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Developing Countries Demand Reduction of Farm Subsidies in West, Japan


Trade ministers from some two-dozen countries are meeting this week in the Kenyan resort of Mombasa in an attempt to push forward trade liberalization negotiations that began several years ago in Doha, Qatar. With a December deadline for completing the talks approaching, the officials in Mombasa are trying to resolve the impasse over ending farm subsidies in the rich countries.

Experts say the success of the World Trade Organization's (WTO) Doha round hinges on a deal over agricultural subsidies. The developing countries, which comprise a big majority of WTO members, insist that farm subsidies in America, Europe and Japan be sharply reduced. That may or may not happen. Daniel Griswold is the agriculture specialist at the Cato Institute, a free trade advocacy group in Washington.

"Without some concessions on agriculture from the rich countries, we're not going to have [success at the] Doha round. And I put quotation marks around concessions because it is in the interest of rich countries to get rid of their subsidies and trade barriers on agricultural products. It costs their taxpayers. It costs their consumers. But this is a major irritant for poor countries. It drives down prices globally."

Mr. Griswold says the billions of dollars in subsidies paid by governments to farmers in the rich countries perpetuates poverty in the developing world. Critics of the subsidies say they enable farmers in Western countries to keep prices so low that farmers in developing countries are not able to get their produce into Western markets.

Development specialist Peter McPherson, a former head of the U.S. aid agency, says that the rich countries will have to agree that the generous farm subsidies should be reduced.

"Now the way this is likely to work, to truly have great reductions, is through something like the Doha round, through not just bilaterally but multilaterally agreeing to have those reductions," he said.

The European Union has offered to cut its farm export subsidies. The EU says it is awaiting a similar offer from the United States. But Daniel Griswold of the Cato Institute is not optimistic that the Bush administration will take on America's powerful farm lobby.

"That remains to be seen,” said Mr. Griswold. “The Bush administration, while they talk a good game on trade, they don't have a good record on standing up to protectionist interests."

But Bob Young, chief economist at the Farm Bureau, America's biggest agricultural organization, says American farmers might accept subsidy cuts in return for reductions on the high tariffs that developing countries impose on food imports.

"The developing countries need to recognize, you know, that it is very much in their interest as well to reduce those tariff barriers of that nature and let trade happen," said Mr. Young.

The meeting in Kenya is not exclusively focused on agriculture. But, say the experts, without progress on farm subsidies there is unlikely to be progress on other contentious issues like services and market access.

Mr. Young anticipates months of tough bargaining ahead of the big ministerial meeting of all of the world's trade ministers in Hong Kong this December. He believes a trade deal, including an agreement on agriculture, is likely to emerge in Hong Kong.

Some experts believe that the problem of subsidies for American cotton growers, the issue that nearly wrecked the trade talks two years ago could be resolved within the next few months. American cotton growers are assisting cotton producers in West Africa and seeking methods to boost world prices without significantly cutting U.S. subsidies.

As to the talks in Mombasa, experts say the trade ministers are beginning to recognize that without compromise on several issues the talks launched four years ago at Doha, Qatar are unlikely to succeed.

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