By MICHAEL DEN TANDT Saturday, August 9, 2003 - Page B2
Most of us may not know it yet. But we blithely content, overfed citizens of the developed West could soon see an economic turnabout unlike anything in recent times. In a nutshell, it's this: Either we begin to share at least some of the fruits of trade liberalization or watch it grind to a halt.
The fulcrum is agriculture. The debate is about whether, or how much, rich countries will reduce barriers to relatively cheap agricultural imports from developing countries. The potential benefits for developing-world farmers, and Western consumers, are enormous. The political risks for Western governments, who must dare buck their domestic farm lobbies, are considerable.
Before we even begin to understand the scope of the problem, which will dominate next month's meeting of the World Trade Organization in Cancun, we must first accept this basic premise: The industrialized countries' positions, including Canada's to a degree, are riven with hypocrisy. As a rule they have preached free trade and development while doing their level best to freeze Third World farm goods off the market.
Indeed, since the early 1990s, according to the United Nations, developing nations have lowered trade barriers at three times the rate of industrialized countries. Over the same period, the leading developed countries have returned the favour by boosting farm tariffs and subsidies by more than 20 per cent.
Total annual spending in the developed world on agricultural subsidies, of one kind or another, has been estimated at between $300-billion (U.S.) to $350-billion. That's more than the combined gross national product of sub-Saharan Africa.
In the runup to Cancun, the hypocrisy has reached a fever pitch, or at least what passes for such in global economic circles. Representatives from the United States and Europe, by far the two biggest offenders on agricultural subsidies, have staged a running battle in the pages of The Wall Street Journal. Each claims an earnest desire to wipe out farm tariffs and help the Third World. Each suggests the other's intransigence is the biggest obstacle to this happening.
In mid-July, the Journal ran a thousand-word screed by U.S. Trade Representative Robert Zoellick, in which he claimed to stoutly support multilateral trade liberalization but also threatened to continue cutting separate trade deals outside the WTO if the talks don't go the United States' way.
The United States, Mr. Zoellick reminded us, has proposed cutting world spending on so-called production-distorting farm subsidies by $100-billion over five years. It wants export subsidies eliminated, and import tariffs limited to 25 per cent or less. If only the subsidy-mad Europeans would agree.
Meantime, though, the U.S. government has doggedly pushed ahead with its Farm Bill -- undaunted by strong objections from all its major trading partners, including Canada. The legislation, made law last year, will pump an estimated $190-billion (Canadian) worth of government support to U.S. farmers over the current decade. Leading by example, it appears, is not in the Bush administration's lexicon.
But the European countries are no better in this regard. If anything, they're worse.
In June, after weeks of tense negotiations, the European Union agreed to overhaul its own system of agricultural supports, worth an estimated $50-billion (U.S.) a year to the continent's farmers. The deal was hailed -- by European politicians -- as a ground-breaking concession that might break the transatlantic logjam. The crux of it was to sever the link between subsidies and production, which leads to overfarming. In his own Wall Street Journal article, published a couple of weeks after Mr. Zoellick's, European agriculture commissioner Franz Fischler contended that great liberalizing strides have been made. Criticism of his continent's farm policy, he sniffed, is based on mere myth.
The bottom line, though, is that even under the latest reform, the total level of EU government support for farmers won't drop. It will merely change its form. Rather than being paid to produce crops, European farmers will be paid to preserve environmentally sensitive pasture land, or forgo harvesting fields where endangered birds have made their nests. So, in effect, they'll still be paid to remain in what has become, by virtue of European farming's high fixed costs, an unprofitable business.
Where does Canada fit in? We like to portray ourselves as a global good guy. And we are -- to a point. Canada's wheat subsidies per bushel, for example, were $31 (Canadian) in 2001, according to OECD estimates, compared with $108 and $130 in the United States and Europe, respectively.
In March, the WTO praised Canada's trade regime for its openness.
And yet, the WTO pointed out in its review that Canadian dairy, eggs and poultry are often protected by import barriers of more than 200 per cent. Here, too, we indulge farmers at the expense of consumers.
What bearing does this have on the meeting in Cancun? Simply this: There will be 146 nations in attendance -- the first full meeting of the WTO since the Doha round of trade talks was launched in 2001. Developing-member nations, to whom the West has preached for years about the benefits of globalization, are dead-set on reducing farm tariffs. If no progress is made, the meeting will end in disarray, which would throw the whole Doha round into doubt. That, in turn, could throw globalization itself into a deep freeze.
Excuses don't cut it any more. It's time for the West to open its doors to the developing world's products, and farm produce in particular.