Towards A Global Food Aid Compact

Chris BarrettCornell University

 

• WTO negotiations – Some Members view food aid as an export subsidy. – Dec 2005 Hong Kong ministerial declaration a step towards a GFAC

• GMO disputes– India, Zambia, Zimbabwe

• Recent crises/near-crises: food aid plainly important beyond its scale – Niger 2005 ($32 mn appeal in Nov 04 draws no response before summer

2005, as crisis sets in)– Ethiopia 2003 ($500 mn US food aid; $5 mn ag dev’t assistance)– Southern Africa: 2002-3 (HIV and drought and Zim/Angola)

• Food aid “tying” disputes:– Controversial 2004/5 OECD report and embargoed 2001 report– US Congressional battles over FY06 budget (stay tuned for FY07!)– Canadian policy change

• FAC is presently on short-term extensions – Some signatories prepared to scrap it entirely.

• CSSD increasingly recognized as dysfunctional– Less than 5% reported through CSSD in 2000-3. – UMR concept violates basic economic laws

Food aid is suddenly a lively issue again

• System dominated by US food aid (~60%)

• Donors have multiple objectives behind food aid: humanitarian, commercial, geopolitical, domestic agricultural constituencies

• Debates muddied by longstanding, pervasive myths: dependency, additionality, effective support for donor country farmers, etc.

• No effective international governance mechanisms

Controversies arise because …

Existing institutions no longer credible or effective. It’s not enough to remake their rules, location, etc. :1. FAO Consultative Sub-Committee on Surplus Disposal (1954)

- no legal authority, no enforcement, only 41 members

- based on economic illogic of UMRs- reporting has fallen to <5% food aid flows,

2000-3.2. Food Aid Convention (1967)

- donors-only club (7 countries + EU) run from the International Grains Council

- signatories breaching treaty routinely now3. Uruguay Round Agreement on Agriculture Article 10 (1994)

- definition of tying differs from OECD/DAC (2001)

- endorses UMR illogic, inconsistent with tying ban

- ratifies FAC shipment minima without bolstering it4. Self-regulation (e.g., Bellmon Analyses)

- conflict of interest problems in quality control

Need to reform food aid governance

Element 1: Use next WTO Agreement on Agriculture to add rules and enforcement capacity lacking to date:

- define and convert towards bona fide food aid (green/blue/amber food aid boxes)- member reporting requirements - maintain resource commitments

(commodities/cash)- effective dispute resolution mechanism

Then

Element 2: Reform the multilateral institutional arrangements that govern food aid to fit the rules.(Form must follow function, not vice versa)

The package comprises a newGlobal Food Aid Compact (GFAC)

So how to proceed?

Implementing a GFAC requires key innovations:

Inclusiveness: Need all recipient countries and operational agencies, enabling a universal code of conduct and broad-based ownership.

Donor commitments: Move beyond tonnage minima, extending coverage to complementary financial resources and commitments to flexible procurement (in accord with OECD/DAC convention on aid tying)

Monitoring and enforcement mechanisms: embed within DRAA to secure access to the WTO DRM so as to credibly prevent misuse of food aid, especially if some existing export promotion tools limited by DRAA.

Recognize that food security, like food safety, has equal standing to free and fair trade: Codex-like commission to provide technical support in evaluating credibility of programs with possible trade impact.

All parties code of conduct: for donors, recipients and operational agencies.

A Global Food Aid Compact

Key principles:

Need, vulnerability and impartiality: Food provided on basis of assessed need and vulnerability only, at all levels.

Appropriate analysis: Needs assessments, early warning systems, and market impacts of distribution or local/regional purchases.

Appropriate utilization and management: follow best practices in targeting (who, what, where, when, how much, how long), and assure provision of complementary services/inputs (water, medical care, shelter), with full transparency and accountability for all resources.

Obligations of all parties: Recipients: physical security of commodities and staff, renounce use of food as weapon, independent OA functioning.

OAs: Sphere standards plus. Donors: timely reporting, ind. OA functioning, informed

consent.

GFAC Code of Conduct

Green food aid box (record, but no monitoring/limits):- Untied aid unambiguously good for trade, development and humanitarian objectives- Emergency aid flows imperative … minimal trade displacement and maximal development/humanitarian gains

Blue food aid box (record and monitor through GFAC): - Tied aid often leads to delays and inefficiencies and can function as a de facto export subsidy … need monitoring- But when effectively targeted, minimal market effects and significant development/humanitarian impact … so allow

Amber food aid box (convert to cash programming):- Tied, non-emergency, poorly (un)targeted food aid has least development gains and most market-disrupting effects

GFAC: The WTO portionB

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Effectively Targeted

Untargeted/ poorly targeted

Untied food aidTied food aid

Non-emergency food aid

Emergency food aid

Bona

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MDG#1

Objective: maintain value of flows, but shift the shares towards food aid forms with greatest development benefits and least trade distorting.

GFAC: The WTO portion

This builds on and blends the strengths of existing institutions, while overcoming their weaknesses:

i) Legally binding minimum commodity and/or cash

commitments (à la FAC)ii) Ex ante notification and monitoring mechanism (à

la CSSD)iii) Predictable, fair rules with clear dispute resolution

and enforcement mechanisms (à la WTO DRM)iv) technical expertise on tying (à la OECD/DAC),

emergencies (WFP/FAO) and targeting (WFP/FAO).

Like Codex Alimentarius, advance 2 goals – fair trade and food security – while coordinating work on best practices by international governmental and non-governmental bodies.

A Global Food Aid Compact

Implementation by a Global Food Aid Commission:

Co-chaired by FAO (CSSD), OECD/DAC and WFP

Interagency coordination among bodies with technical expertise to advise WTO CoA and to coordinate among governments/NGOs. Quite similar to Codex Alimentarius Commission.

The Commissionwould: - build on and coordinate existing technical capacity - improve monitoring and enforcement - include all recipients and operational agencies as signatories - incorporate a universal code of conduct for recipients, donors and operational agencies - prevent food aid from becoming vent for surpluses redirected by new WTO disciplines (e.g., on STEs, export credits, etc.).

While maintaining past benefits of FAC and CSSD.

A Global Food Aid Compact

1. Food aid is an essential tool for addressing MDG #1.

2. But, need to decouple it from other, donor-oriented objectives that impede its developmental effectiveness. (Moreover, food aid is ineffective at advancing other goals.)

3. Existing food aid governance institutions ineffective.

4. Need to consolidate existing technical expertise and set clear, enforceable rules to balance fair trade and food security objectives by recasting food aid in support of a single primary objective: to advance MDG #1.

5. Need a new framework, a Global Food Aid Compact, to improve food aid governance and convert awkward resource flows with sometimes-adverse trade and market effects into more flexible, efficient means of advancing MDG #1.

Conclusions

Thank you for your time, attention and comments!

C.B. Barrett and D.G. Maxwell, Food Aid After Fifty Years: Recasting Its Role (London: Routledge, 2005) and “Towards A Global Food Aid Compact”, Food Policy (April 2006): in press.