Case Study 44: Public and Private Participation in Agricultural Negotiations: The Experience of Venezuela08/07/2020 93
I. The problem in context
The significant changes experienced by Venezuela in recent years have had an important impact on the structure and the position it has adopted in trade negotiations, especially in agricultural negotiations. These changes can be classified in three major areas: political, constitutional and institutional.
In 1999, Lieutenant-Colonel (retd) Hugo Chávez came to office after winning the December 1998 presidential election. Chávez defined his government as military, leftist and populist, and supported by the majority of the deputies of the National Assembly (Congress). An agenda for the agricultural sector was formulated within the broader context of the National Plan for Economic and Social Development (NPESD) (2001-7). It was based on a new economic model of agriculture-related matters, and sought to guarantee an adequate food supply to the majority of the population.(1)
The NPESD established the following guidelines:
- promotion of the rational use of land for agricultural purposes, and respect for private property, but eradicating large landed estates and penalizing holders of unused land;
- reorganization and regulation of the agricultural marketing and commercial system;
- prioritization of infrastructure construction; and
- adjustment of commercial policies to the National Agriculture and Food Plan, among other actions.(2)
In addition to this, the reinforcement of national sovereignty and the promotion of a multi-polar world are given as important objectives in the chapter dedicated to the international aspects of the NPESD. The government’s objective regarding national sovereignty has had a particularly important influence on its position on commercial agriculture. This is because the government considers that the commercial agricultural negotiations that took place in the period before 1999 were one of the main factors to have negatively influenced the agricultural sector as well as national sovereignty.
Changes in Venezuela’s position on commercial agriculture have forced negotiators to adopt a hardline position in World Trade Organization (WTO) negotiations. This lack of flexibility was already in evidence in the months leading up to the Doha Ministerial Conference in 2001. In the months following Doha the Venezuelan position in commercial agriculture negotiations became remarkably rigid, because agricultural policies were focused on short-term issues. For example, the government focused its efforts on enlarging the national market for domestic producers, rather than on medium- to long-term issues such as the development of export options for agriculture.
The Venezuelan Constitution of 1961 had contained general positions on agricultural matters related to the need to improve the living conditions of the rural population; mention was also made of the fact that large estates were not in the public interest, and of the government’s responsibility to help agricultural workers to obtain the necessary resources to work.
The Constitution of 1999 contains more specific dispositions regarding agriculture, including the following:
- the promotion of favourable conditions for integrated rural development;
- the optimized use of land by means of infrastructure, credit facilities, training and technical assistance;
- the opposition of large landed estates to social interest and provision of land of their own to workers;
- the promotion of sustainable agricultural growth as the first step to rural development;
- the development of national farming production as part of a stable and permanent movement to guarantee an adequate food supply to the population; and
- the consideration of activities related to food production as part of Venezuelan national interest, with the purpose of achieving national self-sufficiency.
The dispositions cited are connected with Article 301 of the Venezuelan Constitution, which provides that ‘The State reserves the use of commercial policies to defend public and private national companies’. This article has been used by senior officials at the Ministry of Agriculture and Land to justify maintaining a defensive position in WTO negotiations and other regional integration schemes of which Venezuela is a member. The Agriculture Marketing Law, which was approved in 2001, contains dispositions on commercial agriculture negotiations, based on the articles of the new Constitution. Five years later, these constitutional changes have not been put into practice (Dalke 2004).
Constitutional changes are important, because, according to a public official, in many cases when no specific guidelines for negotiation are provided, high-level officials resort to seeking such guidelines in the Constitution. Carlos Abello, former Director-General of the Venezuelan government’s agricultural marketing branch, and therefore negotiator over agricultural issues in different for a, including the WTO, for over ten years, considers that the legal and constitutional changes in this matter have been positive. However, Abello points out that they have been politically focused and have become a negative element, acting against Venezuela’s negotiation processes by failing to assemble good negotiating teams and implement a negotiation strategy which is in line with the country’s economic and productive reality.
Another former public official, who was involved in the negotiation process but wants to remain unnamed, also states that ‘Venezuela’s position in commercial negotiations that have taken place in the last five years obeys political and ideological changes more than constitutional and legal ones’.
