TRADE: WTO Review Condemns Europe’s Farm Policy

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jul 26 2002 (IPS) - The protectionist stance of the European Union (EU) has hampered the expansion of agriculture in developing countries, say World Trade Organisation (WTO) member states in a study of the bloc’s policies.

Without the barriers created by protectionist measures, farming “could otherwise be an important source of economic growth and poverty reduction” in poor nations, concludes the WTO trade policy review.

The EU’s preferential agricultural regime was the target of harsh criticism during this week’s sessions at the WTO to assess the compliance of the bloc’s trade policies with the rules established by the multilateral system.

The principal objections of the delegates also involved the high tariffs the EU applies to textile and clothing imports.

The WTO’s mechanism of periodic evaluation of trade policies entails the presentation of reports by the countries under scrutiny and by the organisation’s secretariat.

The 144 member countries discuss these documents in sessions that are usually attended by a high-level delegation from the country or group of countries in question.

The conclusions of the European policy assessment underscored the fact that several countries had reported the adverse effects that the EU’s farm trade regime has had on their agricultural products.

A South African delegate pointed out that two-thirds of the poor population in developing countries depend on agriculture for their livelihood, adding, “This is the case for less than five percent of the population in the EU.”

“Yet the trade policies of the EU combine billions of dollars of domestic support, export subsidies and extremely high tariffs to protect large farmers,” said the diplomat.

For the year 2000, the total the 15-country bloc spent on its common agricultural policy (CAP) was 40 billion dollars, or 43.9 percent of the EU budget.

The European policy has not changed, even since the issue of farm trade became part of the WTO system as a result of the Uruguay Round agreements, in force since 1995.

Australia’s delegation noted that the level of the EU’s food imports of all types has fallen since that year.

Canada, like Australia a leading exporter of agricultural products, reported that its sales of these commodities to the EU had suffered a decline in recent years.

Since 1993, the EU has reversed a trend from the 15 previous years and began to generate an ongoing surplus in trade with Uruguay, said the delegate from the South American nation.

A similar situation is evident in trade between the EU and all Latin American countries, added the diplomat.

Nevertheless, during the trade policy review sessions, most countries expressed approval of the direction the EU-proposed reforms are taking its farm policies.

The Canadian delegate commented that the reforms seem to be a positive move towards reducing trade support that distorts the market. Brazil seconded that assessment, saying, “a preliminary analysis indicates that it may be regarded as a welcome step in the right direction.”

But an Australian diplomat said, “Once again there are indications that what the EU may give on one hand will be taken away with the other.” The delegate was referring to the fact that the reforms only involve subsidies to farmers, one of the three pillars of the farm trade negotiations under way at the WTO.

The other two pillars of the talks are export subsidies and market access.

The EU plan, which is still up for discussion by the agriculture ministers of its 15 member countries, is based on shifting support to individual farmers. These resources have previously been earmarked to stimulate production.

Argentina criticised the European agricultural project because it constitutes a lukewarm attempt to reform a policy that is “terribly burdensome for taxpayers and consumers and is one of the most distorting practices of the multilateral trade system.”

The Argentine representatives insisted that the reforms are very modest because they only reorient the expenditure, without eliminating the subsidies.

With regards to textiles and clothing, the WTO observed that the EU had postponed the liberalisation of “80 percent of quotas to the end of the integration process” of that sector.

“The EU has lifted restrictions only on 20 percent of products restricted in 1990, leaving the elimination of the remaining 80 percent of imports ‘back-loaded’ for the final stage ate the end of 2004,” stressed a delegate from India.

China joined in the criticism, stating that “although seven and a half years have passed, most of EU’s quota restrictions in this sector, namely 222 out of 303, are still in place.”