I am very pleased to have my first guest bloggers, my NUS Law colleagues Michael Ewing-Chow and Melanie Vilarasau Slade. They write on ASEAN's food policy, following up on their recent book International Trade and Food Security: Exploring Collective Food Security in Asia.
Michael Ewing Chow (WTO Chair, Faculty of Law at NUS)
and
Melanie Vilarasau Slade (Centre for International Law)
Food security hit the global headlines in 2008
when world food prices spiked suddenly and plunged over a hundred million
people into chronic hunger, contributing to the ongoing unrest in North Africa
and the Middle East that started with the Arab Spring.
Whilst food prices are no longer front-page news,
food security remains a key concern for governments and policymakers. At the ASEAN level, the ASEAN Summit of 2009
pledged “to embrace food security as a permanent and high policy priority”.
It is also high on the agenda of trade
negotiators, where the treatment of national food security policies has threatened
to derail progress in trade negotiations. Indeed, the some have attempted at
recent WTO Ministerials at Bali in 2013 and Nairobi in 2015 to pitch trade
liberalisation against food security, with India in particular arguing that
exemptions from the current trade rules are required to ensure that effective
food security policies can be implemented at the national level.
In our publication ‘International
Trade and Food Security: Exploring Collective Food Security in Asia’ we
argue that this narrative is overly simplistic and does not account for the way
in which the current distortions of trade in agriculture actually undermine effective
food security policies rather than support them.
National food security solutions are often
implemented at the expense of both individual food security for citizens within
the country and of the pursuit of collective food security for ‘all people at
all times’ by encouraging the kind of unilateral export restriction responses
that exacerbated the 2008 food price crisis.
In this context it is interesting that ASEAN in
its Integrated
Food Security (AIFS) Framework and Strategic
Plan of Action on Food Security in the ASEAN Region 2015-2020 (SPA-FS), is choosing a different way: looking
beyond national solutions and seeking to promote food security through regional
trade, with initiatives such as the ASEAN
Plus Three Emergency Rice Reserve (APTERR) and the ASEAN
Trade in Goods Agreement (ATIGA).
We take a look at these initiatives and, ahead
of ASEAN’s upcoming RCEP negotiations, ask whether there is scope for promoting
ASEAN’s vision more widely.
Food
Security Policy in ASEAN – 2008 to 2020
In 2008, ASEAN countries were rocked by the price
of rice more than tripling in less than a month. Rice exporting countries
implemented or considered implementing export restrictions as a self-sufficiency
strategy. This added to the crisis, causing the price of rice to rise even
further. In the longer term, many traditionally rice-importing countries have attempted
to create self-sufficiency strategies focused on local supply. This does not
mean that a country would do without food exports, but rather that they sought
to reduce their reliance on imports of staple crops such as rice by investing
in national production.
In our publication ‘International
Trade and Food Security: Exploring Collective Food Security in Asia’ we
discuss at length, though contributions by experts in the field, why such
efforts can be counterproductive both to containing pricing volatility and to
ensuring stability of supply. Indeed, it was thinness of trade in rice that
contributed to the pricing volatility that hit ASEAN in 2008. High tariff
barriers and subsidies given to rice producers create a distorted market that
results in inefficient production and distribution of rice.
In light of the uncertain impact of climate
change, self-sufficiency as a strategy places all a country’s eggs in one geographical
basket – literally and figuratively – at a time when flexibility of supply is
required. While we cannot be sure what the impact of climate change will be on
the production potential of specific geographical areas, scientists have
suggested that some regions will increase in production potential and current
estimates suggest that the world will be able to provide enough food if production
potential is maximised. This suggests that rather than self-sufficiency as a
strategy, countries need to reconceptualise food security from a collective
security perspective.
At the ASEAN level, ASEAN Member States have put together
a package of measures to promote ‘Sustainable
Food Trade Development’[1] and
under its ‘Strategic Thrust 2: Promote Conducive Food Market and Trade’ ASEAN
has sought to convene discussions on the procedures and disciplines to be
followed with respect to the use of food rice trade restrictions and operations
of state trading entities; food trade facilitation; food value chain
strengthening, and food diet diversification, hosting an ASEAN Food Trade Forum
last year to progress these discussions.
ASEAN already has an example of a
successfully negotiated regional food security initiative, APTERR, in which
ASEAN and its Plus Three trading partners, China, Japan and South Korea have
agreed to limit export restrictions on rice by contributing to virtual
stockpiles, creating an information sharing and market price mechanism for an
origin neutral trade in rice when a member is predicted to be in need of supply
and an emergency response procedure.
