165

and do not provide developing countries with the means to ensure

that they can fulﬁl their obligations in relation to the right to food of individu-

als within their territories.

V. CONCLUSION

As noted above, it is poverty rather than world food supply that is one of the

main causes of food insecurity. It is widely accepted that growth in domestic

agricultural production can have a signiﬁcant impact in reducing poverty, and

that improving agricultural production and particularly staple food production

is more effective in addressing food security in developing countries

166

than the

reliance on cheap imports.

167

As the FAO notes, ‘chronic food insecurity can be

addressed most effectively through policies that tap the huge agricultural poten-

tial of developing countries to increase agricultural productivity and food

production’.

168

State intervention in the agriculture sector is critical to ensuring agricultural

growth in the early stages of a state’s economic development.

169

Historically,

states have protected their agriculture sectors as they move from the early to

middle stages of economic development

170

using a wide range of policy mechan-

isms including state trading and export monopolies, a variety of non-tariff

424 Penelope Simons

162

Ritchie and Dawkins, n 96 above, at 25.

163

See eg WTO, Committee on Agriculture, Notiﬁcation, Doc No G/AG/N/CAN/52, for a list of

the actions taken by Canada, for example, pursuant to the Marrakesh Decision.

164

See FAO, Synthesis of Country Case Studies, n 66, at [17], where it states that none of the eli-

gible countries that were studied reported ‘receiving any tangible assistance related to the Decision

(eg changes in food aid volumes, compensatory ﬁnancing or increased assistance to agricultural

development programmes)’. This problem was also reported in the FAO 2002 study. See FAO,

Developing Country Experience, n 60, above at [91].

165

See n 22ff and accompanying text.

166

Morrison and Sarris, n 67 at 34–6.

167

Ritchie, Murphy and Lake, n 94 above, at 14. Ritchie et al argue that for countries with avail-

able fertile land ‘a policy of dependence on cheap imports makes little economic sense’.

168

FAO, Some Issues Relating to Food Security in the Context of WTO Negotiations on

Agriculture, (20 Jul 2001) Discussion Paper No 1, FAO Geneva Roundtable on Food Security in the

Context of WTO Negotiations on Agriculture, at 2.

169

Morrison and Sarris, n 67 above at 41, who state that ‘[t]here is ample evidence to suggest that

the state needs to play a signiﬁcant role in stimulating the transformation of agriculture’.

170

Ibid, at 22.

(R) Shan Ch16 25/2/08 10:19 Page 424

barriers, state marketing boards to ensure price stability for both producers and

consumers, subsidies for producer inputs and credit and government investment

in rural infrastructure and agricultural research.

171

A trade regime that effectively undermines this potential will likely also

undermine a country’s potential to be food secure. The AoA liberalisation rules,

the manner in which they have been implemented, domestic trade and agricul-

tural policies of major developed countries, and the concentration of market

power in agricultural markets appear to do just that. In this context, the reforms

made by developing countries and LDCs pursuant to SAPs and the AoA have

left them with few policy options to allow them stimulate agricultural, and

hence, economic growth.

WTO members that have ratiﬁed the ICESCR,

172

and particularly those

which were the major players in the Uruguay Round negotiations have violated

their obligations to take the right to food into account in entering into and

implementing the AoA. Moreover, to the extent that these states have duty

under the ICESCR to regulate the domestic and extraterritorial activities of their

corporate nationals which contribute to violations of the right to adequate food

in other countries, these states are in breach of this obligation.

It remains to be seen whether any agreement reached in the revived Doha

Round negotiations

173

will satisfy the obligations of states parties with respect

to the right to adequate food and result in sufﬁcient changes to the AoA to

redress the inequalities, and will allow developing countries, in particular

LDCs, more ﬂexibility to protect their markets in order to pursue food security

and other key development goals. To date, however, the proposals on the table

do not look promising.

