The “fiscal profligacy” of $1 billion per day that developed nations pay in subsidies to their farmers makes it impossible for developing nations to compete in international markets, the deputy director-general of the World Trade Organization said at the World Food Summit in Rome.
“That is more than six times all the development assistance going to poor nations,” Michael Rodriguez Mendoza said.
At the conference, U.S. trade officials were launching a trial balloon for a plan that, over a five-year period, would scrap agricultural export subsidies within the WTO.
Many speakers from the 182 nations represented at the conference were critical of the recently-approved U.S. farm law, charging that it entrenches poverty in poorer nations and weakens the capacity of those countries to export into wealthy markets such as the U.S. and the European Union.
Acknowledging “a tremendous amount of criticism of the law,” Secretary of Agriculture Anne Veneman said “I think much of it is misplaced.”
Charges that the law greatly increases spending on agriculture are less than factual, she said, noting that the law calls for spending “roughly equal to what's been appropriated by Congress over the last four to five years.”
Veneman said she was “very puzzled” over allegations that the law creates protectionism, “because there is nothing in it that changes access to the U.S. market. No tariffs are changed, the preferences that were in place are still in place. It does not change the ability of countries to export to the U.S. market.”
She said the law has “done nothing to change the resolve” of the U.S.' intent in WTO agricultural negotiations to eliminate export subsidies. “We've said we want to reduce the most trade-distorting domestic supports and we want to increase market access.”
Veneman pointed out that U.S. tariffs on food and agriculture imports average about 12 percent, “whereas around the world it averages 62 percent — so our market is relatively open vs. the rest of the world.”
Allen Johnson, chief agricultural trade negotiator for the U.S. Trade Representative's Office, said talks have started on a plan to phase out export subsidies and that the new farm law includes “circuit breakers” to keep payments to farmers from going over limits set in WTO rules. It is hoped that preliminary language for this and other trade/export goals will be complete by the next round of talks set for next March, he said.
The U.S. will propose eliminating agricultural export subsidies and other systems, such as differential taxes, that constitute subsidies.
Johnson also got in a plug for Congress approving trade promotion authority, or “fast track,” for President Bush, saying that would enhance the U.S.' ability to negotiate trade agreements. Although both the House and Senate have approved the authority, a conference committee still must resolve differences.
Despite sharp differences among delegates as to the value of the food summit, the delegates were unanimous in voting to adhere to the goal set five years ago of reducing world hunger by 50 percent by 2015.
“We still have a long way to go,” WTO's Mendoza said, noting that “poverty, rather than a lack of global food production, is the root cause of food insecurity.”
The continuation of the agricultural reform process through the ongoing WTO negotiations on agriculture “can be expected to have significant positive effects on the purchasing power of the poor,” he said.
Reducing or eliminating trade-distorting subsidies and improving market access opportunities, particularly on the part of developed nations, “can be expected to strengthen the capacity of the global food system to feed a growing world population,” Mendoza said.