Among the most contentious negotiations in the Hong Kong ministerial will be those regarding agriculture. A deadlock in talks over agriculture liberalization was one of the major reasons for the collapse of the Cancun Ministerial.
Under the AoA, border protections other than set tariffs are prohibited, and even these tariffs have to be reduced progressively. The AoA also requires WTO member-countries to allow minimum market access for each individual agricultural product. Rules were also created under the agreement for domestic support and the reduction of export subsidies.
The restructuring of global agriculture under the AoA is premised on the theory of comparative advantage, which says that free market competition will result in each country specializing in a product that it can produce efficiently and at a competitive cost. In a globalized marketplace then, each country will be able to export the product it specializes in and import what it needs from other suppliers.
However, a decade after the multilateral trade body was founded, agricultural subsidies in First World countries have remained high while elimination of quantitative restrictions and tariff cuts around the world have facilitated a dramatic increase in dumping of agricultural commodities in Third World markets. Hence, the WTO regime has proven to be a mechanism for developed countries to open Third World markets to their imports, to the benefit of giant agribusiness corporations.
Majority of Third World countries are basically subsistence agrarian economies. A large number of the populace in these countries relies on agriculture as their major source of food and livelihood. These farming families are threatened by the influx of cheap agricultural imports brought about by liberalization.
A study conducted by the Institute for Agriculture and Trade Policy reported that the U.S. has been dumping five major agricultural commodities in the world market: corn, wheat, soybeans, cotton and rice.
Another study estimates that underdeveloped countries lose over $40 billion of net agricultural exports and $24 billion in agricultural and agro-industrial income annually because of subsidies and protectionism by rich nations. In Asia, underdeveloped countries lose some $6.6 billion from agriculture as a result of developed countries’ protection of their farm sectors.
This has driven millions of poor subsistence farmers off their lands, while small agricultural producers fall into bankruptcy in the face of competition from dumped products. Thus, liberalization leads towards concentration of land in the hands of a landowning elite, the marginalization of small farmers, growing peasant landlessness and the indigenous peoples’ loss of control over their ancestral lands.