In the ﬁrst place, the issue of market structure is not being addressed. There

is language in the July Framework Agreement

174

and the Hong Kong

Ministerial Declaration

175

to support the development of a Special Safeguard

Mechanism (SSM) for developing countries. There is also language to allow for

the designation of Special Products (SPs) ‘based on criteria of food security,

livelihood security and rural development needs’ that would exempt designated

agricultural products from tariff reduction commitments. However, there is

disagreement as to whether the SSM should apply to all or some tariff lines, to

Binding the Hand that Feeds Them 425

171

Stockbridge, n 31 above, at 12.

172

To the extent that the right to adequate food has entered customary international law, this

applies to all states (except the US).

173

The negotiations for reform of the agricultural trade regime are prescribed under Article 20

of the AoA. Members commit themselves to ongoing negotiations regarding the liberalisation of

trade in agriculture, taking into account, among other things, ‘non-trade concerns, special and

differential treatment to developing country Members, and the objective to establish a fair and

market-oriented agricultural trading system, and the other objectives and concerns mentioned in the

preamble [such as food security]’.

174

WTO, Decision Adopted by the General Council on 1 Aug 2004 (2 Aug 2004) WTO doc

WT/L/579 at [41]–[42].

175

WTO, Ministerial Declaration (22 Dec 2005) WTO doc WT/MIN(05)/DEC at [7].

(R) Shan Ch16 25/2/08 10:19 Page 425

staple food products or products related to food security.

176

Ambassador

Falconer, Chair of agricultural negotiations, has proposed that the SSM be lim-

ited to use in relation to SPs.

177

With regard to SPs, there is no agreement on the

number of products that developing countries should be allowed to specify,

with the EU and US calling for six per cent of tariff lines while developing coun-

tries have been insisting on allowing designation of up to 20 per cent.

178

There are proposals on the table for developed country subsidy reduction.

179

The US, for example, is proposing to reduce its AMS by 60 per cent, but the

effectiveness of such a cut will depend, among other things, on the base years

agreed and whether the US is successful in gaining agreement for an expansion

of the ‘blue box’ criteria that would allow it to shift some of its subsidies from

the ‘amber box’.

180

A recent report has suggested that the current draft US Farm

Bill could actually signiﬁcantly increase trade-distorting subsidies.

181

In addi-

tion, the EU and US have shown little willingness to make any changes to the

current ‘green box’.

182

The EU has agreed to eliminate export subsidies by 2013,

but this proposal is contingent on US agreement to adopt disciplines on export

credits, export credit guarantees and insurance programmes and food aid, as

well as on agreement among WTO members on signiﬁcant improvements in

market access in other non-agricultural areas of negotiation.

183

Finally, the US

is pushing for ambitious tariff cuts for developing countries on both agricultural

and non-agricultural products.

184

426 Penelope Simons

176

A Matthews, ‘Shallow Versus Deep Special and Differential Treatment (SDT) and the Issue

of Differentiation in the WTO Among Groups of Developing Countries’ in J Morrison and A Sarris

(eds), n 67 above, 79 at 93–4.

177

S Murphy, ‘Still Not Confronting the Real Challenges: Part II of the Challenges Paper for the

Doha Negotiations on Agriculture’, Institute for Agricultural Trade Policy, Trade and Governance

Program, (May 2007) at 2 <http://www.iatp.org/iatp/publications.cfm?accountID=451&refID=

98818> (last visited Jun 10, 2007).

178

There are indications that key negotiating states (the US, EU, India and Brazil) are consider-

ing the development of indicators for designating SPs rather than setting speciﬁc limits on numbers:

see Inside US Trade, ‘G4 Considers Dropping Speciﬁc Limits on Special Products in WTO’, Jun 8

2007 <http://www.insidetrade.com/> (last visited Jun 10, 2007).

179

See South Centre, ‘State of Play in Agriculture Negotiations: Country Groupings’ Positions—

Domestic Support Pillar, Analytical Note SC/AN/TDP/AG/1–2 (Nov 2006).

180

Institute for Agricultural Trade Policy, ‘A Fair Farm Bill for the World’, (Mar 2007), 4.

181

Inside US Trade, ‘Johanns Says Emerging Farm Bill Would Increase Subsidies’, Jun 8 2007

<http://www.insidetrade.com/> (last visited Jun 10, 2007).

182

See South Centre, n 179 above.

