US embassy cable - 05ROME4001

UNCLAS ROME 004001 
 
SIPDIS 
 
STATE FOR EB/TPP, EB/EPPD, IO/EDA 
USTR FOR JOHNSON, DWOSKIN 
USAID FOR A-AA/DCHA GARVELINK, DCHA/OFDA, DCHA/FFP 
USDA FOR OSEC/JBPENN, 
FAS FOR OA/TERPSTRA AND KROBERTS, IPT/SHEIKH AND GYOUNG 
ICD/WBRANT, LREICH, RHUGHES 
 
FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME 
 
E.O. 12958: N/A 
TAGS: EAGR, ETRD, EAID, AORC, FAO, WTRO 
SUBJECT:  AGRICULTURAL TRADE AND POVERTY HIGHLIGHED IN 
FAO'S 2005 STATE OF FOOD AND AGRICULTURE REPORT 
 
 
1.  Summary:  FAO will release the 2005 State of Food and 
Agriculture (SOFA) Report on December 7 at 11:00 am in 
Geneva.  It will be available at www.fao.org shortly 
afterwards.  The special focus of this year's report is 
Agricultural Trade and Poverty: Can Trade Work for the 
Poor?   The report concludes that multilateral trade 
liberalization can benefit the poor and food-insecure by 
acting as a catalyst for change and promoting economic 
growth.  It also recognizes that trade liberalization 
will have adverse effects in some countries, which FAO 
proposes should be addressed through a twin-track 
approach of "(i) creating opportunities for the hungry to 
improve their livelihoods and (ii) ensuring access to 
food for the most needy through safety nets and other 
direct assistance."  End summary. 
 
2.  The release of the 2005 SOFA report was 
intentionally timed to make a splash immediately prior to 
the WTO Hong Kong Ministerial meeting.  The seven 
chapters in the report review agricultural production and 
trade patterns, the trade policy landscape, macroeconomic 
impacts of agricultural trade reform, impacts of trade 
reform on poverty reduction, impacts of trade reform on 
food security, and a twin-track approach to ensuring that 
developing countries are able to capture the benefits of 
trade reform.  The report largely draws on previous 
analytical work done by FAO as well as UNCTAD, UNDP, WTO, 
and the World Bank. 
 
3.  The 2005 SOFA report makes a useful contribution to 
the global debate on agricultural trade liberalization by 
focusing on the policies and programs needed to ensure 
that the poor and food insecure are able to take 
advantage of trade liberalization.  In this regard, the 
report notes that the domestic policy environment is just 
as important as the trade policy environment.  Countries 
need well-functioning markets and good infrastructure to 
participate in international markets.  They also need 
safety-net policies to assist with the adjustment and 
transition process. 
 
4.  One interesting conclusion from the studies reviewed 
in the report is that for many developing countries the 
greatest positive impacts from trade liberalization will 
come through more jobs and higher wages in non- 
agricultural sectors.  Therefore, the short-term negative 
impacts of higher commodity prices on net-food importing 
developing countries should be offset in the longer run 
by higher non-agricultural incomes.  This suggests that 
temporary safety nets may be important policy tools for 
neutralizing the short-run negative effects.  The report 
also notes that removing import tariffs on agricultural 
inputs will promote pro-poor growth by improving the 
competitiveness of agricultural producers in developing 
countries. 
 
5.   Demonstrating that it can learn from experience, in 
this case the experience of a blistering attack from the 
NGO community in response to the 2004 SOFA report on 
biotechnology, FAO has included a special contribution in 
the 2005 SOFA, Can Trade Work for the Poor: A View from 
Civil Society.  The contributions, drawn from previously 
published statements by the respective NGOs, are 
diatribes against globalization and liberalization and in 
favor of food sovereignty.  In contrast to the body of 
the 2005 SOFA report, this section is most notable for 
the complete absence of any analytical support for the 
positions taken. 
 
Cleverley