II. Local and external players and their roles
Along with the political and constitutional changes, institutional ones also took place. Between the mid-1970s and the negotiations on commercial agriculture in 1996, matters were handled by the Institute of External Commerce (ICE) in co-ordination with the Ministry of Agriculture (MAC). In 1997 the Ministry of Industry and Commerce (MIC) was created as a result of the merger of the ICE with the Ministry of Development. Co-ordination between MIC and MAC persisted until 2000, when they were merged into the newly created Ministry of Production and Commerce (MPC). In 2002, the portfolio for agriculture was separated from the MPC to create the Ministry of Agriculture and Land (MAT). These developments have meant that co-ordination in agricultural commercial negotiations between the MPC and MAT were significantly affected.
Former Director-General Abello considers that, before the first merger in 2000, important efforts were made to unify positions between MAC and the ICE and between MIC and MAC. Relations between the employees of each institution became difficult, due to several structural changes that took place after 2000. In Abello’s opinion, institutional decay began after the merger, and made the positions held in the agricultural commerce negotiations all the more difficult to defend. Decay was fostered by structural changes that did not improve the efficiency of the institution, and by the rotation of competent officials and negotiators to other functions due to the need to accommodate new political appointees. In the opinion of another officer, the negotiations became political after these structural changes took place. The country’s position in commercial negotiations was affected because the government had lost sight of the whole Venezuelan economy when it adopted an uncompromising position regarding agriculture.
Luis Ferraz, a former Deputy Minister of Agriculture (2001) thinks that the merger of the ministries of Agriculture and Commerce into a single institution was a positive development, as it favoured the co-ordination of negotiation positions, but that it was not properly managed. Antonio Frances (1999) agrees, and gives as a reason the fact that MIC had a streamlined and highly trained staff with a competitive orientation, whereas MAC was overstaffed and had developed a very defensive position in agricultural commercial negotiations. As a consequence it became difficult to develop coherent positions and to find a minister with a sound knowledge of both industrial and agricultural matters.
According to Abello, the frequent changes in the negotiating team have resulted in improvization and inconsistencies. This, together with the lack of specific guidelines for mid-level officials, and especially the teams’ inadequate structure, has put in risk the negotiation process. Defective communication between the responsible government departments has prevented the building of a clear-cut agricultural position. He also points out that, even though the highest level decision-makers were properly informed, in most cases they did not fully understand the positive and negative implications of the negotiations for the country, due to lack of experience in this area.
The official involved in negotiations mentioned above points out that the frequent changes in the team members of the MAT and the MPC have not only affected the emphasis placed on each issue, but also the way in which they are addressed. Due to the difficulties encountered when new officials seek clear and specific institutional guidelines on negotiation issues, they tend to adopt a very rigid position; in this way they avoid assuming too much responsibility and are able to protect their jobs.
An anonymous former official considers that not only was the co-ordination level between institutions better before 2000, but also that the commercial negotiations that took place before this year were seen as a chance to create opportunities for the Venezuelan private sector, while the contrary is now the case. Now there is little or no institutional co-ordination, and the private sector’s interests are not taken into account by the government. Richard Dalke (2004) agrees that, before 2000, negotiations were conducted in a more efficient way than in the period that followed. Also, while in theory the government currently gives more attention to agricultural negotiations in the WTO, in practice this has never been the case.
All the former officials who were interviewed consider that despite the fact that negotiations were not conducted in a perfect manner before 2000, co-ordination made it easier for the institutions involved to agree on a common position. Additionally, mid- and high-level officers had a more technical than political background, and a better understanding of Venezuela’s internal and external agricultural agendas. They feel that at present public officers devote more attention to the internal agricultural agenda.
An additional problem originates in the structure of the Venezuelan mission at the WTO in Geneva, which reports to the Ministry of Foreign Affairs. The officials who work there work for the Ministry of Foreign Affairs, but receive instructions not only from that ministry but also from any other ministry which has an area of competence covered by the negotiations at a given time. In addition to the Ministry of Foreign Affairs, the other two ministries that are involved in the process are the MPC and MAT. The continuing changes, not only in the structure but also in the personnel of these three ministries, and the resulting lack of clearness in guidelines and instructions, make the mission’s work extremely difficult.
