66 | East and South Asia and the Pacific (ESAP) Report

     In the case of agricultural products, South-South trade is not of a triangular nature. It represents final export to meet growing demand, based on the growth of incomes in developing countries. In the middle- and low-income coun­tries growth of income leads to a growth in demand for ag­ricultural commodities, more than in developed countries, benefiting those economies that mainly export agricultural commodities (UNCTAD, 2005). Within Asia, for instance, Vietnam has increased its exports of rice, coffee and fish, both to markets within the region and to developed coun­tries. But as in other developing countries of Asia, there has not been a one-sided reliance on exports of agricultural commodities, but also a push in exports of manufactures, labor-intensive manufactures, in particular.
     The pattern of consumption of food differs from one country to another. But what is common is a falling share of grain and a switch to higher quality foods, like meat, fish and milk products. Such a switch, however, may be the re­sult of growing inequalities in food consumption. The lower sections may have gross deficits even in basic calories while the upper sections diversify their food consumption into higher value foods.

3.1.1      Free trade agreements in ESAP
Of the 33 countries in the ESAP region, 22 are currently members of the World Trade Organization (WTO), with about 6 more countries in the process of accession negotia­tions. Thus, the rights and obligations under the multilat­eral trade regime, via the WTO, play an important role in ESAP countries.
     Of particular concern are the free trade agreements (FTAs) between developing countries and developed coun­tries like the United States. These North-South FTAs are very comprehensive in scope and extend into the realm of domestic policies (Gibbs and Wagle, 2005), covering areas beyond trade in goods, to include the opening up of services, government procurement, protection of intellectual prop­erty rights (IPRs) and creation of new investment privileges and protection (such as binding dispute settlement mecha­nisms that allow investor-state disputes). Bilateral and re­gional FTAs can be "WTO-plus", with provisions that go beyond WTO obligations (Gibbs and Wagle, 2005). Thus, the "policy space" for developing countries to pursue na­tional development and socioeconomic goals may be signifi­cantly reduced.
     The U.S. FTAs in particular seem to be used to influ­ence partners in larger or multilateral negotiations and "to establish precedents that consolidate the U.S. position on issues where it has serious differences with its trading partners (such as on GMOs, geographical indications or audio-visual services)" (Gibbs and Wagle, 2005). Foreign policy and security issues also play a part. Of relevance to agriculture, FTAs do not establish disciplines on agriculture subsidies in the major developed countries and this exposes farmers in the developing partner country to unfair competi­tion (Gibbs and Wagle, 2005). The U.S. FTAs, for example, do not have commitments on anti-dumping or agricultural subsidies and cover all products (i.e., in terms of obtain­ing market access), with the exception of "sensitive" ones like sugar. This creates the potential for imbalances in the agreement.

 

     As U.S. FTAs generally ask for agricultural tariffs to be lowered to zero, although with varying time periods of im­plementation, many developing country farmers would be unable to compete with the influx of subsidized U.S. agricul­tural products and may be adversely affected. For example, under the North American Free Trade Agreement (NAFTA), from 1993 to 2003, exports of U.S. agricultural produce to Mexico more than doubled, climbing from $3.6 billion to $7.9 billion. Over a similar period, Mexico lost nearly 2 million agricultural jobs, according to Mexico's National Employment Survey (The Washington Post, 2007). Ratifica­tion or accession to UPOV 1991 is a requirement in U.S. FTAs with Bahrain, the Central American countries—Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua— under CAFTA, Chile, Colombia, Morocco, Oman, Peru and Singapore.
     Such obligations remove the flexibility afforded under the TRIPS Agreement that allows countries to choose the option of a sui generis system of plant variety protection, which could be tailored to protect farmers' rights (TWN, 2005). The UPOV 1991 system currently restricts farmers' rights to use and save seed and prohibits them from ex­changing or selling seeds of the varieties it protects, thereby subjecting poor farmers who depend on farm-saved seed to dependence on commercial breeders.
     There are also numerous South-South FTAs, which may be able to promote South-South trade and allow countries to export goods for which they face market access barriers in the North. South-South FTAs may be more equitable in that there is less of an imbalance between the negotiating partners and they are less likely to be as comprehensive in scope as the North-South FTAs, since they tend to focus mainly on trade in goods.
     Nonetheless, the South-South FTAs have to be also as­sessed carefully to ensure that the overall benefits outweigh the costs for the countries concerned and that any sectoral implications as a result of the liberalization of tariffs on goods are properly addressed to help with adjustment costs. For example, under the Thai-China FTA, agricultural tariffs have been lowered on 116 types of fruits and vegetables, including garlic and onions, from 1 October 2003. Since then, Chinese garlic has entered the Thai market in large quantities and at lower prices, with the result that garlic growers and small traders in Thailand have lost their liveli­hoods (Narintarakul and Silarak, 2005). A major issue in "asymmetric" North-South FTAs would be to ensure that policy autonomy is retained for national development and the particular needs of each society.

3.1.2     Major players: their roles and interactions
The roles of different countries and block of countries in in­fluencing trade policy depend on their positions as import­ers or exporters or both, driven by the size of population and their food production. More recently, large corpora­tions have become major players and have influenced trade policies.
     China and India, with their large and growing markets will have a substantial influence on the pattern of trade within Asia. Because of the size of their populations, even at a lower per capita income level these economies are larger and their influence is likely to be greater than that of Japan