Farm subsidy row picks steam

The Guardian

London, June 15:

The EU and the US are paying out billions of pounds in secret subsidies to their farmers as they exploit every available loophole to avoid real concessions to the developing world in the current round of global trade talks, Oxfam said today.

In a report designed to put pressure on rich western countries in the buildup to next month’s G8 summit at Gleneagles, Scotland, the campaign group accused Washington and Brussels

of using creative accounting and the ‘Enronisation’ of their accounts to continue with their protectionist regimes.

“The EU and the US are cheating on the poor,” said Liz Stuart, author of the report, “They are telling poor countries that they have to open their markets in return for cuts in farm subsidies in the west but in reality they are cooking the books with devastating consequences for the poor.”

The current round of trade liberalisation talks commit the EU and the US to cut back on export subsidies, which allow the west to dump its excess agricultural produce at bargain-basement prices in the rest of the world. Oxfam said, however, that the US and the EU were using the rules of the World Trade Organisation (WTO) to disguise the real level of their payments to farmers.

The US was paying 200 times more in export support than it declared, while the EU is paying four times more. The proposals being discussed in Geneva in an attempt to secure a trade deal by the end of the year would result in the EU being able to increase spending on trade-distorting subsidies by around 20 billion sterling pounds a year, and the US by 5 billion sterling pounds.

“Aid and debt are essential, but without the vital third leg of the stool - trade - we won’t get poverty reduction in Africa. This is the Enronisation of the Doha round of trade negotiations. Rich countries have used creative accounting to cheat poor countries into giving up their market access in return for nothing,” Stuart said.

The Oxfam report came at a sensitive time, with the future of Europe’s common agricultural policy at the centre of talks in Paris between Tony Blair and Jacques Chirac.

The prime minister sought to fend off French calls for a reduction in Britain’s EU rebate by demanding big cuts in the subsidies paid to French farmers.

According to Oxfam, however, any cuts in export subsidy offered by the EU and US in the trade negotiations will be more than matched by increases in domestic support for farmers which would have the same distorting effect on trade, and harm poor countries.

According to Oxfam’s report, A Round for Free, rich countries have been redefining rather than reducing subsidies at the WTO. As a result, overall farm support in developed countries has not changed since 1986, and still stands at over $250 billion per year in real terms.