AGRICULTURE: Protectionists and Free-Marketers Clash at WTO

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Sep 26 2002 (IPS) - A group of countries led by the European Union and Japan, and noted for the high level of subsidies for their farmers, has lashed out at the broad scope of the reforms proposed for the Agreement on Agriculture of the World Trade Organisation (WTO).

The protectionist bloc, which also includes Norway, Switzerland and South Korea, described the proposed liberalisation plan for farm trade, promoted by the United States, the Cairns Group and most developing countries, as “ambitious, unrealistic and counterproductive.”

The Cairns Group, founded in 1986 in the Australian city of the same name, consists of 18 countries — industrialised and developing nations alike — that are characterised by the fact that their governments provide little or no assistance to their farmers.

The warning by the protectionist nations emerged this week during a critical moment in the negotiations for reforming agricultural trade, one of the areas — alongside textile and apparel trade — in which talks on the liberalisation process have fallen behind schedule.

The chief of the Swiss delegation to the WTO, Luzius Wasescha, commented that the attitude of the countries favouring liberalisation could lead negotiations down a dead-end road.

The climate of the talks, taking place at the WTO headquarters in Geneva, heated up as differences emerged among the 15 members of the European Union (EU) about reforming the bloc’s Common Agricultural Policy (PAC).

The PAC is a governmental stimulus programme for farming that entered into effect in the 1950s to reverse the European food deficit.

The first criticisms were heard in the 1970s, when enormous surpluses occurred, symbolised by the mountains of butter and floods of wine arising from overproduction.

The proposal of European Commissioner Franz Fischler to tone down the PAC subsidies, which cost the EU some 40 billion dollars a year, has come under fire from EU members, with France, Spain and Ireland in the lead.

The Fischler plan, which does have the backing of Germany and Britain, aims at reducing subsidies before 2004, when the burden is expected to become unsustainable for the bloc’s finances, as another 10 members — mostly from poorer Eastern Europe — are likely to become EU members.

But France’s efforts to postpone PAC reform to 2006, when the entire EU budget is up for revision, this week won backing from the agricultural ministers of Portugal, Belgium, Austria and Luxemburg, as well as Spain and Ireland.

The debate takes place under pressure from non-governmental organisations (NGOs) based in European countries that object to the protectionism of industrialised countries, particularly in farm trade.

The Britain-based ActionAid accused the nations of the industrialised North of maintaining a double standard. “Protection for the rich and the free play of market forces for the poor,” stated the independent organisation.

Meanwhile, CAFOD, the English and Welsh arm of Caritas Internationalis, a Catholic charity, pointed out that the EU spends more than two dollars a day on each of its 21 million head of cattle, while in the rest of the world, three billion people — half the world population — subsist on less than two dollars a day.

In other words, the people survive on “less than the support received by the average European cow,” notes CAFOD.

Also speaking out were the multilateral credit institutions, which until now had kept a reserved attitude on the matter of trade protectionism in the industrialised countries.

A study released by the International Monetary Fund (IMF) and World Bank on the eve of their annual joint assembly, to take place this weekend in Washington, stated that the agricultural markets are among the most distorted in the world trade system.

The IMF and World Bank say this distortion has had major consequences, as three-quarters of the poor people worldwide live in rural areas and depend on farming to make a living.

In this context, the WTO Committee on Agriculture concluded another round of talks this week dedicated to the assistance that governments provide their farmers.

During previous sessions, the committee debated matters related to export subsidies and market access, which, along with domestic support, make up the three pillars of reform under the Agreement on Agriculture.

Stuart Harbinson, of Hong Kong, chairman of the Committee on Agriculture, applauded the efforts made by the delegations in the debates, but said it was still necessary to reduce the number of differences remaining in order to draw up conclusions for the current phase of the negotiations.

The 144 WTO member states dedicated this year to discussion of the “modalities” that will define the key phase of the negotiations, which begin in April. At that time, the delegations will have to make concrete offers on trade concessions.

Harbinson must prepare a final document summarising the modalities and present it for approval before Apr 1, 2003. The trade talks overall are scheduled to end before Jan 1, 2005.

In diplomatic circles here, the feeling is that the real trends in the negotiations will not become evident until after the next WTO ministerial conference, to take place in September 2003 in the Mexican resort city of Cancún.

The domestic support debate prompted the EU and Switzerland to criticise what they described as the overly ambitious proposals of the countries seeking greater liberalisation in agricultural trade.

These proposals would be impossible to implement in their countries and would disrupt the reform process, according to the EU and Swiss delegations.

The European bloc objected because the proposals were formulated in such a way that they “would force the EU to make far- reaching changes while others would not have to do much at al,” said a spokesperson.

In response, the United States and some members of the Cairns Group noted that “the worst offenders should expect to have to do most,” when it comes to compensating for protectionism.

The agricultural trade negotiations at the WTO will continue in November. The chairman, Harbinson, is to present an initial summary of the talks on Dec 18 for the member states to discuss after the year-end recess.