Review of the impact of globalisation on the agricultural sectors and rural communities of ACP countries

A study commissioned by the Technical Centre for Agricultural and Rural Cooperation (CTA) STUDY REPORT 4-1-06-211-9

Peter Robbins CMIS, London - May 1999

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The process of globalisation has been made possible by technical advances in communication and transport systems. In order to take advantage of the benefits that these innovations bring with them, it has become necessary to reform international rules governing the trade in goods and services. These changes affect every country in the world and every section of society within those countries.

The General Agreement on Tariffs and Trade was a series of protracted negotiations that began in 1948 with the objective of promoting free and fair trade among member countries. The last series of GATT negotiations, known as the Uruguay Round, culminated in 1995 with a radical programme for the reform of world trade and the formation of the World Trade Organisation. A specific agreement was also reached on the reform of trade in agricultural products which commits member countries to increase market access and export competition and to reduce government support for agricultural sectors.

Prior to the signing of the WTO Agreement on Agriculture many other agreements existed between countries to regulate trade in agriculture. It has therefore, become necessary to modify some of these agreements where they conflict with the new WTO rules.

The reform of the EU's Common Agricultural Policy and the Lomé Convention, the effects of the Uruguay Round and the forthcoming renegotiations of the WTO's Agreement on Agriculture are all interrelated and have a combined impact on ACP countries.

The degree to which ACP countries depend on Europe for trade in certain commodities was established in the colonial era. Over the second half of the Twentieth Century, however, the volume of Europe's trade with former colonies has become almost insignificant compared with its trade with other industrialised countries. The EU's decision to include several Eastern European countries within the Union weakens still further its trading relationship with ACP countries.

Changes in the Lomé Convention and three of the protocols attached to the Convention on bananas, beef and sugar are of particular significance to ACP countries.

In the light of the recent dispute over the banana protocol at the WTO, it is now by no means clear that the three protocols are compatible with existing WTO rules. If they are ended or even amended many ACP countries are likely to lose a considerable proportion of their export income.

Under WTO rules the sale of subsidised produce from industrialised countries is likely to be curtailed substantially over the next few years. This reform should have the effect of increasing world market prices for products like meat,vegetable oils, sugar and cereals. This will benefit those ACP countries that export these products to non-EU countries.

The loss of preferential EU tariffs will expose some ACP countries to greater competition from some industrialised and non-ACP developing countries who have more efficient and lower cost production systems. This is likely to encourage ACP countries to try to improve productivity in agriculture. These changes include a move towards larger and more intensive farming and greater efforts to improve quality and added value of agricultural goods. Such changes will require significant amounts of investment. Investment on this scale is likely to come from large, transnational corporations. These companies are unlikely to invest in production of goods for the domestic market.

Changes in the pattern of agricultural production, brought about by the need to increase exports and improve efficiency, are likely to have a significant social impact on rural communities in ACP countries and may further marginalise small-scale farmers who lack the resources to grow products for the export market.

Liberalisation of agricultural markets will also affect food security in ACP countries.

Over the last decade the proportion of food imports made available to least developing countries and other net food-importing developing countries represented by food aid programmes has fallen compared with commercial purchases. Higher prices for cereals and vegetable oils caused by reductions in farming subsidies mainly in industrial countries will have a serious negative effect on the balance of payments of food-importing countries and may jeopardise food security.

Preparations for a new round of WTO negotiations on agriculture, which begin in 2000, are already underway. Proposals for changes to the EU's Common Agricultural Policy and the Lomé Convention have already been published. With so many negotiations taking place at the same time, governments, academic institutions, private sector organisations, development agencies and NGOs are making a great effort to research the implications of these changes and to advise those affected on the policy positions they should adopt to influence the outcome of the reform process.

This paper attempts to review relevant sections of this work from an ACP perspective and to identify and clarify some of the key issues raised. The paper makes a number of suggestions that might assist ACP countries to develop policies to cope with changes in international rules on agricultural trade. It also makes a number of recommendations.

Recommendations aimed at strengthening the negotiating position of ACP countries in forthcoming negotiations:

• An effort should be made to pool resources not only with other ACP countries but also with other developing countries that will be affected in a similar way by the proposed changes. i ACP countries should actively participate in the Analysis and Information Exchange process offered by the WTO.
• ACP countries should take advantage of assistance offered by development organisations to help developing countries to prepare for changes in WTO rules .
• Individual ACP countries should prepare for negotiations by strengthening their domestic administrative arrangements.
• ACP countries should investigate the merits and demerits of establishing Regional Economic Partnership Agreements and Free Trade Agreements with the EU and formulate their own agenda to influence the details of these agreements.
• ACP countries should press for inclusion of comprehensive and detailed commitments to ensure food security in the forthcoming WTO Round.
• ACP countries should join with other developing countries to press for better representation on international food aid organisations.

Recommendations aimed at strengthening the agricultural sectors of ACP countries in a globalised economy:

• Improving quality standards especially in food products should represent a high priority for ACP countries not only to protect the health of their own populations but also to enable them to export produce to countries with increasingly higher hygiene and quality requirements.
• In any new agreement, emphasis should be put on the need to assist countries to be more self-sufficient in food production.

Recommendations aimed at strengthening the position of rural communities in ACP countries:

• Governments should assess the social and economic impact of private sector investment in large-scale agriculture on rural communities.
• Governments should encourage the formation of grass-roots organisations, such as small-scale farmers, traders and processors associations, and the strengthening of existing associations. These organisations, together with NGOs and church groups who represent the interests of rural communities, should be brought into the consultation process for formulating agriculture-sector policy.

CTA's working document series consists of material that, in view of its immediate relevance and practical utility to specific readerships, the Centre wishes to make available without the delays inherent in the formal publication process. These working documents have not yet undergone technical editing by CTA and should be cited accordingly. Comments on matters of substance are welcome, and should be addressed directly to CTA