The participation of the Venezuelan private sector in commercial negotiations has been affected by its high degree of dependence on the state. In an oil-based economy, in which petroleum exports make up more than 80% of total exports and its proceeds go to the state — which uses them to pay for public contracts, salaries and other mechanisms — the private sector has to choose carefully in which areas to make demands, as it is unable to refuse the government’s leadership in agricultural matters. Commercial agricultural negotiations in the WTO in the last few years offer a good vantage point from which to analyze this behaviour, as well as the deterioration of government-private-sector relations in Venezuela.
For representatives of ASOVEMA (Venezuelan Association of Rice Mills), the last meeting with private-sector participation was organized when the then Minister of Commerce and Production, Jesus Montilla, made a very short presentation on the Venezuelan position which was to be taken to Seattle. When Luisa Romero was minister, ASOVEMA was not invited to participate in discussions to formulate or make comments on the Venezuelan position for the Doha meeting. Since then, they have learned of government positions through the press, and have had access to official documents published on the ministry’s website. They have had more access in negotiations between the Andean Community of Nations (ACN — Bolivia, Colombia, Ecuador, Peru and Venezuela) and Mercosur (Argentina, Brazil, Paraguay and Uruguay), and attribute this to the fact that the ACN encourages the participation of business together with government representatives by creating ad hoc groups and asking for advice from the Andean private sector (Salas 2004).
Another representative of a business association has reported that, although she has been working in ASOGRASAS for the past sixteen years, the association was never invited to participate in activities related to the WTO agricultural negotiations, neither have they followed what is discussed there. However, they participated until April 2002(3) in activities related to the negotiation of a free trade agreement between the ACN and Mercosur. Since that date the government has stopped inviting them to any activities, although informal contacts were made once again at the end of 2003 by the MPC. Meanwhile the association has been able to follow the ACN-Mercosur negotiations, as well as those of the Free Trade Agreement of the Americas (FTAA), by participating in meetings of the ACN Secretariat and in the Business Forum of the Americas, and by means of their close relations with Colombian businesses (González de Useche 2004).
Two problems seem to affect business participation in the negotiating process. First, agro-food industry and primary producers do not share the same view of the negotiations, and not all associations are concerned about what is going on at multilateral or WTO levels and, second, they tend to concentrate their efforts on concrete aspects of bilateral or group negotiations, such as those between the ACN and Mercosur or in the FTAA. While the agro-food industry is more competitive and may accept tariff reductions if the government gives guarantees of its willingness to provide an adequate framework for their activities, primary rural producers are not in the same situation. Thus the latter had a more defensive (protectionist) position vis-à-vis the WTO and the former a more pro-active one. The second problem may be the result of a combination of lack of human resources to follow different negotiating processes simultaneously and the perception that Venezuela had had little leverage in the multilateral agricultural negotiations, and that in smaller regional groupings there were more opportunities of having demands taken into account, especially when Venezuelan associations co-operate with those of similar countries.
Difficulties experienced inside the government sector have not made communications with the private sector any easier. This is not only due to the constant changes in contact personnel in each public entity — the opposite occurs in the private sector, where there is more stability and contact personnel tend to remain in the same job for long periods of time — but it is also due to a lack of intra-government communication. This lack of communication between the responsible government institutions does not provide the private sector with a coherent and consistent message. In addition, communication between public and private sector was practically cut by the political events of December 2002, when a private-sector general strike seriously affected economic activity, and even paralysed the state-owned oil company .
In addition some government officials and former officials think that the private sector is trying to exert its influence on agricultural and commercial issues to the benefit of their respective sectors without understanding that this might be counterproductive for intrinsic or extrinsic reasons. Abello and another official involved in the negotiations indicate that the internal struggle caused by the antagonistic positions held by the primary producers and the agro-food industrialists has resulted in a general weakening of the private-sector position. And other former public officials comment that some representatives of the private sector do not know the contents of multilateral rules and procedures, especially the effects that negotiations might have on their sectors. This is due not only to problems in the information flow between the sectors (which have become very serious after the general strike of December 2002 mentioned above) but also to the lack of interest and the poor organization of the agricultural private sector.