183

See South Centre, ‘State of Play in Agriculture Negotiations: Country Groupings’ Positions—

Export Competition Pillar’, Analytical Note SC/AN/TDP/AG/1-3 (Nov 2006). See also Oxfam

International, ‘A Recipe for Disaster: Will the Doha Round Fail to Deliver for Development?’,

Oxfam Brieﬁng Paper 87 (April 2006) at 10. Signiﬁcant reductions in tariffs for non-agricultural

products for many developing countries would also compromise their chances for development as

it would open their industrial markets before they were competitive. Historically many developed

countries and advanced developing countries have used tariffs as part of their industrial develop-

ment strategy: see Oxfam, ibid, at 14–16.

184

See South Centre, ‘State of Play in Agriculture Negotiations: Country Groupings’ Positions—

Market Access Pillar’, Analytical Note SC/AN/TDP/AG/1-1 (Nov 2006).

(R) Shan Ch16 25/2/08 10:19 Page 426

It is clear, as Murphy states, that ‘[t]he pretence of a development agenda has

long since been dropped’.

185

This is perhaps not surprising given the mercan-

tilist basis of the WTO and the fact that there is no collective understanding of

how this organisation and its members should pursue and support develop-

ment.

186

States parties to the ICESCR have clearly not looked to their

international human rights obligations as a basis for developing such an under-

standing. Unfortunately, this means that once again the human rights of the

hungry will not be adequately addressed. Nor will trade in agriculture play its

potentially important role in reducing poverty levels and addressing food secur-

ity, but rather, it will likely contribute to the opposite.

Binding the Hand that Feeds Them 427

185

S Murphy, n 177 above at 3.

186

JE Stiglitz and A Charlton, Fair Trade for All: How Trade Can Promote Development

(Oxford, OUP, 2005) 67.

(R) Shan Ch16 25/2/08 10:19 Page 427

(R) Shan Ch16 25/2/08 10:19 Page 428

International Law’s Invisible Hand and the Future of Corporate Accountability for Violations of Human Rights

Article

Full-text available

Sep 2011

Penelope Simons

In May 2011, the United Nations Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises (SRSG), Prof. John G. Ruggie, submitted to the Human Rights Council, his “Guiding Principles on Business and Human Rights” aimed at implementing his “Protect, Respect and Remedy” policy framework. The Council unanimously adopted the Guiding Principles at its June 2011 session. Ruggie’s work has been both welcomed and criticized and his Guiding Principles are likely to remain controversial. Apart from the SRSG’s recommendation to the HRC to develop a process to clarify the legal obligations of business entities not to commit international crimes, his work on this issue did not include a recommendation that the future development of binding international obligations should be one of the goals of his policy framework and guiding principles. This article argues that Ruggie’s approach to addressing corporate human rights impunity was misconceived. For Ruggie, ‘[t]he root cause of the business and human rights predicament today lies in the governance gaps created by globalization - between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences’. It is argued here, however, that to effectively address corporate impunity, one cannot simply deal with the governance gaps alone. One must also identify and address the root causes of those gaps. This article contends that corporate human rights impunity is deeply embedded in the international legal system. It seeks to demonstrate the problems with the SRSG’s approach by arguing that, along with the interventions of international financial institutions in the economies of developing states, one of the most significant impediments to corporate human rights accountability is the structure of the international legal system itself. The validity of this assertion is explored through an examination of the critiques of the international legal system by Third World Approaches to International Law (TWAIL) scholars, as well as insights drawn from feminist critiques of international law. It is argued that powerful states have used international law and international institutions to create a globalized legal environment which protects and facilitates corporate activity and, although the SRSG identified symptoms of this reality during his tenure, he did not examine the deep structural aspects of this problem. This article demonstrates that such an examination would have revealed the crucial need for binding international human rights obligations for business entities in any adequate strategy aimed at addressing corporate impunity. It concludes with some recommendations for developing such obligations incrementally.

Conflicting Norms in a World of Fragmented International Law and the Role of World Trade Organization: Constitutionalization or Linkage Facilitation?

