Western Producer reporter Barry Wilson was working in Europe recently to provide insight and context for upcoming world trade talks in Seattle next week. The World Trade Organization talks promise to change the face of western Canadian agriculture.
ROME, Italy – The 1994 world trade agreement, hailed by rich trading nations as a breakthrough, has been a disaster for developing countries, says a United Nations agriculture development agency.
Studies done for the UN Food and Agriculture Organization show the deal, which started a reduction in rich country subsidies and protection, bound poor countries to their inferiority.
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World Trade Organization rules do not allow enough support so poorer countries can develop their weak food-producing sectors.
The rich country subsidy cuts were too small to reduce subsidized food supplies or raise market prices.
Open borders made poor countries susceptible to higher import levels while giving them no incentives to produce for export.
“While trade liberalization had led to an almost instantaneous surge in food imports, these countries were not able to raise their exports,” said an FAO study completed this autumn on the impact of the world trade deal on developing countries.
The surge of imports “marginalized small producers and added to unemployment and poverty.”
Meanwhile, rich nations have cut their food aid budgets and shipments.
“Developing countries are being hit by a double whammy,” said Harmon Thomas, chief of the organization’s commodity policy and projections service.
“They are being told they have to open their markets and they are not allowed to support their own producers to provide local competition in a meaningful way.”
Thomas said the FAO has been holding regional seminars for developing countries. The seminars will inform them of the inequities and invite them to use the information to develop a better strategy for the next round of trade negotiations, slated to begin next week in Seattle, Washington.
Thomas said the only way a new liberalized trade deal will work is if the rich countries recognize the poor countries need a transition to catch up.
“All the analysis shows that if liberalized trade reforms are implemented, prices should strengthen in the long run,” he said.
“But people have to be able to live to the long run. There needs to be a transition for countries that are far behind.”
He said the basic flaw in the last agreement was that it froze support levels at 1986-88 levels and then called for reductions.
It left developed countries with hundreds of billions of dollars to spend on farms.
In developing countries, the 1980s were a time of agriculture taxes rather than subsidies, so the deal froze them in a permanently disadvantaged space.
And 1994 promises of “special and differential treatment” for developing countries has not been effective.
“Reforms always mean there are winners and losers,” said Thomas. “Ultimately, they will be successful only if there is a way to help the losers. At this moment, there is no such global mechanism for the WTO losers. This round is touted as the ‘development round’. It must recognize the disparity.”