III. Challenges faced and the outcome
Venezuela’s position since becoming part of the WTO (1995) until the beginning of a new round of agricultural negotiations in the first quarter of 2000 could be classified as evolving from ‘moderate offensive’ to ‘moderate defensive’. In general terms, before 2000 Venezuela requested the opening of developed countries’ markets, in exchange for a moderate opening of Venezuela’s domestic market. Most of the former officials who were consulted agreed that Venezuela negotiated its agricultural questions effectively when it joined the WTO, counting on the active participation of the private sector, the agro-food industry more than primary producers, who were not well organized at that time.
After the beginning of the new round of negotiations, Venezuela’s position became considerably more, even totally, defensive, with little interest in taking the offensive. Some of the elements of Venezuela’s current position are:
- favouring the interests of primary agricultural producers over those of the agro-food industry;
- making no compromises further than a limited tariff reduction for some specific products;
- making more effective use of the mechanisms of special and differential treatment;
- adopting horizontal and unlimited dispositions in non-commercial issues;
- having longer transition periods;
- maintaining agricultural safeguards;
- emphasizing resolving the problems of rural poverty, unemployment, food supply and the environment;
- applying a tariff reduction formula with low impact on the primary agricultural producers;
- eliminating export subsidies and reducing trade distorting measures of domestic support in developed countries.
These result from the emphasis on the political and the ideological in negotiations, especially the first and last points.
Another observer(4) has stated that, since the Chávez administration came to power in 1999, and especially since the signing of the new Constitution, the Venezuelan government’s position on agriculture had been more supportive of the interests of primary rural producers, to the detriment of the interests of agro-food producers. This is reflected in the fact that since 1999 ministers of agriculture have been consistently more radicalized than ministers of production and commerce. This may also explain the hardening of the Venezuelan position between Doha and Cancún, based more on political than economic reasons. However, the fact that Venezuela is a net importer of food products limits its capacity to sustain a coherent position within the ongoing WTO negotiations.
On many occasions the interests of primary producers and the agro-food industry differ because if the former were to ask for protection and receive it, the agro-food industry would then be harmed by being limited in its access only to inputs from domestic producers (Salas 2004). This is of particular importance since the agro-food industry imports most of its inputs, except in the case of rice — although rice mills can buy rice abroad, they cannot depend on the exports of China, India and Thailand, because bad weather in those countries can sharply curtail their supply. In addition, the Venezuelan rice sector is highly industrialized and has made important investments at the levels both of primary producers and of the agro-food industry. Some of the differences between primary producers and the agro-food industry may well arise from the fact that, except for the establishment of protective tariffs, agriculture has never been encouraged by government, while the agro-food industry was explicitly promoted by some administrations (Salas 2004).
María Eugenia Salas (2004) has been in charge of following commercial and integration negotiations for ASOVEMA since 1997. According to her, between 1997 and 1999 the government facilitated agro-food industry participation in those negotiations by organizing seminars and other meetings in which private-sector representatives had access to information. Since late 1999, however, this co-operation has been lost and the private sector learns about discussions taking place by means of the press and/or official papers with no input from the agro-food industry.(5)
An example from the earlier stage of relations is the agricultural workshop organized by the MPC in November 1999, in order to present the preliminary position that the Venezuelan government would take to the WTO Millennium Round (Programa de Formación 1999). At that time the main challenges to Venezuela were defined as the liberalization of agricultural markets, the laggard technological performance of agriculture, and the need to create a sustainable base for its development and alter the low nutritional level of the population. The document put forward by the government also recognized that it was imperative to reconcile the interests of Venezuelan agricultural producers, the agro-food industry, and traders and consumers (Programa de Formación 1999: 26). Accordingly, the proposal called for the strengthening of the position of agriculture vis-à-vis trade liberalization, promoting new markets for Venezuelan agricultural exports, and also supporting policies for rural development, environmental protection and food security. Special emphasis was put on co-ordinating with the rest of the Andean countries (Programa de Formación 1999: 32-3).
If in the Doha and Cancún meetings the Venezuelan government asked for the removal of domestic agricultural subsidies by the developed countries, the position changed from mentioning the general removal of subsidies in Doha to supporting the continuation of subsidies for developing nations in the Cancún meeting. Thus the government moved from asking that developing nations be granted the possibility of a gradual elimination or phasing out of subsidies (Programa de Formación 1999) to claiming that developing nations could not be asked to put an end to their own subsidies (Rosales 2003). Accordingly, Venezuela sided with the G20 on this question. When after the Cancún Ministerial Conference Colombia,(6) Ecuador and Peru left the group, Venezuela and Bolivia remained, ending the co-ordination of their negotiating positions in agriculture at the WTO.
