View Full Version : Europe Snubs World's Poor - Agricultural policy

June 23rd, 2003, 03:16 AM
June 23, 2003

Europe Snubs World's Poor

The European Union held one of its splashy, self-congratulatory summit meetings over the weekend in a Greek resort, complete with the unveiling of a draft for a new constitution for the peoples of Europe. The gathering featured the usual photo ops and rhetorical flourishes about the ever-closer union.

What it lacked was much substance. Most glaringly absent was any reform of Europe's subsidy-rich common agricultural policy, which gobbles up half the union's budget and manages to simultaneously victimize both European consumers and poor farmers in the developing world.

The European Commission, the union's executive body, has been pushing a modest reform of farm policy aimed at ending the link between payments to farmers and their actual production levels. The idea is to reduce Europe's chronic overproduction of cereals, beet sugar and other agricultural products. The farmers would still receive the same level of payments, but the change would ease the gluts in certain subsidized products that are driving down global commodity prices. For the millions of impoverished farmers worldwide who cannot compete with the rich nations' subsidized harvest, Europe's reluctance to embrace even modest reform must be disheartening.

It is too bad that in their weekend discussions about illegal immigration and asylum policies — perennial political hot potatoes on the Continent — Europe's leaders couldn't have reflected on how their agricultural policies contribute to the very desperation that provokes such migratory flows. Sadly, the United States is a willing co-conspirator in this tale, betraying its supposed belief in free markets and trade with its own lavish handouts to politically powerful farm lobbies.

Britain and the Netherlands, along with the Scandinavians, were strong proponents of the commission's proposed reform. The plan would be only a modest step, but it would constitute an important acknowledgment that the union's sacred cow — a system of agricultural supports that pays earthly cows a $2 daily subsidy — is not untouchable.

That is why the union's 15 national agricultural ministers were locked in a drab conference room in Luxembourg for the past two weeks, and will reconvene there this week. The group may produce a version of reform so watered down as to be virtually meaningless. So far France, the largest beneficiary of the union's handouts, has opposed even the most minimal changes in the status quo with startling vigor. Once it seemed a consensus had formed behind a compromise, but President Jacques Chirac, a former farm minister, killed it late last week by threatening a veto.

The willingness of Germany, traditionally a champion of reform, to back France's intransigence has been most disappointing. There is much speculation about what Chancellor Gerhard Schröder may be getting in return for his U-turn on these issues. What is clear is that the union's reinvigorated Paris-Berlin axis, so evident in the debate over the Iraqi war, does not always act in Europe's best interests. And it definitely is not acting in the interest of the world's poorest.

Copyright 2003 The New York Times Company

June 24th, 2003, 06:30 PM
It's interesting that Chirac can veto the entire effort. *Is the EU political structure similar to the UN, where each of the chief members has veto power? *In that event, I'd be surprised if any reforms at all, on any topic, ever got passed.

June 26th, 2003, 03:06 AM
Eugenius, the EU uses qualified majority voting on some issues, and the range of those issues will be expanded under the new constitution, though vetoes will likely be retained over foreign and security policy.

The article takes a justifiably critical approach to France's provincial perspective on the Common Agricultural Policy. Nevertheless, it makes a crucial admission in that the US is a "co-conspirator." So long as either economic bloc retains agricultural protectionism, the other will be too suspicious to suddenly abandon subsidies in favour of encouraging third world agriculture. The issue is more contentious in Europe where the public actually seems to realise the effect of subsidisation on the outside world. Both blocs claim they will follow suit when and if the other abandons subsidies, making a breakthrough highly unlikely. If Western markets are to be opened to developing agricultural sectors, they will have to do so simultaneously. Any attack on agricultural subsidy, therefore, must target equally both the United States and Europe.

June 26th, 2003, 02:15 PM
EU agrees 'radical' farm reform
BBC News

European Union agriculture ministers have agreed reforms to the controversial system of paying subsidies to farmers.

