Posted on 08/01/2004 3:46:47 AM PDT by snopercod
A historic drive to bring down export subsidies and many other forms of financial support for farmers forms the centrepiece of the agreement struck at the WTO, touching on a politically-charged issue worldwide.
The workplan reviving deadlocked global trade talks, which was adopted by the World Trade Organisation's 147 member states after days of hard bargaining, sets the target of eliminating or reducing subsidies in what is likely to be years of tough negotiations to come.
Decades into the drive for international free trade, the decision marks the first time that governments have accepted to anchor elimination in a global agreement, trade sources said.
"We have agreed to make historic reforms in global agricultural trade," US Trade Representative Robert Zoellick told journalists.
"This is the beginning of the end for subsidies," Brazil's Foreign Minister Celso Amorim, who was leading the G20 group of developing countries at the talks in Geneva, said.
The Doha round will now aim to wipe out export subsidies, which have been a 2.8 million euro ($A4.84 million) a year pillar of the European Union's help to farmers, and make more cuts in protective tariffs. Advertisement Advertisement
Poor countries, and the EU's economic competitors, had been demanding the step for years.
Wealthy nations were reluctant to make it because many of their farmers rely on support to make ends meet while prices were skewered at low levels.
Developing nations blame export subsidies for artificially driving down prices, making their produce uncompetitive or diminishing the value of one of their few potential export earners.
But the WTO text went further by advocating tariff cuts, restricting export credits - a form of loan-subsidy that Washington pays to some US farmers - and also charting cuts in domestic support that might distort international competition.
Domestic support accounts for a larger proportion of the EU's budget than export subsidies.
Zoellick predicted that the agreement would lead to cuts in domestic support for agriculture of a greater magnitude in the first year than the whole Uruguay round of trade liberalisation in the 1990s.
"In the agreement it's clear that support given to farm exports will disappear first, but the process leading to the disappearance of domestic support has also started," Amorim told journalists.
Overall the package will not only affect the 25 EU nations, the United States and state trading enterprises in Canada or Australia.
It will also hit wealthy farm importers in the G10 group, like Japan, South Korea and Switzerland, with small but highly supported and protected farming.
On July 21, France's President Jacques Chirac, dismissed an "unacceptable" WTO proposal and sharply criticised the European Commission for selling out.
Agriculture Commissioner Franz Fischler, one of the architects of the recent subsidy-reducing reform of EU farming, said domestic support levels would remain untouched by the WTO talks.
"We can assure our farmers that there's no risk we cannot keep our reforms as they are," he said, as France rallied around the EU's position.
Switzerland's President and Economics Minister, Joseph Deiss, was less reassuring, warning his agricultural community of tougher times ahead.
"We must recognise that it will be asked to contribute even more to restructuring," he said.
The United States sought to highlight improved access to other markets for its farmers rather than the limits on export credits or support.
"The point is that our farmers support open markets, they face high tariffs in other countries, so this is a part of an overall package and we believe this is a great deal for American farmers," a US official said in Geneva.
In a written statement released after the WTO deal, Zoellick said: "President George W. Bush confounded conventional wisdom by empowering me... to make trade success a priority even in an election year."
http://www.fee.org/vnews.php?nid=5873
Ending Farm Subsidies Wouldn’t Help the Third World? It Just Ain’t So!
Published in The Freeman: Ideas on Liberty - April 2004
by —E. C. Pasour, Jr., Professor Emeritus,
Department of Agricultural and
Resource Economics, North Carolina State University
Talks by the 146 members of the World Trade Organization (WTO) collapsed last fall over trade-liberalization disputes between rich and poor countries. The biggest bone of contention was the extent to which the “first world”—mainly Europe, the United States, and Japan—were willing to slash their huge farm subsidies. More than 20 developing countries, including Brazil, India, and China, banded together to fight the aid to rich-country farmers.
Writing in the New York Times just before the talks collapsed, author Michael Lind acknowledged that farm subsidies in advanced nations exploit their own consumers and taxpayers (“The Cancún Delusion,” September 12). However, he discounted their harmful effects on farmers and economic development in poor nations.
Yet farm subsidies in rich countries depress market prices for farm products and induce poor countries in Africa and elsewhere to import food that local farmers could otherwise produce more efficiently. Farmers in poor countries are rightly concerned about the effects of the subsidies.
Consider cotton. The United States spends some $2.5 billion a year and the European Union about $700 million in subsidies to cotton farmers. The historically low cotton prices are wreaking havoc for domestic producers in poor countries.1 Cotton subsidies in Mississippi drive cotton farmers in West Africa out of business. African countries pleaded unsuccessfully with the WTO to end all cotton subsidies, but they are only the tip of the agricultural-subsidy iceberg.
U.S. farmers annually receive more than $20 billion from the government, and EU subsidies are even larger—45 billion euros a year.2 These payments for beef, cotton, wheat, and other products spur production, depress product prices on world markets, and make it more difficult for farmers in developing countries to compete. American farmers produce twice as much wheat as the country uses, but federal subsidies help protect them from world market-price signals. Washington then uses food aid and other export programs as a safety valve to cope with overproduction.