Article

Jan 2010

Mahmoud Sharei

Better the Devil We Know: How Sociology Informs the Debate Over Antidumping Laws

Article

Cherrine Callista Chow

Commoditizing Nonhuman Animals and Their Consumers: Industrial Livestock Production, Animal Welfare, and Ecological Justice

Article

Full-text available

Jun 2012

Heather McLeod-Kilmurray

There is increasing research on the effects of industrial livestock production on the environment and human health, but less on the effects this has on animal welfare and ecological justice. The concept of ecological justice as a tool for achieving sustainability is gaining traction in the legal world. Klaus Bosselman defines ecological justice as consisting of three elements: intragenerational justice, intergenerational justice, and interspecies justice. While the first two have been extensively discussed, interspecies justice has received less attention. It is argued that the neglect of interspecies justice in the practice of industrial livestock production leads to both intragenerational and intergenerational injustices. The article focuses primarily on an animal welfare perspective, addressing the extreme harm and oppression of animals entailed by their commoditization for industrial food production. The destructive impact of this mode of food production on environmental resources and its massive contributions to climate change also lead to the impoverishment of the food, environmental, social, and economic health of present and future generations. The article describes the legal mechanisms that have permitted, and indeed encouraged, the move to industrial livestock production, and suggests changes that could reduce the three kinds of ecological injustices which industrial livestock production produces.

A Legal Appraisal of the West African Free Trade Area

Article

Adedokun Ogunfolu

African countries after independence in the latter half of the twentieth century embraced the formation of Free Trade Areas (FTAs), provided for under Article XXIV of the General Agreement on Trade and Tariffs (GATT 1947), as an exception to Article I Most Favored Nation (MFN) clause. FTAs were the adopted anodyne to reverse systemic underdevelopment wrought by departing colonialists from Europe and the emergence of the European Union. Sub-Saharan Africa encompasses West Africa, and accounted for 1.1 per cent of world trade in 1991. West African share of world exports with the exception of Nigeria fell from 1.6% in 1980 to 0.6 per cent in 2006. In 1963 Africa’s share of world exports was 5.7 per cent and imports accounted for 5.2 per cent, while in 2006 Africa’s share of exports had declined to 3.1 per cent and imports 2.4 per cent. The Economic Community of West African States (ECOWAS)5 FTA is relatively unknown in the United States, unlike the North American Free Trade Area (NAFTA), which came into effect on January 1, 1994. ECOWAS is a model FTA on the successful abolition of visas amongst its members. A brief history of western dominated international trade regime is necessary, in order to understand why West African countries’ attempts to form a customs union resulted into a free trade area. This paper analyzes the debate whether FTAs create trade or distort trade, and examines the arguments around their role in facilitating the growth pace of developing countries. The impact of the World Trade Organization (WTO) on developing countries is analyzed through the prism of the constructive school of international relations, and the normative constructs of the realist school. The paper appraises the international economic law regime, through the establishment of ECOWAS in 1975 by fifteen contiguous states in West Africa, to promote inter-regional trade and remove all barriers to labor, capital and ultimately establish a single currency for its fifteen countries. A critical legal analysis is carried out on the implementation of the goals of ECOWAS, and the modification of its treaty through additional protocols; to guarantee, peace, security and democracy in West Africa as a sine qua non for engaging the global economic community in a symbiotic relationship. The paper concludes that ECOWAS has achieved peace and democracy in West Africa, despite limited resources, but its percentage share of world trade fell from 1.6 per cent in 1980 to 0.6 per cent in 2006, excluding oil exporting members. The paper observes that ECOWAS has a lot of homework to do in lowering rules of origin requirements for goods manufactured in its member countries, provision of public infrastructure, enabling access to credit by entrepreneurs, in order to promote regional trade and access to the global economy.