The enormous 43bn euro ($50bn, £30bn) subsidies, widely-criticised for distorting global trade and hurting poor countries, will be substantially reduced.

EU farm commissioner Franz Fischler, who first proposed the reforms, said the accord marked "the start of a new era" and would fundamentally change the 45-year-old Common Agricultural Policy (CAP).

But farmers and unions were already fearful that they would be driven out of business without the subsidies they have been accustomed to.

Germany's DBV farm union said the deal would cost German farmers between 1.2bn and 2bn euros in lost income, and they would especially struggle with reduced milk prices.

Campaigners on development issues said the deal was a blow to developing countries and would not stop poor farmers going out of business.

The breakthrough deal comes after three weeks of talks, and the original proposals have been watered down.

France, Spain and Ireland insisted on the changes as the price for making an agreement, and only Portugal was left opposing the deal.

Under the deal, most of the subsidies that reward farmers according to how much food they grow will be abolished.

In other measures:

-Farmers will receive a single payment, rather than grading the amount of money in line with the amount of food produced
-Individual countries will be able to stick to the old system if there is a risk that the new system would lead to the land being abandoned
-The prices at which the EU intervenes to support farmers are to be cut in key sectors, including milk powder and butter
-Countries like the UK, which want to press ahead with more radical reform, are allowed to do so
-Direct payment for bigger farms will be cut to finance the new rural development policy, promoting the environment and animal welfare.

The BBC's environment correspondent Tim Hirsch says the deal effectively means that the method of subsidies will vary greatly from country to country.

And the shift will not save taxpayers any money in the short-term, as the money saved on food subsidies is being redistributed as rewards for taking good care of the environment.

The EU currently pays 43bn euros in annual subsidies to its farmers, angering poor countries left unable to compete in the global market.

The subsidies have been the key sticking point in agreeing the next round of global trade talks.

Other countries, including Australia and much of Africa and the developing world, say it is unfair to ask them to open their markets while the EU is protecting its own agriculture business.

British Agriculture Minister Margaret Beckett said it was "an excellent agreement" and a courageous stride forward in setting a benchmark for September's world trade talks in Mexico.

But critics said the deal was a botched compromise.

Tim Rice, trade analyst for the charity ActionAid, said the latest proposals were unlikely to curb over-production in Europe.

"They allow rich countries to continue dumping agricultural produce, such as sugar and dairy, on developing countries putting poor farmers out of business," he said.

"This fudged deal clearly reveals that development is far from the heart of the current WTO [World Trade Organisation] negotiations."

Oxfam said Europe had "chosen to stick its head in the sand".

European farmers were not universally happy either, though for different reasons.

"It's a typical EU compromise which gives and takes a little from everyone and creates terrible difficulties for those who have to implement it," said Gerd Sonnleitner, head of Germany's farmers union.

Britain's National Farmers' Union was more positive, saying it would allow farmers to "re-direct their focus towards the marketplace in a constructive way".

But the French farm ministry suggested the reforms were not as radical as some were claiming.

"This reform preserves - as was France's position all through the negotiations - the essential principals of the Common Agricultural Policy," the ministry said.

July 11th, 2003, 06:08 AM
July 11, 2003

Your Farm Subsidies Are Strangling Us


After too many years of Africa's being pushed to the global background, it's heartening to see the world's attention being focused on our continent. International support — both financial and otherwise — is certainly needed to help combat the severe poverty and disease gripping our nations. But first and foremost, Africa needs to be allowed to take its destiny into its own hands. Only self-reliance and economic growth and development will allow Africa to become a full member of the world community.

With the creation of the New Economic Partnership for African Development in 2001, African leaders have committed themselves to following the principles of good governance and a market economy. Nothing is more central to this goal than participating in world trade. As the presidents of two of Africa's least developed countries — Burkina Faso and Mali — we are eager to participate in the multilateral trading system and to take on its rights and obligations.