Both the EU and the United States maintain programs to directly subsidize exports of farm products. The EU spends about $3.3 billion per year doing this. That gives EU goods an artificial advantage in international markets and works against the interests of producers in poor countries.3
Direct export subsidies have long been a prominent feature of U.S. farm programs. Public Law 480, enacted in 1954, is still going strong. It was instituted to rid government warehouses of surplus wheat, corn, cotton, and other farm products acquired through price-support programs. Dubbed “Food for Peace” to burnish its desired altruistic image, PL 480 provides easy credit and donates food to people throughout the world in response to famine and other emergencies.
Farmers in poor nations are especially critical of U.S. food aid for humanitarian purposes. Unlike the EU, which for the most part donates cash to buy food from producers in stricken countries, the United States buys food from American farmers. The Department of Agriculture (USDA) estimates the total value of U.S. food aid to be about $1.5 billion this year.4
Law Changes
The nature of U.S. food-aid programs has changed as the nature of farm subsidies has changed. In 1996 Washington stopped storing cotton, grain, and other products as a way to support farm prices and raise farmer incomes. Though food aid is no longer an adjunct of price-support programs, it continues as Washington buys the crops directly from the U.S. market.
The operation of U.S. food-aid programs demonstrates the difficulty of linking them to farm policy. Local farmers in Ethiopia, for example, see commodities purchased from American farmers—some $500 million this year—arriving as humanitarian aid as tons of their wheat, sorghum, and beans remain unsold in Ethiopian warehouses.5 U.S. food aid not only breeds a welfare mentality in the recipients (just as domestic welfare programs do), like all other first-world farm subsidies, it also works against the interests of third-world farmers.
Food-aid programs have been augmented over the years by a variety of other dumping schemes. Washington now provides U.S. exporters guarantees against default on loans used to purchase U.S. agricultural commodities, reimbursement of trade groups and private companies for promotional activities overseas, and subsidies for exports of dairy products and other farm commodities. Recipients of export subsidies include Sunkist Growers, Dole Foods, and Gallo Wines. The value of all direct export subsidies—by USDA estimate—will exceed $6 billion this year.6
Indirect subsidies in wealthy countries also damage producers in low-income countries. The U.S. sugar program, for example, holds domestic sugar prices above the world price through import quotas. It also reduces opportunities for sugar producers in low-income countries. Indirect export subsidies are just as harmful to producers in low-income countries as the direct subsidies associated with the production of beef, corn, cotton, rice, wheat, and other commodities in first-world countries.
Farmers in the United States become irate when low-cost imports undercut domestic prices. Farmers in low-income countries are just as concerned about the effects of subsidized agricultural imports on their markets. It is ironic that one arm of the U.S. government provides assistance for economic development in poor countries while another subsidizes farm exports that stifle development.
The developing countries did not go to Cancún with clean hands—they have higher trade barriers overall than richer countries, but their agricultural protection generally is lower. (Poor countries often keep food prices artificially low and tax agricultural exports at high rates.) Ending first-world farm subsidies, as Lind suggests, would greatly benefit consumers and taxpayers in rich countries. However, ending policies that distort world trade in agricultural products—contra Lind—also is critical to poor countries.
Er....wait...
I have a hunch that food prices will be going up in the U.S., so maybe this will be a good thing for farmers overall, although wheat farmers will need to find something else to grow.
The American consumer will get low priced farm goods from countries in South America where they have no hygiene in the fields, they are years behind in developing safe, effective pesticides and, I suspect, the quality of produce will suffer.
But, all of this is okay because that head of lettuce won't go from 99 cents to $1.59.
American manufacturing workers have been sold down the river. American tech workers have been knifed in the back. And now the American farmer joins them, a further sacrifice on the bloody alter of free trade!
How many Americans are to be slaughtered in the name of this false god? How many will be given over to the globalist imperative?
If you want on or off my offshoring ping list, please FReepmail me!
I hope so. It's a shame that it is taking the WTO to force us to do the right thing for the American taxpayer, but farmers have such a disproportionate representation in the U.S. Senate that reform is impossible. The reason for the 60 vote rule in the Senate is to keep the farm welfare system safe from abolition.
Average farm family income is twice that of non-farm income, yet we still have fourth generation welfare farmers whining for more government freebies. This year I think they want taxpayers to give them state-of-the-art hospitals in every town with a population of twenty or more.
Even the article says it will take several years. I have my doubts it will ever happen. Paying off farmers is the politician's favorite form of corruption.
When lettuce is 99 cents a head and being picked by an illegal, I sure hope that farmer isn't also getting a federal subsidy. Even a slow illegal could easily pick 250 to 300 heads in one hour --- and the farmer might pay that illegal $4 an hour? And have the taxpayers provide all the free education and health care and housing subsidies to that illegal and his family because the farmer wants to pocket as much as possible.
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