One of the main areas of discussion at the next WTO meeting will be agriculture. This week’s edition of The Economist had an interesting report on inequalities in the agriculture system. Essentially, the article related how agriculture is still heavily subsidised by the rich countries. The implicit suggestion was that this was at the expense of the poor.

The report detailed how the ‘Uruguay round’ of world trade talks bought “promises of enhanced market access for the crops of rich and poor countries alike”. As you might expect, though, “the reality has been one of unkept promises . . . even the poorest countries still face largely unchanged high tariffs and low quotas when trading with the world’s economic powerhouses”. For example, Japan sets a tariff close to 1,000% for rice imports from poor countries.

Many of the rich countries plead ‘parity’ in regulation when it comes to trade talks. This was one of the main reasons given by President Bush for ditching the Kyoto protocol on global warming. They complain that poorer countries are favoured at the expense of rich ones. The Economist report tells a different story, with subsidies for food production in Europe, America and Japan “totalling 80% of the world’s total”.
This means that in good years, production will vastly outweigh need. The result of this is that prices fall – so far, so ‘free market’. What happens at this point, though, has nothing to do with the ‘free market’ and everything to do with self-interest. The rich countries buy their own grain and ship to poor countries, wrecking the poor countries farming. This is what the report described as “the rich countries habit of buying up crops when prices fall and then sending them to the poor as aid”.

The E.U.’s proposal on export competition calls food aid “a disgrace”, as it is extremely destructive of rural economies in poor countries. American use of food aid as a strategic weapon has been well documented by observers. One example is the American threat to withold food aid from Bangledesh after it had been devestated by floods, unless it agreed to ‘restructuring’. Bangledesh now has large tax-free zones where designer shoes and clothes are made for the west.

In bald statistics, the numbers are huge but meaningless. The E.U. spent $100 BILLION in 1997 on agricultural subsidies. America often claims to have reduced or even done away with farm subsidies, but the report notes that this is mostly a case of the aid being redefined. For example, direct subsidy was replaced by ‘emergency’ assistance to shield American farmers from low world prices. This almost unknown subsidy rose from $1.8 Billion in 1998 to $7.6 billion in 2000.

The developing countries have asked that their food production be exempt from any requirements under any new WTO rules that are drawn up. This may seem unfair to some, but the Economist report notes that “Their case if strengthened by the fact that the market access they were promised after the Uruguay round has not materialised”.
Not even the Americans or Europeans can deny this. Joseph Glauber, America’s Agriculture department deputy chief, stated that “the real pay-off from the Uruguay round just hasn’t happened”. That it hasn’t happened, or even been discussed is hardly surprising, as the article relates how “if rich countries were to remove the subsidies
. . . poor countries would benefit by more than three times the amount of all the overseas development aid they receive each year”. Clearly, the west does not relish the idea of genuine ‘free markets’, as much as it claims to.