Hopes of a breakthrough in the stalled global trade talks were dealt a blow last Friday when a leaked letter from Europe’s trade commissioner highlighted the determination of Brussels to continue its $45-billion- a-year support for farmers.
With fresh talks in the agriculture sector only just under way in Geneva following the collapse of negotiations in Cancun six months ago, Pascal Lamy strongly defended Europe’s protectionist regime in the face of criticism from Supachai Panitchpakdi, Director General of the World Trade Organisation (WTO).
Lamy said he had read with dismay comments by Panitchpakdi in Costa Rica, accusing him of using misleading figures to exaggerate the extent of Europe’s subsidies.
”The European Union — as any other country — has a legitimate right to choose to support its agriculture in order to reach food security, safety and quality, to protect its natural environment and to maintain rural livelihood.
”That is a collective preference which we will not renounce, as we will not accept that our social policies are put into question by international constraints.”
Developing countries are demanding that the European Union and the United States scale down their support for farmers in the round of trade talks launched at Doha in November 2001. Although Brussels and Washington have offered some concessions, poor countries heavily dependent on agriculture argue that they are inadequate.
In his speech in Costa Rica, the WTO director general quoted figures from the Organisation for Economic Cooperation and Development in Paris, a think tank representing 30 rich countries, showing that developed countries spend about $1-billion a day supporting their farmers.
Lamy said it was ”extremely annoying” that Panitchpakdi was using ”very contestable figures”.
The trade commissioner added that the $1-billion figure included higher prices paid by consumers and the cost of tariff protection. The amount spent by the West was about $100-billion a year rather than $300-billion, of which $45-billion was accounted for by the EU.
”This polemic is, in my view not only wrong, but dangerous in that it ultimately denies countries’ legitimate policy choices and undermines the basis on which the WTO rules have been built.”
A WTO spokesperson said Panitchpakdi had responded in robust terms to Lamy’s letter, though he refused to make its contents public.
Phil Bloomer, head of Oxfam’s Make Trade Fair campaign, said: ”This letter gives us a rare glimpse into what goes on behind the scenes between the big players at the WTO. It is extremely worrying that [Panitchpakdi], a director general who is standing up for the principles and promises of the so-called development round, should be subject to such targeted pressure.
”Lamy is right to say that not all subsidies are bad: domestic support can be provided without hurting others or damaging their prospects.
”However, the truth is that Europe continues to pay massive trade-distorting subsidies that hurt farmers in the developing world and undermine world trade.” — Â