Cotton is our ticket into the world market. Its production is crucial to economic development in West and Central Africa, as well as to the livelihoods of millions of people there. Cotton accounts for up to 40 percent of export revenues and 10 percent of gross domestic product in our two countries, as well as in Benin and Chad. More than that, cotton is of paramount importance to the social infrastructure of Africa, as well as to the maintenance of its rural areas.

This vital economic sector in our countries is seriously threatened by agricultural subsidies granted by rich countries to their cotton producers. According to the International Cotton Advisory Committee, cotton subsidies amounted to about $5.8 billion in the production year of 2001 to 2002, nearly equal the amount of cotton trade for this same period. Such subsidies lead to worldwide overproduction and distort cotton prices, depriving poor African countries of their only comparative advantage in international trade.

Not only is cotton crucial to our economies, it is the sole agricultural product for our countries to trade. Although African cotton is of the highest quality, our production costs are about 50 percent lower than in developed countries even though we rely on manual labor. In wealthier countries, by contrast, lower-quality cotton is produced on large mechanized farms, generating little employment and having a questionable impact on the environment. Cotton there could be replaced by other, more valuable crops.

In the period from 2001 to 2002, America's 25,000 cotton farmers received more in subsidies — some $3 billion — than the entire economic output of Burkina Faso, where two million people depend on cotton. Further, United States subsidies are concentrated on just 10 percent of its cotton farmers. Thus, the payments to about 2,500 relatively well-off farmers has the unintended but nevertheless real effect of impoverishing some 10 million rural poor people in West and Central Africa.

Something has to be done. Along with the countries of Benin and Chad, we have submitted a proposal to the World Trade Organization — which is meeting in Cancún, Mexico, in September to discuss agricultural issues — that calls for an end to unfair subsidies granted by developed countries to their cotton producers. As an interim measure, we have also proposed that least-developed countries be granted financial compensation for lost export revenues that are due to those subsidies.

Our demand is simple: apply free trade rules not only to those products that are of interest to the rich and powerful, but also to those products where poor countries have a proven comparative advantage. We know that the world will not ignore our plea for a fair playing field. The World Trade Organization has said it is committed to addressing the problems of developing countries. The United States has convinced us that a free market economy provides the best opportunities for all members of the world community. Let us translate these principles into deeds at Cancún.

Amadou Toumani Touré and Blaise Compaoré are the presidents, respectively, of Mali and Burkina Faso.

Copyright 2003 The New York Times Company

July 14th, 2003, 05:48 AM
July 14, 2003

European Welfare Farmers

The European Union recently took a small, grudging step toward reforming its farm-subsidy policies that undermine the global trading system and cheat farmers in the underdeveloped world. The one advantage of the move is that it amounts to a welcome admission that the status quo can no longer be justified. It should also serve to spur some changes in the United States and Japan as World Trade Organization members negotiate a further liberalization of trade.

Under the new changes, farmers will no longer always be able to greatly increase their subsidies by growing more food. In addition, subsidies to the largest farms will be diverted to "rural development projects," and payments to farmers will depend partly on environmental criteria. All well and good, but far too little. European leaders will need to offer more concessions in coming months — the W.T.O.'s September meeting in Cancún, Mexico, would be a good time — if overhaul of its venerable "common agricultural policy" is to mean much for struggling farmers in poorer countries.

Europe, the United States and Japan have aggressively sought to lower barriers to the flow of manufactured goods and services, and succeeded in forcing onto the trade agenda issues important to them, like foreign investor rights and intellectual property protection. Yet the rich world's reluctance to dismantle market-distorting agricultural policies, like tariffs and subsidies, betrays an unwillingness to make the sacrifices that poorer nations, with less negotiating leverage, have been asked to make in the name of economic orthodoxy.

Tellingly, the reform announced recently by European agricultural ministers does not address export subsidies. Nor does it cut the overall amount of farm aid the European Union doles out, a staggering $49 billion a year. Price guarantees for certain commodities also remain in place.

