Aid Irrelevant Unless Rich Countries Cut Subsidies


by World Bank Press

World Bank
October 11, 2002

Efforts by institutions such as the World Bank to tackle poverty are irrelevant unless wealthy countries cut farm subsidies, Agence France-Presse and Libération (France) report World Bank President James Wolfensohn warned on Thursday. Meeting with WTO Director-General Supachai Panitchpakdi, he pointed out that the $50 billion spent on development assistance annually worldwide were dwarfed by the $350 billion ploughed into agricultural subsidies every year.

"To have seven times the amount of overseas development assistance paid annually in agricultural subsidies, which is the product in which the developing world could be significantly competitive, makes no sense at all," Wolfensohn said. "There is no way that we can deal with the question of development without dealing with the question of trade."

The Financial Times also quotes him as saying, "We will not have peace, we will not have stability, unless we have development." Wolfensohn emphasized that he and Supachai shared the view that there had been limited progress in the first year of negotiations on the Doha development round of trade talks, notes AFP. "Free trade and reduction of agricultural subsidies has not at all been addressed," he said. The 144 members of the Geneva-based WTO have so far been unable to come up with any agreement on cuts to domestic support for farmers in their talks on the issue, which is widely recognized as key to the overall three-year Doha round of trade liberalization talks.

Supachai welcomed Wolfensohn's help on the agricultural issue after the meeting, notes the story. "We need more concrete proposals coming from advanced countries so we can make headway into reaching our modality agreement by March 2003, and as you know I have been emphasizing this as a life or death matter," he is quoted as saying. The World Bank and WTO chiefs agreed to produce a joint report within the next few months on development issues.

Wolfensohn also pledged to help developing countries build up their capacity to use the WTO system to the same extent as trading giants, while noting that the budget Supachai was granted to provide capacity-building was "ludicrous."

The World Bank head also backed attempts by Brazil to mount a separate challenge in the WTO against the agricultural policies of the world two largest trading powers, by filing a formal complaint about subsidies to US cotton farmers and EU sugar producers. "I think any attack by any country on subsidies is a good thing," Wolfensohn said. He insisted that strong farm lobbies in western countries would be won over once they were convinced that the need to tackle poverty in developing countries was in their own self-interest in the long-term.

In an interview with the Stuttgarter Zeitung (Germany), Wolfensohn also mentions the rise in agricultural subsidies in the US, saying that he was very disappointed by this decision. Today he feels that changes in US policy are possible. But such changes in the way of thinking take plenty of time, especially in such a huge endeavor as reducing agricultural subsidies given the powerful farmers' lobby in the US.

The news comes as Business Week says in a feature on foreign aid that never in the past three decades has there been a better opportunity to reduce global poverty dramatically—if rich nations and poor can seize the moment. It is time for rich nations to support the programs that work. The attention now being paid to global poverty is likely to be fleeting, especially as the West becomes ever more absorbed in its own economic woes. If new programs bog down or are grossly underfinanced, billions of dollars will again be wasted. Disillusionment will return. But if rich nations and poor can seize this moment, they could well set the stage for dynamic global growth that will improve everyone's lives.

More Information on Globalization
More Information on Globalization of the Economy
More Information on the World Bank
More Information on the WTO
More Information on Poverty, Debt and Development

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.