Special Features

We will only make headway in “Doha Development Agenda” if developing countries are convinced that they are not getting a rough deal from the World Trade Organisation (WTO) and trade liberalisation. If the poorer countries are to benefit they need much better market opportunities, the need support to meet international production standards, the need a steep cut in trade-distorting agricultural subsidies in rich countries, including the European Union (EU), they need special treatment.

That is precisely what the EU is proposing.  

Contrary to what many believe, the European Union is not a fortress. The EU is the world’s largest customer for farm products from developing countries, importing as much as the US, Japan, Canada, Australia and New Zealand taken together. The EU alone absorbs around 85% of Africa’s agricultural exports. And the average tariff for imports of farm goods to Europe is 10.5%, whereas the average tariff in Brazil is 30% and among developing countries 60%. 

But, no doubt, we still can do more and better.  

So, what is the EU offering?

1.      We are ready to completely eliminate our export subsidies for products of interest for developing countries. This is a major shift in the EU’s position. Our only condition is that other forms of export promotion, which equally harm developing countries, such as US export credits and export support in the guise of “food aid”, or Canada’s  and others state trading monopolies have to go as well.

2.      Developing countries should have the right to cut their tariffs and trade distorting farm subsidies considerably less and over a longer period.

3.      We want a “food security box” to help developing countries meet their justified concerns on sensitive agricultural crops, while a special safeguard instrument should ensure their food security.

4.      Developing countries should also have the possibility to support their agricultural sector for developmental reasons.  

5.      All industrialised countries shall give completely duty and quota free access to their markets for exports from the 49 poorest countries in the world. The EU has already made this step, now it is time that the other industrialised countries follow our example.

6.      We further propose that industrialised states shall grant zero duty access to at least 50% of their imports from the remaining developing countries.

7.      And the EU finally offered to address tariff escalation, which undermines to such a significant extent the ability of developing countries to develop value-added exports.

We also have to address cotton in the WTO talks. African cotton has already free market access in the EU, we do not pay any export subsidies and are with 2% of the world’s production price takers, not price makers. In general access to a number of other major markets has to be improved. We must also continue our efforts to reduce trade distorting support within the on-going WTO Round. Europe is ready to do its part. We are about to take a decision to make our subsidies for cotton trade friendly. I hope that other rich countries will follow the EU’s lead.

But facilitating trade alone is not a sufficient answer. We also have to look at the fundamental factors that affect supply and demand of cotton since, as the recent doubling of cotton prices has reminded us, the factors affecting cotton trade are more complex. And the recent Commission initiative on cotton goes exactly in the direction of helping developing countries making the adjustments needed to fully exploit their trade opportunities.   

Last year, Europe decided on the biggest reform of its farm policy in its history. While in the early 1990s much of EU agricultural support created major trade distortions, these have been slashed by 70% today. And we will continue on our reform path. Our determination is underscored by the recent Commission initiative to also make the EU support system for sugar, cotton, olive and tobacco much more trade friendly. Such positive developments have to be recognised in the Doha Development Agenda.

I trust that our American friends will follow the European example, change their 2002 “Farm Bill” and consequently bring a much needed increase in market orientation and reverse the new and more trade-distorting elements in U.S farm policy that sent shockwaves around the world.  

When I speak to representatives of developing countries, I often get the following question “Isn’t it unfair that most of the world’s poor have to live on a dollar a day, while farmers in the US, Japan or Europe receive much more money in subsidies alone?” My answer is that the WTO is about slashing agricultural support that impacts on international trade, squeezes prices or harms the developing countries.  

Let me give you an example. Europe is increasingly supporting its farmers to produce public services, such as a sound environment, safe food or a living countryside, and not the production of beef or milk. A European farmer gets money from the public if he commits himself to environmentally friendly farming practices and hence uses less pesticides. Such type of support is not linked to production, and does therefore not harm developing countries.

It is therefore grossly misleading to make believe that the EU just has to sacrifice its farmers and paradise will descend on the third world. Abolishing all farm subsidies in rich countries won’t solve the problem. Restrictions in terms of productivity, technologies, organisation, production and management capacity, institutions and farm policies or the state of natural resources are often much stronger obstacles. Without capacity building, without supply side measures the poorest countries will never able to compete, not with the US, not with the EU, not with Australia, not with Brazil or Thailand – with or without subsides.

This is why poorer countries need not only deep cuts in trade distorting farm subsidies especially in the industrialised world and better market access for poorer countries. They also need targeted measures, a special deal for the weakest. Short, we need trade AND aid.

The EU is fully committed to re-engage to make the Doha Round a success. But we cannot go it alone. We need the support of the developing world to reach a balanced and realistic agreement, from which the developing countries stand most to win.