While the changes made have some value, it is unfortunate that the European Commission's initial proposal was watered down to meet French objections. The commission had sought to assist farmers without giving any incentives to produce wasteful surpluses, which drive down commodity prices for farmers elsewhere in the world. Such surpluses are often "dumped" in foreign markets with devastating consequences for farmers in poorer countries who have no government support.

These issues will only gain in prominence as the Cancún meeting nears, and sensible European leaders know full well they must offer further reforms of their agricultural policies. The only question is whether they can do so before much of the world gives up hope that the World Trade Organization offers a trading system that is fair to all.

Copyright 2003 The New York Times Company

August 15th, 2003, 04:32 AM
August 15, 2003


Inching Toward Trade Fairness

Poor and developing nations have long — and rightly — complained that while the richest countries want open markets for their manufactured goods, they rig the game when it comes to agricultural products. Now it appears that the United States and Europe are beginning to get the message. Their trade negotiators have agreed to try to reduce their farm subsidies and other barriers to agricultural imports. The vague agreement, announced on Wednesday, falls short of what is needed and raises as many questions as it answers. The numbers are yet to be filled in. Still, the effort is a heartening sign that on the eve of next month's critical World Trade Organization meeting in Cancún, pressure is mounting on developed nations to make the global trading system more fair.

As this page has been reporting in recent weeks, poor nations buy into the mantra of globalization and free-trade orthodoxy, only to find their farm products locked out of developed nations' markets by high tariffs, or competing hopelessly against subsidized European and American goods, which sell below cost. The ongoing "development round" of World Trade Organization negotiations is meant to redress this and other injustices in the global trading system by the end of next year. Talks are already behind schedule, however, and may derail entirely if no discernible progress is reached at the Cancún gathering.

The European Union and Japan have been most reluctant to face up to reality and commit to meaningful cutbacks in their protectionism. This week's deal, however, reflects the extent to which the Europeans have been shamed into showing some willingness to compromise. The vague document they have agreed to, with all those blanks to be filled in later, represents an effort by Robert Zoellick, America's trade representative, to bridge the considerable gap between American and European positions in advance of Cancún.

Despite the billions of dollars in farm subsidies agreed to by the Bush administration under pressure from farm-state lawmakers, Washington has been a strong and constructive voice in pushing the wealthy countries toward a fairer agricultural policy. Mr. Zoellick is right to coax Europe toward its more progressive position, but the Bush administration should not compromise too much in order to make common cause with protectionists. For instance, the deal's failure to call for a total elimination of export subsidies, long an American proposal, is alarming. Such subsidies, and American loan programs that amount to their functional equivalent, need to be phased out. Farmers in poor countries already struggle with poor transportion and primitive technology. It is outrageous that rich countries compound their advantages by subsidizing their own agricultural products with public money.

On tariffs, the agreement also fudges trans-Atlantic differences. Washington has rightly advocated that tariffs be capped at reasonably low levels, while Japan and the European Union prefer an "across the board" cut that would leave excessively high barriers in place. Of what use is a one-third reduction of Japan's 500 percent tax on imported rice?

Both poor countries and the bloc of major agricultural exporters that include Australia and Brazil were quick to express an understandable wariness about the agreement reached between the United States and Europe. Their concerns must be heeded. This agreement simply does not go far enough.

The European Union and the United States are the world's two trading superpowers, but they cannot dictate World Trade Organization rules to suit their own interests. The Bush administration must now play the pivotal role of mediator at Cancún rather than digging in its heels at Europe's side — an alternative that would thrill some of our domestic farm lobbies that live off their subsidies. Washington has shown that it can exert enough pressure to prod the Europeans into agreeing to some concessions. It will have to do a lot more of that before a fair deal on agricultural trade is within reach.

Copyright 2003 The New York Times Company