According to Salas, public-sector participation in the WTO negotiating process is weak, due to the fact that the government has general positions but no specificity because it does not know what to promote, what to protect and what to reconvert, and no negotiator can hope to succeed without a clear state policy behind him. The only point at which Venezuela had a clear policy line was when it joined GATT, but that line has, in the intervening period, been blurred and lost due to lack of definition and continuity. This is why negotiators have fought for protection, but not for the promotion of Venezuelan agriculture, and Venezuelan producers have made efforts to protect themselves but not to prepare themselves for access to a global economy.
The absence of communications between business associations and the government since 2000, and the latter’s defence of an autarkic position regarding food security — hard to sustain because the government is importing large amounts of food free from tariffs — means that the evolution of the Venezuelan position between 2000 and 2003 was predicated more on ideological than on economic terms. Although the government’s position in the WTO is faultless from the private sector’s point of view because it demands an end to agricultural subsidies in developed countries, it is also uncompromising and thus denies all possibility of negotiation in favour of those Venezuelan agro-food products that may have a chance in the international market (Salas 2004).
At the same time, several contradictions exist in Venezuela’s position at the WTO: it defends special and differential treatment, such as the maintenance of agricultural subsidies for developing nations, but has never gone beyong making declarations and designating rice as a so-called ‘flag sector’ at the beginning of the present administration. Primary producers whose production techniques have become more industrialized have achieved this by means of their own investments, or by integrating themselves with the agro-food industry. The only subsidies rice producers get are indirect (cheap water in certain areas and cheap energy everywhere). Also, by supporting in the WTO the maintenance of developing countries’ agricultural subsidies, Venezuela is supporting nations that are big agricultural producers, and can support those subsidies, to the detriment of its own rice producers which could face competition from subsidized rice from Thailand and India (ibid.).
Without a clear and defined agricultural programme there is no possibility of sustaining a concerted and coherent position, not only in the WTO, but also in regional negotiations. Salas (ibid.) does not see any coherence and/or continuity in agricultural policies, when abrupt changes of technical staff in the ministries risk putting an end to the ‘historical memory’ of negotiation processes. Another important limitation is that the government and the private sector have not sat down to define a development programme for agriculture and the agro-food industry (ibid.). And the situation has been exacerbated since the strike of 2002, after which the government started importing food products with zero tariff — to the detriment even of primary agricultural producers — so that currently Venezuelan food security is being predicated on cheap imports paid for by high oil revenues.
In summary, political, legal and institutional changes after 2000 have had an important effect on Venezuela’s position in commercial negotiations in general, and more specifically in agriculture. In addition to constitutional and legal provisions that do not allow flexible positions, political context and institutional changes have made the negotiation process more difficult, due to the lack of public-public- and public-private-sector co-ordination. The ministries related to commerce and agricultural negotiations (MPC and MAT) have experienced structural and functional changes. Departments and working teams have been reorganized and officials have been rotated or substituted. In a four-year period (2000-04) there have been five ministers of agriculture, five ministers of commerce, five deputy ministers of agriculture, six deputy ministers of commerce, three directors general of agricultural marketing and three directors general of foreign trade. New officials, in general, require training, time to learn about their new posts and experience (especially if they have none previously, as is the case with the majority of the new political appointees), and team co-ordination. In most cases, when taking up their post each high-level official reorganizes tasks and teams, and even sometimes substitutes experienced officials with new ones with no relevant experience but safer in political terms.
Additionally, private-sector participation in the WTO agricultural negotiations seems to have been consistently slight, and has been practically reduced to zero in the last couple of years due to domestic political problems. In the years when private-sector representatives have had access to government negotiators, contacts between them seemed to have been informal (joint participation in workshops and seminars and the circulation of documents and information), and neither public officials nor the sector’s associations have made efforts to institutionalize their co-operation in foreign commercial negotiations. This has not prevented private-sector representatives from blaming the government for any perceived flaw in the outcomes of the WTO process, especially when political polarization has freed them from their usual restraint in relations with the state apparatus.