From a rice trade reform perspective
ASEAN is focusing on two twin strategies: (i) guaranteeing stability of supply;
and (ii) promoting market access.
Designing
an ASEAN Food Security Strategy
As highlighted above, encouraging
the efficient production for rice in the region would be one pillar in the
ASEAN food security strategy.
ASEAN is considering encouraging “reduced
self-sufficiency targets of net-rice importing countries in exchange for
guarantees on export deliveries of net rice exporting countries”. This will not be easy. Several ASEAN
countries aim to become entirely self-sufficient in rice. Malaysia has publicly declared
its intention to achieve this by 2020. Indonesia has announced it is
ahead of its goal of achieving self-sufficiency by 2018 and The Philippines has delayed its target
of 2016, aiming for only 90-95% self sufficiency this year.
The costs of these policies, monetarily
and from a food security perspective, are considerable. We have already covered the dangers of
attempting to see national boundaries as defining the production for food
security: climate change means that production yields are now unpredictable.
Further, as explained by Dawe, “[t]he problem with such a
strategy is that there is a very good reason why fewer farmers grow rice in the
importing countries, namely, other crops are more profitable. Forcing farmers
to grow rice will reduce their income, which will work against household food
security. Thus, rice importers face a trade-off between national
self-sufficiency (which is often equated with national food security) and
household food security. The policy of restricting imports to achieve national
self-sufficiency and reduce reliance on the world market raises domestic
prices, which reduces household food security because most of the poor have to
buy their rice in markets and are hurt by higher prices. Higher domestic prices
also result in other costs, such as reduced farm diversification, poorer
nutrition, and less competitiveness in other sectors of the economy. These
costs should be considered in the design of national policies.”
The only way to persuade countries
that self-sufficiency is not necessary for national food security is to provide
a viable alternative: guaranteed supply through trade. It is no coincidence that these self-sufficiency
drives gained traction following export restrictions by major exporters in
2008. To this end, ASEAN is considering a “set of criteria to be met and
disciplines to be followed in the exercise of export restrictions and/or
related domestic measures which have the equivalent effect of reducing rice
exports”. ASEAN has effectively started moving towards limiting export
restrictions by each member guaranteeing its contribution to APTERR’s virtual
stockpile. More of course can be done but this is an important first step.
Strategies to increase efficient production must be
married to strategies to lower market barriers and thereby improve
opportunities for distribution of rice.
In return for disciplines on export
restrictions, ASEAN aims to ensure that market access will be provided through
a “set of criteria to be met and other disciplines in the grant of the Article
24 waiver for rice under the ATIGA”. To this, ASEAN adds the “promotion of
private sector participation in rice trade and disciplines to be followed by
national food parastatals [government controlled companies].”
If implemented as amendments to
Article 24 of ATIGA as proposed in the AIFS SPA-FS, these measures could go a
long way to supporting an effective regional food security strategy.[2]
The focus on trade as a food security
component will be critical to reducing the thinness of rice trade in ASEAN and
this could in turn result in better production and distribution of rice in
ASEAN, fulfilling national needs through a collective food security strategy.
Planting
the Seeds for a Collective Food Security Strategy
Recognising that a regional collective
food security strategy is the best way to ensure food security across ASEAN is
a critical and necessary first step towards its implementation. However, there is still a long way to go before
this is achieved even in ASEAN.
Building
on APTERR could provide a way forward that would ease the process. In
addition to emergency reserves, as highlighted above APTERR provides:
· Disciplines
on agricultural export restrictions including a de facto partial
prohibition of export restrictions up to a certain threshold committed to the
virtual stockpile;
· Greater
market price transparency; and
· Regional
cooperation on pricing information.
Significantly, the regional model embodied in APTERR goes
some way to implementing export disciplines by ensuring that at least 1.75
million metric tons of rice in the region will not be subject to export restraints,
at least amongst the APTERR members. This will also help reduce rice price
spikes as it limits the opportunity for speculators to take advantage of panic
buying by ensuring that there will be enough rice to meet short-term needs.
Emphasising this aspect of APTERR could assist in
encouraging commitments from both exporting and importing countries under Art.
24 ATIGA.
But there is another advantage to
APTERR, in that it covers not only ASEAN but also the ‘Plus Three’ countries:
China, Japan and South Korea all of which are major rice producers and rice
consumers.
Looking
Beyond ASEAN: RCEP and the WTO
There is an opportunity, through
APTERR, to expand this model of regional food security strategy beyond ASEAN.
