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DAVOS FORUM: Farm Trade Unnerves Even the Most Stolid

By Gustavo Capdevila

DAVOS, Switzerland, Jan 24 2004 (IPS) - The inequality of international farm trade, of all the problems afflicting the developing countries, is apparently the only one capable of shaking up the more than 2,000 business executives, financiers, government leaders and economists participating in the World Economic Forum this week.

A poll of the participants in the annual event in this Swiss alpine resort found that 60 percent believe agricultural trade is the most important issue to resolve in the Doha Development Round of negotiations under the World Trade Organisation.

A similar proportion of respondents said that failure in farm trade talks “could kill the Doha Round”, which the WTO ministerial conference launched in November 2001 in the Qatari capital.

Samuel A. DiPiazza, CEO of the consulting giant PricewaterhouseCoopers, which announced the survey results, identified the United States and the European Union as the main obstacles to achieving consensus on an agricultural agreement.

Beyond agriculture, the concerns of the Davos Forum participants revolved around matters like the depreciation of the dollar and the consequent declines in EU and Japanese exports, and the rise of their currencies, the euro and yen, respectively.

The executives, national leaders and economists, gathered here since Wednesday, also said they are worried about the recovery of the global economy, driven by the United States, China and India, and whether the current trends mark a solid upturn.

Other issues cited were prosperity and security in business and economic activities, the twin deficits – fiscal and trade – of the United States, and the potential “overheating” of the robust Chinese economy.

As is customary since the birth of the Davos Forum 32 years ago, private meetings were held amongst business leaders and with government leaders interested in investment.

But in the trade sphere, agriculture appeared to hold the monopoly of attention. Swiss Confederation President Joseph Deiss convened trade ministers and top officials from some 20 WTO member countries to discuss the fate of the thorny farm trade talks.

The Fifth WTO Ministerial Conference, held in September in the Mexican resort of Cancún, was a flop, failing to produce any accords. The ministers of the 147 WTO member states were supposed to reach agreements on the Doha Round agenda, where agriculture is a key issue.

Former Mexican president Ernesto Zedillo (1994-2000) told the mini-meet hosted by Deiss that the joint EU-United States proposal on farm trade, presented a few weeks ahead of Cancún, was the cause of the debacle.

In the debates of the Davos Forum, the European stance came under fire from corporate executives and economists, although Nobel Economics laureate Joseph Stiglitz called on both of the trade superpowers to make concessions on agricultural trade and on other Doha Round issues.

In the farm sector, protectionist policies are in force in nearly all industrialised countries. The latest estimates by the Organisation for Economic Cooperation and Development (OECD), a bloc of wealthy nations, are that its members spend a combined total of 320 billion dollars a year on agriculture-related subsidies.

It is not just a European problem, but a problem of the countries of the industrialised North, said Francis Mer, France’s minister of economy.

European farmers wield political weight disproportionate to their numbers, as they constitute just two to three percent of the population, Mer said.

Wolfgang Clement, labour minister of Germany, commented that the Europeans “must do something about agriculture,” but that the decision is in the hands of the political leaders.

The possibility of a European compromise in the agricultural negotiations met with incredulity. The vice-president of food giant Nestlé, Peter Brabeck-Letmathe, doubted the EU’s ability to become a “credible partner” in the discussions.

The EU faces some difficulties in its own calendar because shortly the bloc will expand its membership from 15 to 25, and by the end of this year the make-up of the European Commission, its executive body, will be different, and no one knows yet who will be on it, said Brabeck-Letmathe.

The essence of the farm trade problem can be summarised as the willingness of the WTO countries “to provide market access, to eliminate export subsidies and to eliminate domestic support,” said DiPiazza.

Grant Aldonas, U.S. under secretary for international trade negotiations, said his country would respond affirmatively to those three requirements.

But Francois Loos, France’s foreign trade minister, acknowledged the challenge that the negotiations timeline poses for the Europeans, and stressed that the bloc cannot make a decision on the matter overnight.

The Doha Round of trade liberalising negotiations is slated to conclude Jan. 1, 2005. WTO director-general Supachai Panitchpakdi is pushing the member countries to assume more commitments and put them into practice.

But DiPiazza said he doubts much can be achieved in 2004. The Uruguay Round, which led to the creation of the WTO, lasted eight years, from 1986 to 1993. With the Doha Round, it could take five or six years to produce real results, he said.

Stiglitz warned that “a bad agreement is worse than no agreement”. And civil society organisations share his opinion, especially when it comes to an accord that would only benefit rich countries, said a statement from Friends of the Earth disseminated here Saturday.

Another non-governmental organisation, Global Vision International, a Christian relief and development group, says that civil society has an important responsibility in keeping the Doha talks on track so that they promote development in the nations of the South.

By eliminating farm protectionism, we can reduce poverty in the world, which affects nearly three billion people, said Global Vision president Dean R. Hirsch.