IV. Lessons for others: the players’ views
From the different interviews conducted it is clear that there are many lessons that could be learned in order to improve Venezuela’s WTO negotiations. We will sketch first the general ones, and afterwards the lessons for the public- and private-sector actors.
Several key points were signalled by most of the interviewed regardless of their public/private-sector origin.
- Public officials need to consult frequently with the private sector with regard to aspects of negotiating that affect their performance, and also to have a better understanding of the different strategies and alternatives that can be carried out.
- The construction of communication channels between them is a common responsibility of both public and private sector. There will not be balanced negotiations in the national interest if the representatives of the public and private sectors cannot agree on a minimum consensus base.
- The organization of teams with relevant experience in the different areas of trade negotiations is a priority, as frequent changes of institutions and removal of public officers place the country at a disadvantage.
- A consensus in agriculture-related issues should be reached between the public and private sectors; this is needed in order to introduce practicable domestic policies that strengthen negotiations and their results.
The following are key points for public-sector actors.
- High-level officials involved in negotiations need to review carefully the positive and negative implications for the economy as a whole, as well as reviewing in detail WTO agreements in order to have a better understanding of the legal scheme of negotiations.
- The politization of technical negotiating teams should be avoided.
- Co-ordination between ministries should be improved, and officers need to know clearly who is in charge of the final decision-making process.
The following are key points for the private-sector actors.
- Improvements in communication should be made inside and between private-sector associations, in order to balance the interests of the primary producers and the agro-food sector.
- Some associations need more trained staff in order to follow properly the negotiating process.
- Associations need to improve their links with their members in order to represent their interests in a more effective manner, keep members informed of what is being negotiated and obtain their support when dealing with the government.
In conclusion, the lessons are clear. There should be concentration on communication flows, the development of human resources for negotiations and follow-up, the need to establish positions supported by domestic consensus and on the avoidance of politization by both the public and the private sector. Thus a state position should be developed separately from a government one, and private-sector associations should carefully navigate the waters of domestic politics in order to have the right to participate in shaping Venezuela’s position in agricultural commercial negotiations at the WTO.
Abello, Carlos (former Agriculture Marketing Director and negotiator for ICE/ MIC/ MPC/MAT) (2004), interview in Caracas, 18 June
Arellano, Fèlix Gerardo (CAVIDEA) (2004), interview in Caracas, 9 June
Briceño, Germàn (FEDEAGRO) (2004), interview in Caracas, 8 June
Dalke, Richard (former Agriculture Marketing Director, MAT (1993-8); FEPORCINA) (2004), interviews in Caracas, 8 June and 6 July
Ferraz, Luis (former Deputy Minister of Agriculture, in office in 2001) (2004), interview in Caracas, 12 July
Frances, Antonio (1999), ‘La fusión MAC-MIC’, El Universal, 5 Sept
Gonzàlez de Useche, Morelia (ASOGRASAS) (2004), interview in Caracas, 9 June
Hugueney, Clodoaldo (2004), ‘The G-20: Passing Phenomenon or Here to Stay?’, Dialogue on Globalization, FES Briefing Paper, March
Programa de Formación de Negociadores Económicos Internacionales (1999), Propuesta preliminar de posición de Venezuela para las negociaciones comerciales de la Ronda del Milenio de la OMC, Caracas: CIET-PDVSA
Rosales, Manuel (2003), ‘Posición de Venezuela ante la OMC’, 11 Sept., available at www.aporrea.org
Salas, María Eugenia (ASOVEMA) (2004), interview in Caracas, 30 June
3.- In that month the President was removed from power for 48 hours by a civil-military movement and the President of FEDECAMARAS, the umbrella organization of the private sector, took up the position of President during that time, before armed forces loyal to Chavez reinstated him.
5.- A former official who does not want to be named disagrees with this statement. For him after 1999 the participation of the private sector began to lessen, but it did not deteriorate until 2002. In the case of WTO negotiations, business participation has usually been low because those negotiations are conducted by country missions in Geneva. Moreover, neither Venezuelan primary agricultural producers nor agro-food industry representatives have ever presented to the government a coherent national position distinct from that of their individual sector or company.
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