Reducing agricultural trade distorting subsidies

Eliminating agricultural trade distorting subsidies

Implementation

According to the World Bank (2002), agricultural subsidies total nearly a billion dollars a day, a situation it considers untenable both for rich and poor countries alike. But curbing the subventions is a tremendous task, given the political influence of the farming lobbies in the European Union and USA. Both the EU and the USA resisted attempts by developing countries for a draft action plan to be being crafted at the Earth Summit in Johannesburg (2002) to include detailed commitments for phasing out "trade-distorting" farm subsidies.

With its latest enlargement, Europe lost the opportunity of quickly reforming its Common Agricultural Policy (CAP). New member states have been granted the same treatment as old states, with up to 55% direct payments to farmers being topped up by rural development funds. Farmers in countries like Poland are unlikely to reject this and added to the reactionary forces to CAP reform in France and elsewhere will practically block any initiatives for reform in the future. High direct payments to farmers and the price support for a variety of agricultural products serve the interests of only 20% of farmers in the old EU, who receive 80% of the direct payments.

A coalition of canned-fruit producers on 12 August 1999 launched a campaign against EU canned fruit subsidies. The coalition of producers from Chile, Argentina, South Africa, Australia and the USA alleged the EU regime fosters fraud and abuse, programme waste and environmentally unfriendly practices.

Claim

If even one-third of the world's subsidies and tariffs in agriculture were eliminated, the poorest developing countries that could export would gain more than US$ 4 billion in economic benefits every single year.