Introduction

Largely, the financial institutions have played the role of turning a loan-recipient nation government's focus to business issues and business groups.  The financial institutions are, of course, the International Monetary Fund (IMF), World Bank (W)B and the Asian Development Bank (ADB).  Along with the World Trade Organization (WTO) it is all a collusive mission towards their common goal of free and unrestricted trade between the West and Asia.

The tools that have been developed for use in this mission's agricultural focus are the WTO's Uruguay Round (UR)  agreements including the agreement on agriculture (AoA), trade related aspects of intellectual property rights (TRIPs), trade related investment measures (TRIMs), sanitary and phytosanitary standards (SPS) and finally agreements on dumping.

These tools are used when doling out aid money.  The financial institutions say that the loans are conditional on instituting policies that are in line with these agreements...or that even hasten their implementation in the recipient country.  The idea is to make the recipient country a more 'efficient' producer of goods and services and to open up the country to international investment and trade.

It must be understood that the WTO is not the only acting force in pushing free trade.  Other trade groupings such as APEC and ASEAN also push for similar goals, seemingly counter to their member's best interests.  So where do the ideas originate?

The noticeable trend is that the WTO and/ or its sister organizations that were once collectively called the Bretton Woods Institutions (essentially Western dominated trade negotiating fora) play the very key role of forwarding new and shocking ideas and concepts to the world.  The most difficult step in forwarding such ideas is the initial unveiling.  The rest, these institutions know very well, is left to the human psyche.

a brief aside: the idea behind floating new ideas

The idea behind new ideas is to make commonplace that which is perceived as novel and shocking.  Once that has been achieved then plans can go forward.  Once they make the uncommon idea common, it will work itself into regular discussions in that topic.

It's a very good idea for an idea to be commonplace.  The important thing is that a new idea should develop out of what is already there so that it soon becomes an old acquaintance. -Penelope Fitzgerald as Quoted in THE MOTLEY FOOL INVESTMENT GUIDE by David and Tom Gardner, Simon and Schuster, New York, 1996. p. 76

The TRIMs (a very MAI-like inclusion precalculated by the crafters of the WTO UR agreements) is included in the UR agreements partly as a result of its 'commonplace-ness' and partly because it is piously upheld by those who once introduced the very bold MAI.  It is a loaded gun.  Once any one WTO member country, for example Thailand, takes the step of instituting free investment measures, there exists the insidious thread in the UR agreement that states that anything offered to one trading partner MUST be offered to ALL other trading partners on an equal basis; you cannot give to one without giving to all others, you cannot protect your own.  So now, if the free investment efforts underway in ASEAN succeed, then every member nation in the WTO that ASEAN trades with must necessarily be given equal treatment.  If it sets a new standard of tremendously free investment that, in hindsight, is felt to be too liberal, no correcting is allowed; once the decision is made it must be adhered to.

The crafters of the 'now dead' MAI are therefore quietly calling check-mate since the idea has found legacy in TRIMs, APEC and also the ASEAN Free Investment Area, and it has found legitimacy in its common-ness.

To ask a nation to forsake its agriculture is presently largely heresy.  For how much longer?  How soon will the idea of free trade in agriculture set itself into everyday discussions and roll freely on its own?  When will those groups that proposed this wild new idea of free trade in agriculture quietly call check-mate?

Back on Track: Food Security

As stated above, the goal of financial institutions is to focus loan-recipient governments on specific sectors of the economy.  The general belief in America's approach is that small and medium enterprise (SMEs) is going to be the heart of economic growth into the next century.  The approach being engrained into global agricultural trade is to let the private sector in on agriculture in Asia.  The five agreements listed in the introduction to this note - AoA, SPS, TRIMs, TRIPS, and dumping - work to that end.

Not only is WTO working to that end; APEC is also very much an engine running on redline to ensure the train arrives at the SME station on time:

These measures focus essentially on facilitating trade and investment and on making the conduct of business in the region easier, cheaper, faster, more predictable and transparent. -Quoted from "Introduction to MAPA" as found in the APEC website (MAPA is the Manila Action Plan of APEC)

Because the loan conditions imposed on Thailand are forcing the government to improve the national books, the government is being manipulated into pulling out of agriculture and letting SMEs into the game.  Through the framework presently being instituted under the UR agreements, market pressures are going to slowly force farmers out of agriculture while allowing SMEs and large corporations into the countryside...the goal of course being that hopefully the West will get into the action early on in the game.

Case in point: Small-scale agriculture in Thailand

Thailand's Ministry of Agriculture and Agricultural Cooperatives (MAAC), in the wake of all the aid loans accepted by Thailand, developed a set of economic policies for agriculture (that in itself might cause a few eyebrows to raise).  What the policy proposals contained was completely in line with improving the domestic return on investment in the agricultural sector.  Now, while such an effort is ok for cash-crop farmers, it is not appropriate for the many subsistence farmers who are labouring to produce food for home consumption and not for sale.

This body of policy proposals tables the idea of taking land ill-suited to rice out of rice production and putting it under vegetable, flower or other high foreign-exchange earning commercial crops (to service all the loans, of course).  How government will institute this is by various incentives in loans and other supports for those farmers who plant the high income earners over such things as rice.

