Posted on 19-12-2003
Cottonheads
Victor Keegan
In refusing to concede on agricultural subsidies during world
trade talks, the west is harming itself as well as the developing
world.
You may not have noticed, but attempts to rekindle the burnt-out
international trade talks in Geneva have been postponed yet
again until next year.
Who cares? Boring old talks, complicated issues, things happening
far away; pass the channel switcher.
Actually, the talks are hugely important. They offer not only
the usual galvanising benefits arising from lowering tariff
barriers but also - and much more important - a way of giving
developing countries the biggest boost they have ever had and
at no cost to ourselves.
Indeed, the west would gain many billions of dollars in return.
How? By abolishing agricultural subsidies. This is the simple,
but highly charged issue holding up the talks, and it is worth
repeating some oft-quoted statistics.
The numbers do not have general currency, maybe because people
find them difficult to believe, but they illustrate a simple
fact. Not to beat about the bush, they show that the maintenance
of agricultural subsidies is the biggest scam in the world inflicted
by the rich on the poor.
Farmers in industrialised countries receive over $300bn (£169.9bn)
a year in direct and indirect subsidies to grow crops much of
which - if it was a level playing field - could be done more
profitably by developing countries and thereby employing millions
more workers.
Subsidies have been removed from practically every other business
activity but not in the one area where they could do the greatest
good because of formidable political power of a tiny minority
of farmers.
The biggest obstacle to progress is the EU, and France in particular
(Britain and Germany are angels in this respect). But the most
glaring abuse is in the grotesque way that US cotton farmers
are featherbedded.
Growing cotton is not a strategic thing like being self-sufficient
in food. By its nature it is better done in places such as Africa
where the climate is good and where literally millions more
could be employed.
Yet in 1992 the US government (that's the one with the whacking
budget deficit) paid out $12.9bn - yes billion - to its cotton
farmers. As a result, the US improved its share of world exports
from 25% to 40% between 1999 and 2002 despite falling world
prices.
As an editorial in the New York Times put it last week: "The
United States was in effect paying the rest of the world to
buy American products rather than the cheaper cotton grown in
Africa and South America."
Try as I do, I cannot think of a single argument to justify
subsidies on this gargantuan scale beyond the cynical need to
preserve jobs at any cost to gain votes. Am I missing something?
The issue of agricultural subsidies is important not just because
it is the most cost-effective way of helping developing countries
to help themselves, but for another reason as well. Progress
would give a big boost to world governance at a time when self-interest
is preventing progress in other arenas like the development
of a European constitution.
The world trade talks are being held up because industrialised
countries won't respond to the newly acquired determination
of poorer countries to make the abolition or severe reduction
of farming subsidies a sticking point in the negotiations.
Yet abolition would give the west over $300bn to spend on other
things, including rehabilitation schemes for farmers. Developing
countries are holding a gun to the west's head to persuade it
to pay itself a bonus of $300bn. It's like highway robbery -
in reverse.
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