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The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.Please REGISTER to post.by Jerome a Paris Sun Dec 18th, 2005 at 09:08:35 AM EST A deal has apparently been struck in Hong Kong in the trade negotiations. The main points of the deal are as follows: Agricultural subsidies: Farm export subsidies will progressively be phased out by 2013. However, there has been no agreement on import tariffs. Cotton: Rich countries will phase out export subsidies for cotton but there is no agreement on reducing domestic subsidies for US farmers. Development Aid: The poorest countries will get quota-free and duty-free access to global markets for 97% of their goods. Sorry I missed it - Idiot Savant has two diaries up on the same topic: WTO: the poor revolt again and WTO: the same old scam Cotton: Rich countries will phase out export subsidies for cotton but there is no agreement on reducing domestic subsidies for US farmers. Development Aid: The poorest countries will get quota-free and duty-free access to global markets for 97% of their goods. Sorry I missed it - Idiot Savant has two diaries up on the same topic: WTO: the poor revolt again and WTO: the same old scam This sounds pretty good, doesn't it? End of agricultural subsidies, free access to rich markets for poor countries! Of course, the truth, as always, is in the fine print or the background facts: Agricultural subsidies Export subsidies represent only a small fraction of farm support. In the case of EU farm policy, export support represents only 5% of the total budget (EUR 2.5bn out of close to EUR 40bn annually). In the case of US cotton subsidies, direct export support is only $250m, vs $4bn of domestic subsidies annually. For some products, the export subsidies are a big part of the problem, so their elimination is a progress of sorts, but it is a much smaller progress than will be claimed, and a much smaller sacrifice than the farmers will scream. Duty free access to rich world markets Again, 97% of the goods have free access is good, but that hides the fact that 3% will not, and of course, these 3% will be - coincidence! - precisely those products where developing countries have the most competitive advantage, or the largest industrial capacity, and thuse their exclusion will prevent them from reaping the benefits of the deal. Another thing that must be noted is that a number of the poorest countries already had a preferential access to the European market (again, with some blatant exclusions), so that deal, by extending that openness to all countries, will actually be tough on the poorest countries as they have to compete with less poor developing countries. In the agricultural sector, in particular, any general opening up of the European market will tend to favor the big competitive countries like Australia, Brasil or Argentina (and in these countries, the largest, most competitive farms geared to export, not the small farms) against the poorest countries. Non farm aspects This was seen as the quid pro quo by the EU and the US: the opening up of their agriculture sectors would be matched by an opening up of the industrial and service sectors of the developing world. There is little information on whether this has happened. In any case, the tragedy is that what would help developing countries most is to trade with each other, not just with the rich world, and there, obstacles are as great as ever. It's not just the tariffs and import quotas, but also the bureaucratic requirements (permits, licenses, incompatible standards, contradictory requirements of local authorities) which are obstacles to trade and to prosperity. In a number of countries, those same obstacles work inside the country to make economic activity and development a headache for all - except for the well-placed officials and politicians which take their dime and what activity that does take place. President Chirac, I beg you Some CAP facts and figures The official arguments for the CAP Doha Round and developing nations Why do the British prefer cheap food to rich farmers? by Gary J How bad is the CAP? Oxfam say it's very bad. by Colman In the long run, we're all dead. John Maynard Keynes G20 - emerging markets asking for an opening up of the markets of the developed world Cairns Group - countries with very competitive agricultural sectors and strongly pro free trade in that sector (one third of world ag. exports) US and EU - the traditional protectionists G10 - highly protectionist countries - and significant importers - keen to protect what remains of their agriculture G33 - weak ag. countries who ask for specific protections as a  total opening of the market scould devastate their economies. The accompanying article in Le Monde flags various points: the WB estimated that a full opening of ag. markets would have a net global benefit of 182 billion $ by 2015. However, this would be unevenly spread: the big winners would be exporting countries like Australia, Brasil, Argentina, which subsidise the agriculture little, and are highly specialised, and competitive, in a few products (beef, milk, sugar, wheat); the big markets (US and EU) would see losers amongst producers unable to cope with competition, and winners amongst consumers, who would see lower prices (or amongst the distribution chain, if lower import prices are captures there...) the non competitive third world would likely be a net loser, as they would lose their preferential access to Europe. The volumes are too small to be significant in any case, except in very specific cases like cotton producers in central Africa which would benefit from an end to export subsidies form the big 2. After losing out to China on textile, these countries would now lose to Brasil or Australia on the agricultural front... In the long run, we're all dead. John Maynard Keynes the big winners would be exporting countries like Australia, Brasil, Argentina, which subsidise the agriculture little, and are highly specialised, and competitive, in a few products (beef, milk, sugar, wheat); the big markets (US and EU) would see losers amongst producers unable to cope with competition, and winners amongst consumers, who would see lower prices (or amongst the distribution chain, if lower import prices are captures there...) the non competitive third world would likely be a net loser, as they would lose their preferential access to Europe. The volumes are too small to be significant in any case, except in very specific cases like cotton producers in central Africa which would benefit from an end to export subsidies form the big 2. After losing out to China on textile, these countries would now lose to Brasil or Australia on the agricultural front... In the long run, we're all dead. John Maynard Keynes the big markets (US and EU) would see losers amongst producers unable to cope with competition, and winners amongst consumers, who would see lower prices (or amongst the distribution chain, if lower import prices are captures there...) the non competitive third world would likely be a net loser, as they would lose their preferential access to Europe. The volumes are too small to be significant in any case, except in very specific cases like cotton producers in central Africa which would benefit from an end to export subsidies form the big 2. After losing out to China on textile, these countries would now lose to Brasil or Australia on the agricultural front... In the long run, we're all dead. John Maynard Keynes the non competitive third world would likely be a net loser, as they would lose their preferential access to Europe. The volumes are too small to be significant in any case, except in very specific cases like cotton producers in central Africa which would benefit from an end to export subsidies form the big 2. After losing out to China on textile, these countries would now lose to Brasil or Australia on the agricultural front... In the long run, we're all dead. John Maynard Keynes The market access as you pointed out means little, but the export subsidies is a significant, even if largely symbolic, step.  The hitch of course is that the elimination of the export subsidies makes the real meat - elimination of production subsidies - all that much harder. by gmoke - Sep 19 1 comment by Frank Schnittger - Sep 10 5 comments by ARGeezer - Sep 7 35 comments by Frank Schnittger - Sep 2 57 commentsby gmoke - Sep 191 commentby Cat - Sep 147 commentsby Frank Schnittger - Sep 105 commentsby ARGeezer - Sep 735 commentsby Frank Schnittger - Sep 257 commentsby THE Twank - Aug 3110 commentsby Frank Schnittger - Aug 2757 commentsby Cat - Aug 2222 commentsby Cat - Aug 2224 commentsby Frank Schnittger - Aug 186 commentsby Cat - Aug 185 comments



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