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French plan on EU farm subsidies bad
2008-03-27 08:45:21
By Editor
France has indicated that it will be seeking to consolidate what are very clearly trade-distorting agricultural subsidies when it assumed the presidency of the European Union on July 1 this year.
This shocking intention has come in the wake of amendments to the EU’s controversial Common Agricultural Policy (CAP) and skyrocketing crop prices worldwide, even as Europe’s farm subsidies for 2007 still amounted to 54.7 billion euros ($85 billion).
African states and other developing countries have for years been agitating against farm subsidies in EU member countries and the US, arguing that they cause overproduction that in turn distorts world prices and leads to the dumping of commodities into African markets.
The African continent has been bearing the harshest repercussions throughout chiefly because of its overdependence on agriculture, its single most important source of exports and foreign exchange.
France has never distanced itself from the fact that it is an unswerving champion of the subsidies regime, whose entrenchment it would happily further advocate as it holds the EU presidency for six months from July 1.
The sad truth is that the French attitude will perpetuate trade-distorting financial aid well beyond the World Trade Organisation’s 2013 deadline.
The CAP itself absorbs 42 per cent of the EU’s budget and French President Nicolas Sarkozy recently announced that his administration would strive to guarantee the high prices agricultural products currently fetch.
There are also indications that France wants to plan for the future and to make the CAP subsidies a lasting feature of the EU.
An apparent consolation is that not all EU member countries agree with France, the largest single beneficiary of the CAP, or Germany - the second largest.
Britain and several other countries have long refuted the claim that subsidising farms was necessary for European agriculture to flourish.
WTO should whisk all its members into agreeing that world agriculture should be treated as any other businesses and therefore be ready to bear the same risks as other commercial operations.
Quite contrary to worries by EU trade strategists, the removal of subsidies can be rewarding.
For instance, the world prices of dairy products doubled last year, allowing the EU to remove subsidies on all dairy products and contemplate increasing production this year.
The entire world dairy industry has benefited from the price boom, that is, even in developing countries.
In addition to WTO efforts to evenly liberalise world trade, public pressure against excessive production and the subsequent destruction and dumping of crops in Africa was badly needed.
What is currently needed is a trading system that freely allows farmers to grow any crop the market demands.
Unfortunately but not so surprisingly, WTO negotiations on this subject often end up deadlocked, with rich countries hesitating to agree to anything when unanimity is required.
France and suchlike countries have the right to have an opinion of their own.
But their pleasure could be the misery of hundreds of millions of people in poor countries. We hope they know this and will soon change heart.
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