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World Food Negotiations: Billions at Stake - 2004-06-24


Rich countries continue to provide massive subsidies to domestic agriculture. Ken Ash tracks agricultural trade barriers for the Organization for Economic Cooperation and Development, the O.E.C.D. He tells a seminar at the American Enterprise Institute in Washington, that subsidies have declined, but remain huge.

"The level of support remains quite high, but at the same time, in the past decade and a half there has been some improvement, at least. In the past three years, the level of agriculture support by the rich countries has averaged almost $240 billion a year. In 2003, agriculture support paid by rich countries totaled $257 billion."

In what W.T.O. countries call the Doha round of negotiations, countries are trying to cut agriculture subsidies to zero. Claude Barfield at the American Enterprise Institute says negotiators are running out of time.

"In the next month or so, by the end of July, there will be some key negotiations related to the Doha round which will center on agriculture. In the past couple of months, we have seen new positions taken by key players, including the United States, European Union and G-20 developing nations."

In June, the world's eight richest nations, the G8, met in the United States. British Prime Minister Tony Blair says they agreed to speed up W.T.O. food negotiations because hundreds of billions of dollars a year are at stake.

"On trade, there was broad agreement to press ahead with the Doha round of negotiations. We called on all parties to get the round moving forward. The benefits are clear: reducing trade barriers could increase global income by $500 billion a year, with most of the increase going to developing countries."

President George Bush explains the importance of the negotiations. "Over the long-term, trade is the most certain path to lasting prosperity. Free and fair trade is the key engine of growth in the world. As we spur growth in our own countries, we must continue to reduce the trade barriers that are an obstacle to growth in the developing world. G8 nations reaffirmed our commitment to the success of the Doha Round of WTO trade negotiations. We directed our trade ministers to take action to get the negotiations back on track toward a successful conclusion."

An obvious question: If world leaders and economists agree that abolishing agricultural subsidies would benefit everyone around the globe, then why do they still exist?

Part of the answer is that countries have subsidized agriculture for many years and the habit is hard to break. Economists at the American Enterprise Institute seminar say subsidies are part of rich nations' "cultural heritage." Another reason they persist is economists and world leaders cannot change agriculture policy by themselves. Influential groups have to agree on changes. Agricultural businesses and the voters who work for them are unlikely to agree that more than 200 billion dollars a year in subsidies should be abolished. Convincing them to give up their subsidies in order to help developing nations' economies is difficult.

A final sticky issue may be environmental concerns. For example, one country may object to another's use of pesticides or genetically modified foods. Another concern is animals infected with mad-cow and other diseases. These objections may lead to tariffs against, or banning of, foreign foods. Such trade restrictions hamper change. Jason Hafemeister (haff-MY-ster), a U.S. negotiator in the Doha round, says negotiators agreed on the big concepts, but are still settling the details.

"There is a broad consensus among economists on the agriculture market distortions caused by trade barriers. I will say this: these conclusions have been made part of the WTO negotiations and integrated into the WTO structure. This is driving a lot of what we are trying to do in Geneva in the next couple of months. How do we bring down tariffs and get rid of market access barriers that keep prices higher than they would be without competition? This is the focus of what we are trying to do, particularly in agriculture."

What remains to be seen is whether good ideas can overcome the dependency agriculture has on subsidies and the inevitable political turmoil their termination creates.

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