Well Done

10 October 2005



US Offers Farm Subsidy Cut

In an effort to remove the diplomatic blockage that is screwing up world trade talks, the US has announced that it is willing to make deep cuts in its farm subsidy program. It expects a similar move from Europe. The (completely artificial) deadline for finishing off the current “Doha Round” of global trade talks is the end of 2006, but to meet that, a farm deal is needed by year-end. Europe should grab the offer with both hands.

Farm subsidies distort world trade patterns terribly, ensuring that the poorest nations of the world are prevented access to the richest markets in the world, and thereby ensuring that world poverty persists. Their political raison raison d'être is the preservation of the “family farm,” largely unviable economic units that have been virtually wiped out in the US and which are kept afloat in Europe only by plundering the pockets of urban consumers. For decades, Europe has had wine lakes and butter mountains because its farmers are paid to over-produce. In America, farm subsidies go to vast agribusinesses that wiped out the small farmers by 1990.

The American offer is to end farm-export subsidies in half within five years and to reduce domestic subsidies by 50%. A complete elimination of the domestic subsidies would be better, but this is a good offer. Moreover, US trade tsar Rob Portman has suggested that American food aid (which is vital during short-term famine and deadly for recipients at other times) may be open to review.

The “however” in this is the demand that Europe make some kind of reply. “The US offer is conditional on other countries reciprocating with meaningful market access commitments and subsidy cuts of their own,” Mr. Portman said. There are noises in the EU that a deal can happen. European Trade Commissioner Peter Mandelson said the EU plans a response, “In domestic support and agriculture subsidies, we will be going further than the US,'' he said at a Zurich press conference. Mr. Portman’s offer “is the step we asked them to take. Now that they have, we welcome it.”

Regrettably, Mr. Mandelson doesn’t speak for all of Europe. The 25-member EU still has 25 different agricultural policies. An October 7 letter to Mr. Mandelson and Agriculture Commissioner Mariann Fischer Boel from 13 of them, including France and Italy that have benefited most from the EU’s subsidy gravy train, said the EU should get credit for all the concessions it has already made. “We note that our partners have made no substantial move to respond” to those moves. “The obvious imbalances in these negotiations not only have not been corrected, but on the contrary have become more marked.” Point of information: The US has capped its subsidies at just over $19.1 billion (ridiculously huge) while the EU ceiling is more than triple that amount (ridiculously huge x 3).


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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