Canberra — Trade liberalisation of basic foods such as rice could have potentially catastrophic impacts unless the World Trade Organisation allows developing countries to determine their own policies on agricultural reform, warns a leading aid agency.

In a report, 'Kicking down the door: How upcoming WTO talks threaten farmers in poor countries', Oxfam International points out that a dramatic reduction in tariffs could undermine domestic food security by allowing imports of cheap rice to flood in.

"Whether these come from competitive rice exporters such as Vietnam and Thailand, or are dumped by heavily subsidised sources such as the United States, the impact threatens to destroy the livelihoods of millions of farming families and the prospects for rural development," the report, which was released late Monday, warns.

According to the Britain-based Oxfam, the current tariff reform proposals being pushed in the WTO would force thirteen rice-growing countries including India, China, Fiji, Nicaragua, Panama and Egypt to cut their tariffs. "These 13 countries produce over half of the world's rice and are home to a total of 1.5 billion people who depend on agriculture for their livelihoods," the report states.

It reports that similar problems would be experienced for other basic foods including poultry, sugar, maize, soybeans, maize, groundnuts, milk powder and wheat.

However, the greatest potential beneficiaries of an increased rice trade, especially within South-east Asia, would be Thailand and Vietnam, which send the majority of their exports to other developing countries.

Oxfam argues that despite this it remains critical to concentrate on eliminating subsidies and lowering tariffs in the developed economies. The report argues that U.S. subsidised rice was dumped on global markets for 274 U.S. dollars per tonne even though the average cost of production between 2000 and 2003 was 415 U.S. dollars per tonne.

"There is no single set of agricultural and trade policies that will produce a successful development strategy. Countries differ, and governments need to have sufficient flexibility to use the kind of interventions that best suit national conditions," the Oxfam report argues.

The next round of World Trade Organization ministerial level negotiations is scheduled for Hong Kong in mid-December but the talks could collapse once more if developing country concerns are not addressed.

For its part Oxfam supports proposals launched by the G33 group of countries in December 2004 arguing that countries should be able to designate commodities such as rice as a "sensitive product" and be covered under "a special safeguard mechanism". The 40 countries in the G33 grouping include Indonesia, the Philippines, Pakistan and Kenya.

The G33 propose that under "special products" provisions of an agreement a developing country could designate crops such as rice as exempt from tariff cuts on the grounds that they are vital to ensuring rural development and food security. They also propose a "special safeguard mechanism" under which poor countries could temporarily increase tariffs if import prices or volumes vary significantly.

While Oxfam's support will help mobilise community support for the G33 position in developed countries, the group's proposal faces stiff opposition from major agricultural exporting nations like the U.S. and European Union which seek protection for their own farmers.

Though Australia has invested substantial effort in promoting the elimination of tariffs on agriculture and the end of subsidies through the Cairns Group - consisting of major agricultural exporting nations such as Indonesia, Philippines, Malaysia and New Zealand - even this group is split on the G33 proposals.

The final Cairns Group communiquŽ from its meeting in Cartagena, Colombia two weeks ago noted that the "concepts of the Special Safeguard Mechanism and Special Products, will be essential to assist developing countries to best adapt to liberalisation."

While that may reflect the view of countries such as Indonesia, which has millions of small farmers vulnerable to cheap food imports, the Cairns Group also sought to appease the free trade advocates within its ranks, such as Australia.

"Special and differential treatment should be designed in such a way as to facilitate the continued growth in trade of agricultural products," it stated.

"They are split and as a result are having to bob each way," Oxfam-Community Aid Abroad's Advocacy Co-ordinator, Jeff Atkinson, told IPS.

However, as one of the biggest potential beneficiaries of reduced barriers to agricultural trade and the elimination of subsidies, Australia is keen to play the role of a bridge builder in the negotiations. In background papers, Australia acknowledges that unless an agreement is reached on agriculture progress in the broader talks is unlikely.

"We recognise that developing countries have difficult issues such as vulnerable farmers," a spokesperson for the Australian Department of Foreign Affairs and Trade said.

The Australian government offers qualified support for the G33 proposals. "They need to be tightly defined and in return for liberalisation but not as a gift," the spokesperson said in an interview.

Atkinson is not convinced the Australian government comprehends the potential impact of pushing for the liberalisation of trade in basic foods.

"I really don't think the Australian government comprehends that eliminating tariffs could cause massive poverty problems for the rural poor," Atkinson said. "They have this rather simplistic belief that the free market will solve all problems."

Other normally outspoken free trade advocates are also wary of commenting on the G33 proposals.

After a career as a diplomat and a stint as the Australian ambassador to the WTO's predecessor, the General Agreement on Tariffs and Trade, Alan Oxley founded a trade consultancy, ITS Global, as well as a "pro-growth" free trade non-profit group, World Growth.

Asked for their view of the G33 proposals an ITS Global spokeswoman told IPS "we don't have a comment on that."