Global Policy Forum

By Members of the Cairns Group

The failure of World Trade Organization members to agree on guidelines for agricultural reform is a serious setback for the Doha round of multilateral trade negotiations. From what we heard in Geneva from those WTO members who continue to oppose efforts to bring about genuine reform of agricultural trade, we may not even be able to reach agreement before the ministerial meeting in September. This would be a major setback for development and for world trade in general.

The Doha round was conceived and begun on the understanding that it would create the necessary conditions for genuine agriculture reform. The objective is to promote substantial change in access opportunities and trade disciplines, not to perpetuate the present distortions and inequalities.

The Cairns Group, 14 of whose 17 members are developing countries, is acutely sensitive to the needs of the developing world. It needs constructive help to build up and diversify its supply capabilities. The first step in providing that help should be elimination of export subsidies and the massive taxpayer transfers to wealthy farmers in developed countries. The second step is to open up markets for tropical products, beverages, food and fiber by slashing tariffs and expanding quotas.

The current global agricultural subsidy regime in developed countries involves a massive total support of more than $300 billion. This is six times the amount of all aid sent to developing countries. It is neither economically sensible nor morally defensible, particularly when typically 80 percent of those transfers goes to the richest 20 percent of producers and only a small fraction trickles down to the farmer on the land.

We are facing two fundamentally different approaches to the WTO agricultural negotiations. The Cairns Group believes that the powerful, creative force of trade liberalization will generate growth and opportunity for all members. The alternative view places emphasis on protecting vested interests, maintaining trade-distorting subsidies and extending the dependency of the less advantaged.

We find it hard to understand that the European Union has embarked on a policy to discourage liberalization on a multilateral basis. Now the world's largest trading entity, the EU has benefited immensely from opening up global markets over the last 50 years. It should assist countries that are dependent on European preferences through technical assistance to enable their economies to adjust and diversify. Restricting markets and extending the dependency of the less advantaged is no prescription for global development.

President Jacques Chirac of France recently proposed to halt export subsidies to sub-Saharan Africa. This is the first public acknowledgment from France that export subsidies have damaged the developing world. But the damage these subsidies have wrought is of global proportions and requires a global solution. If only the EU would agree, the global solution resides in the Doha mandate.

The mandate for the agricultural negotiations is not something that was sought by just a few efficient agricultural exporters, but by the vast majority of members. It is not an agenda that can be secured by one member simply completing its domestic reform agenda and insisting others accept that as the limit of ambition.

The Cairns Group is ready to engage constructively with all its partners. But to do so effectively we need assurance that everyone remains committed to an outcome that is consistent with the objective of fundamental reform as agreed at Doha. The United States says it is ready to cut subsidies and tariffs dramatically if others do. Let us see. The subsidy reductions it has proposed are not enough, but at least they show some ambition. What we need now is a matching commitment from Europe and Japan. The whole world would benefit if all three engage in liberalization.

If rich countries are to sustain prosperity, they must make greater efforts to address poverty in the developing world - poverty of resources and of opportunity. Trade supported by technical assistance is the most effective way of attacking this challenge.

This article was signed by the ambassadors or heads of delegation to the WTO of Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, New Zealand, Paraguay, Philippines, South Africa, Thailand and Uruguay.

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