ASEAN’s famous ‘noodle bowl’ of FTAs
is currently being streamlined, with ASEAN member countries collectively
negotiating the ‘Regional Comprehensive Economic Partnership Agreement’ (RCEP)
with the ASEAN+6 countries, that is, the ASEAN+3 and Australia, India and New
Zealand.
With APTERR already covering
ASEAN+3, and RCEP envisaged as paving the way towards greater regional economic
integration, the kind of commitments envisaged in the reform of Art. 24
ATIGA could be translated to RCEP.
Currently RCEP does not contemplate
this kind of concessions in agriculture, even though its aim is “progressively eliminating tariff and non-tariff
barriers on substantially all trade in goods in order to establish a free trade
area” among the RCEP participating countries”. Instead commentators have voiced concern that RCEP’s low ambition
could render it irrelevant even to the businesses it is intended to benefit.
While the negotiating agenda has expanded, there is currently little to suggest
that RCEP’s level of ambition will match that of the other regional agreement
to which several ASEAN member countries are party, the Trans Pacific Partnership
(TPP). In it, countries like Japan offered significant concessions on rice –
never before granted in any of Japan’s FTAs - in return for market access in
other areas.
It may just be that the recent
conclusion of the TPP could spur a higher level of ambition for RCEP. There are powerful drivers that could support
this: those RCEP countries which have already granted concessions under the TPP
may find it difficult to argue that they cannot be granted under RCEP and those
that are not party to it may be keener to seek an effective counterweight that
would avoid the diversion of trade away from their markets that the TPP could
create.
Regional
agreements could also pave the way for progress at the WTO. Currently at WTO level, despite the attempts
at a Single Undertaking to cover multiple issues, all progress is limited to
individual issue Declarations, which can only attempt to deal with the issues
we raise - the stability of trade and reduction of distortions to agriculture
distribution and production - at a much slower pace.
Indeed, the
use of Decisions, Declarations and Peace Clauses to make progress at the WTO,
outside the clear negotiating framework provided by the Doha single undertaking raises concerns. Para. 47 of the Doha Ministerial Declaration allows for
progress via Decisions to be incorporated into the single undertaking. But the future of the Doha round is highly
uncertain, with WTO members failing to ratify their commitment to it at the
recent Ministerial in Nairobi. This
clouds the otherwise significant progress in prohibiting export subsidies
achieved at Nairobi, as sought under Goal
2 ‘Zero Hunger’ of the Sustainable
Development Goals (SDGs).
WTO
is open to incorporating progress that takes place outside its framework through
regional agreements. The Nairobi
Ministerial Declaration at its paragraph 28 states “We reaffirm the need to
ensure that Regional Trade Agreements (RTAs) remain complementary to, not a
substitute for, the multilateral trading system. In this regard, we instruct
the Committee on Regional Trade Agreements (CRTA) to discuss the systemic
implications of RTAs for the multilateral trading system and their relationship
with WTO rules.” This is placed in Part III of
the Ministerial Declaration which deals with the future of the WTO negotiations
and this language could present an opportunity for the WTO to discuss the
issues raised on Food Security by FTAs such as the TPP and RCEP.
From a
collective food security perspective this would be critical: ultimately the WTO
is the only organisation capable of creating a level playing field in trade in
food. It is the only forum where the US
and China are both present unlike the TPP and RCEP. It is also the only effective rule maker and
arbitrator through the DSU. Ultimately any framework for an effective food
security policy will require this.
With ASEAN
countries members of the WTO and RCEP and some ASEAN members also in the TPP,
and with the high ambition of the ASEAN food security strategy, ASEAN is in a
key position to show the WTO members a possible way forward.
[1] See the Integrated Food Security (AIFS) Framework and Strategic Plan of Action on Food Security in
the ASEAN Region 2015-2020 (SPA-FS). In the first instance the coverage of the AIFS
SPA-FS covers priority commodities for food security in the ASEAN region: rice,
maize, soybean, sugar and cassava. Other commodities such as livestock, fishery
and crops for staple food, which are important for food security and nutrition,
shall be identified during the course of implementation of the AIFS Framework
and SPA-FS.
[2] These
will be combined with (a) measures to attract private investors in a regional
rice futures trading, including the development of a rice index; (b)
establishing product standard and certification procedures in the trade of food commodities; (c) facilitating cross-border trade in
food commodities; (d) strengthening value chain systems and promoting contract
farming; and (e) accelerating food diet diversification among the peoples in
ASEAN.
