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Food crisis sparks role reversal in WTO

The food crisis is bringing about a role reversal in the World Trade Organization: traditionally liberal major food exporters are now imposing restrictions on exports.

business Updated: Apr 29, 2008 10:40 IST

The food crisis is bringing about a role reversal in the World Trade Organization: traditionally liberal major food exporters are now imposing restrictions on exports while protectionist states are pushing for liberalisation.

To deal with the recent hike in food prices, Argentina, Brazil, Vietnam, India and Egypt have all imposed limitations on the export of certain produce in order to ensure food security for their populations.

This is unusual for some of these countries. Argentina and Brazil, for instance, are part of the Cairns group, among the most aggressive proponents of liberalisation in the Doha round of trade liberalisation negotiations at the WTO.

The members of this group want the European Union and the United States to lower tariffs so they can export their food produce.

The direction taken by these developing nations is embarrassing their representatives in Geneva.

A Brazilian official told AFP that he "does not understand" his government's decision to announce Thursday a temporary stoppage of rice exports.

Brazil's government also said it was digging into its 1.6-million-ton reserve of rice to alleviate price pressure on the staple, which has become increasingly expensive worldwide as consumption grows in Asia, its main market.

"These measures concern stocks of rice owned by the government and not the sale by private companies," he explained, but added that this "element of intervention on the markets" could be viewed negatively in the WTO negotiations.

Voices of dissent are already being raised. Japan will on Wednesday table the issue during the WTO agricultural committee meeting.

A net food importer, Japan imposes extremely high tariffs of some 500 percent on rice to protect its own market.

"We are not against the prohibitions and the restrictions of exports," said Takaaki Kawakami, first secretary at the Japanese mission to the WTO.

"But the countries heavily dependant on the imports like us do not want the food security of our population to be put in danger," he said.

The plan proposed by Tokyo would require countries imposing restrictions to notify the WTO within 90 days and to justify the move. Such restrictions should also not last more than a year.

While it would not stop countries from imposing restrictions, Japan hopes that the additional procedure would lead to discussions among nations on the subject.

Currently, according to the 1994 agreement on agriculture, developing countries can impose restrictions on exports.

EU trade commissioner Peter Mandelson recently said that taxes of exports or quotas provide nothing but an "illusion of food security."

For some observers of developing nations, such restrictions on exports risk aggravating the situation for the world's poorest.

These restrictions "could put poor countries which are dependant on imports in a situation which is more volatile and critical than it is currently," said Carin Smaller, director of the association Institute for Agriculture and Trade policy in Geneva.

"African countries, like Ghana, Senegal, Ivory Coast or Cameroon depend mainly on imports which they buy on the world market, such as rice from India, soya from Brazil or wheat from Argentina" she said.

As a gesture of appeasement, India, which recently suspended its rice exports, promised to supply Senegal with 600,000 tonnes of rice per year for six years.