What has to be understood is that those farmers who are owners of land ill-suited to rice are going to be trapped in a catch-22:  If one keeps in mind that rice is the very heart of the Thai diet, then those farmer who own land ill-suited to riziculuture are already hard-done by.  The fact that they own poor land already means they probably cannot afford to buy rice and can only barely produce it.  These farmers usually are non-commercial because they cannot afford the inputs.

It will be these farmers that will suffer under the various dis-incentives that will be put in place to take their land out of rice production.  Gone may be the low interest loans, free inputs or whatever other support and services once available to them through government extension and outreach.  Those farmers' only alternatives will be to sell their land to those who want to plant flowers for sale or to plant flowers themselves and hopefully, if the market for flowers does not disappear, be able to buy food for their families.

Furthermore, the body of economic policy proposals by the MAAC also talk of increasing loans available to the private sector to increase opportunties for and enhance the existing environment of SMEs.  The trend then becomes very obvious.

The loan stipulations drafted by the financial institutions are forcing the government to forsake their 'low-productivity' farmers for commercial interests.  This, of course, is all to the immediate goal of servicing the loans.  It is all to the ultimate goal of the financial institutions to create earnings opportunities for Western business and venture capital.

Specific Example: Water rights.

The past 5 months have been very exciting as regards water rights in Thailand.  The awareness of the effects of drought across the region was so acute that the Thai government began to talk of stopping rice export altogether to ensure maintaining adequate domestic supplies should the regional climatic situation persist.

Then low rainfall started becoming a concern in Thailand itself.  The second rice crop (only possible in the central region of Thailand -  an area that ultimately receives the water from the northern and northeastern watersheds) was threatened by low rains.  Farmers were so concerned about their crops and the heavy investment made that they were pumping streams dry.  Farmers downstream were up in arms.  Their crops had no water at all.  There was in fact so little water reaching downstream areas that natural limits of the saltwater reaches of the estuaries were creeping upstream - there was no flow downstream to oppose the inland flow of saltwater!

Farmers demanded that the government do something to control upstream water consumption.  It was ultimately declared by the government that it could do nothing as the state never claimed ownership of the water in natural waterways.  The government's hands were tied.

Then out of nowhere came a loan offering by the ADB for US$300 million for 'improvement' of the agricultural sector.  One of its key stipulations was the imposition of a water tax.  If accepted, farmers would have to pay per unit volume of irrigation water consumed.  This was a stipulation to force the government to institute measures to regain some of their irrigation investment - to improve the national books and make it easier to repay those loans!

Unheard of!  Heresy!

Never in Thailand's history did anyone ever talk of such a tax. And how could such a tax be put upon farmers by a government that does not even 'own' the water in the rivers?  Does this mean that farmers along natural waterways could pump the streams dry before letting water reach the irrigation channels developed by the government? Could those farmers then sell the water to farmers downstream?  Could they sell it to the government irrigation systems?

Now there is talk of inviting the private sector into the irrigation business.  Is that perceived as even worse by the farmers?  Are they being forced to accept the lesser of two evils?  Suddenly the idea of a water tax maybe is not so bad - not so foreign a concept - given the alternative idea of a private firm coming to knock on their doors once a month.

The idea behind new ideas!

Conclusion

Will subsistence farmers owning land poorly suited to riziculture be now even more pressured to give up on their farms or to take up planting flowers for international sale under the AoA?  Will those farmers engage in contract planting of vegetables?  Will the company offering that contract be a foreign company allowed to operate in the country and send the profits back home as allowed under the TRIMs agreement?  If non-rice foodstuffs is planted, will it only be those contracting companies (and not the farmer) who can assure adherence to the sanitary standards as proposed under the SPS for the reason that it will be only those profitable companies that can afford to pay the fees of that new [foreign-based?] Food-Analysis Services company that came to exist under SME support measures - a company that replaced the government service that could have existed if the government was not forced to focus on business and reduce public spending to service huge debts?

Food sovereignty in Thailand is falling apart and I suspect not even the government agencies that are negotiating loans and trade agreements are aware of it.  Government ministries negotiating various loan agreements certainly won't know the effects the loan stipulations will have far down the reaction chain on the ultimate 'benefactor' - the small farmer.  The financial institutions certainly won't raise those issues.

There has never been any constructive interaction between various Thai government ministries.  They have always been competitors for available government budget allocations.  They are enemies - not allies.  This situation makes it unlikely that trade negotiators from the Commerce Ministry understand the effects reduced tarrifs in coconut exports will have on that piece of the agricultural sector, much less on the farmer.  The Ministries of Commerce, of Agriculture, of Culture, of Social Welfare do not know each other at all and they do not know how the decisions of one affect the other.

The financial institutions are the 'enforcers' and the pious disciples.  The WTO sets the trade environment vision and the financial institutions see to it that governments know about and abide by the vision.  They also preach the WTO gospel so as to make the uncommon common.  If all that fails, they force the vulnerable governments to accept the measures, knowing that these governments don't have it together enough to argue for themselves, much less for their constituents.

J.D. Comtois
April, 1999