Millions Of Farmers Stake Future On WTO Deals

by Diego Cevallos

Trade ministers from 146 countries are negotiating the actions to be taken on the subsidies that rich nations grant their farming sectors, an activity that provides a livelihood for three billion people worldwide, with some 600 million suffering hunger and malnutrition.

Out of the differences on the agricultural question emerged a North-South clash that is unprecedented at the World Trade Organization, whose ministerial meet ends Sunday in Cancun.

On one side are the major trade powers: United States, European Union and Japan, backed by other governments of the industrialized North; on the other are 22 countries, led by Brazil, China and India, now known as the Group of 22 (G22).

The group includes Argentina, Brazil, Bolivia, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, El Salvador, Guatemala, India, Mexico, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, Turkey and Venezuela.

The dispute ultimately affects millions of farmers around the world, the majority of whom are likely unaware of the trade ministers' discussions.

Although just 10 to 20 percent of the world's farm production enters the international market, the rules that govern agricultural trade directly affect all of the world's farmers, says the U.S.-based Institute for Agriculture and Trade Policy.

The bulk of farm exports come from just 15 countries. The United States is responsible for 19 percent of agricultural trade and the EU 17.5 percent.

The tensions evident in Cancun, where non-governmental organizations have accused the United States of blackmailing and threatening poor countries to prevent them from joining the G22, are a reminiscent of the Cold War of the 1960s and 1970s.

But this time the main component is not ideology.

According to Eduardo Perez Motta, Mexico's representative to the WTO, the creation of the G22, to which his country belongs, is a response to the shared interests of the members and "to very practical concerns, nothing more."

The farm subsidies dispute has heightened as the deadline set by the WTO ministerial conference in Doha in November 2001 approaches.

The trade ministers decided in the Qatar capital that by Jan. 1, 2005 there should be agreements in place for substantially reducing domestic supports and removing export subsidies, with sights on total elimination, in order to improve poor countries' access to world agricultural markets.

But given the state of the negotiations, observers say there is little chance the deadline will be met.

If agreements are not achieved in the next year, there will be negative consequences throughout the global economy, says EU trade commissioner Pascal Lamy.

The G22 demands that the rich countries dismantle their farm subsidy regimens, in keeping with Doha plan, stressing that the protectionist measures harm the developing world's farmers and distort global markets.

The industrialized countries respond that they are willing to make concessions, but in a gradual and sector-specific way, arguing that a sudden end to subsidy programs would be harmful to everyone.

Independent studies, such as one published recently by the U.S.-based University of Tennessee's Agricultural Policy Analysis Centre (APAC), supports the rich countries' claim -- to a point.

The elimination of farm subsidies worldwide, estimated at $300 billion a year (80 percent paid by the EU, United States and Japan), would continue the downward spiral of agricultural commodity prices, which would have a sharp impact on poor countries, according to the University of Tennessee study.

"Farmer-orientated policies and international cooperation are the real solutions," say the report's authors.

But the World Bank has come out saying that the definitive reduction of farm subsidies would help 144 million people who live on less than two dollars a day to escape poverty.

The total subsidies that industrialized countries pay their farmers is more than the combined gross domestic product of sub-Saharan Africa, and six times more than is spent on assistance for developing countries.

World Bank managing director Shengman Zhang told the delegates gathered in Cancun that the world cannot allow the relatively comfortable inhabitants of rich countries prevent progress towards a system of global trade that would help millions escape poverty.

Wealthy nations are responsible for two-thirds of global trade and are in better conditions to confront the long-term costs associated with the reforms needed in the multilateral trade system, he said.

But the representatives of the industrialized countries have made it clear that they are unwilling to heed the conditions laid out by the G22.

Brazil's foreign minister Celso Amorim, spokesman for the G22, warned that if the Cancun ministerial conference fails to find ways to significantly reduce farm subsidies the WTO is in danger of losing credibility and the world will face serious trade problems.