Shallow versus deep Special and Differential Treatment (SDT) and the issue of differentiation in the WTO among groups of developing countries

Chapter

Full-text available

Jan 2007

Alan Matthews

Dealing with the Coffee Crisis in Central America: Impacts and Strategies

Article

Full-text available

May 2003

Current coffee prices are at record lows and below the cost of production for many producers in Central America. Moreover, the coffee crisis is structural, and changes in supply and demand do not indicate a quick recovery of prices. So, coffee producers in Central America are facing new challenges-as are coffee laborers, coffee exporters, and others linked to the coffee sector. Coffee plays a major economic role in Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The coffee crisis is actually part of a broader rural crisis caused by weather shocks (such as Hurricane Mitch and droughts), low international agricultural commodity prices, and the global recession. These challenges call for new strategies for Central American countries aimed at broad-based sustainable development of their rural economies. The authors deal with the impact of the coffee crisis and strategies to deal with it. They include an analysis of the international coffee situation and country-specific analyses. The authors explore options and constraints for increased competitiveness and diversification, and discuss social, environmental, and institutional dimensions of the crisis. The authors conclude that there are specific solutions that can be pursued for the coffee sector. Some are already being applied, but more can be done in a more systematic way. Also, there is a need for safety nets to deal with the short-term impact of the crisis. Longer-term solutions are to be found in increased competitiveness and diversification in the context of broad-based sustainable rural economic development.

Food Security and International Trade Law: An Appraisal of the World Trade Organization Approach

Article

Jun 2001
J World Trade

Melaku desta

The New York Press, 1999) at 38. According to Oxfam, the livelihood of approximately 25 per cent of the population of Uganda depends on coffee sales

Jan 2001

G See
N Dicum
Luttinger

See G Dicum and N Luttinger, The Coffee Book: Anatomy of an Industry from Crop to Last Drop (New York, The New York Press, 1999) at 38. According to Oxfam, the livelihood of approximately 25 per cent of the population of Uganda depends on coffee sales. Oxfam International, Mugged: Poverty in Your Cup (2001) at 8 <http://www.maketradefair.com/assets/english/mugged.pdf> (last visited Jun 10, 2007).

The WTO's Cotton Crisis and the Crisis in Commodities', IATP Trade and Global Governance Program

Aug 2006

S Suppan

S Suppan, 'The WTO's Cotton Crisis and the Crisis in Commodities', IATP Trade and Global Governance Program, Aug 2006, at 2 <http://www.tradeobservatory.org/library.cfm?refID=88936> (last visited Jun 7, 2007).

UNCTAD also cites this report

Jan 1999
41-43

W D Heffernan

WD Heffernan, The Influence of the Big Three-ADM, Cargill and ConAgra (1999) 5, <http://www.foodcircles.missouri.edu/coop.pdf> (last visited Jun 10, 2007). UNCTAD also cites this report, see n 105 above at 41-2.

Finding the Moral Fiber, n 129 above at 13, citing a study prepared for the World Bank by the International Food Policy Research Institute

460-461

Oxfam

Oxfam, Finding the Moral Fiber, n 129 above at 13, citing a study prepared for the World Bank by the International Food Policy Research Institute. 143 Gonzalez, n 38 above, at 460-1.

Support to the WTO Negotiations: The Need for Special Safeguards for Developing Countries

Jan 2003

FAO, 'FAO Support to the WTO Negotiations: The Need for Special Safeguards for Developing Countries' (2003) <http://www.fao.org/docrep/005/y4852e/y4852e05.htm> (last visited Jun 10, 2007).

Ritchie et al argue that for countries with available fertile land 'a policy of dependence on cheap imports makes little economic sense'. 168 FAO, Some Issues Relating to Food Security in the Context of WTO Negotiations on Agriculture

Jul 2001

Murphy Ritchie
Lake

Ritchie, Murphy and Lake, n 94 above, at 14. Ritchie et al argue that for countries with available fertile land 'a policy of dependence on cheap imports makes little economic sense'. 168 FAO, Some Issues Relating to Food Security in the Context of WTO Negotiations on Agriculture, (20 Jul 2001) Discussion Paper No 1, FAO Geneva Roundtable on Food Security in the Context of WTO Negotiations on Agriculture, at 2.

Still Not Confronting the Real Challenges: Part II of the Challenges Paper for the

S Murphy

S Murphy, 'Still Not Confronting the Real Challenges: Part II of the Challenges Paper for the

Binding the Hand that Feeds Them: The Agreement on Agriculture, Transnational Corporations and the Right to Adequate Food in Developing Countries

Abstract

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