Cross Subsidizing Political Groups in the Name of Agriculture - Essay Example

Cross Subsidizing Political Groups in the Name of Agriculture Politics is continued to play the major role in the international trade negotiations. Irrespective of developed, developing and least developed status, countries have been trying to block a genuine international trade regime. These politically motivated hurdles were the fate of not only the Hong Kong Round of Doha development talks but also all previous rounds. We had seen a large protests and processions consequent to every talk. There is lot of lobbying for and against the trade negotiations inside and outside the international trade bodies. It is not economics, but its impact on domestic politics was the major cause for each and every countries. They grouped together on regional base to protect, manage and block any adversaries, which affects major forces in their particular countries such as farmers, traders and other demographic groups. It was the fourth Ministerial conference of the World Trade Organisation held in Doha (Qatar) on November 2001 set the further course of the future development of the WTO: It has launched a new round of trade negotiations called the Doha Development Agenda (DDA) aiming at further trade liberalisation and new rule-making. It has given more commitments to strengthen international trade of developing countries and help them to improve their total trade by implementing exisiting agreements. It has also decided to interpret the Trade Related Aspects of Intellectual Property Rights (TRIPS) to ensure members’ rights. The Doha Development Agenda has a wide ambition to take the WTO into a new face of growth. Its major objectives were improving conditions for worldwide trade and investment by putting enhanced and specific rules and enable developing countries to play a much fuller role in the pursuit of economic growth, employment and poverty reduction. It wanted to place a strong base for an international corporate governance agenda and the promote f sustainable development.The Doha round negotiations has also aimed at lowering trade barriers around the world and make fair and transparent trade practices for developing countries. But from the beginning itself talks stumbled Agricultural protectionism was a major cause of difference of stand between the two sides. The intention of the talk was make fair international law for a balanced trade approach for developing countries.This round could not fetch any results as there was no agreement on farm subsidies and market access.But it also decided to further continue talks in next negotiations. The Ministerial Declaration launching the Doha Development Agenda reflects the "broad agenda" and the focus on development.: It mandates negotiations on agriculture, industrial products, services, intellectual property (geographical indications, TRIPs and Health), the "Singapore issues" (investment, competition, transparency in government procurement and trade facilitation), WTO rules (anti-dumping, subsidies, regional trade agreements) and trade and environment ( Doha Development Agenda, European Union and WTO, Trade Issues, http://europa.eu.int/comm/trade/issues/newround/doha_da/index_en.htm) European Unions sys that its primary objects in the WTO were multilateral trade rule making, market opening, the integration of developing countries in the world trade system and the improvement of the functioning of the WTO It has believes that doing away with high tariffs, tariff peaks and tariff escalation will significantly increase trade opportunities between North and South EU points out that market access negotiations on services would help in improving market opportunities for business as well as benefits to consumers world-wide. Bit it stood against general deregulation or privatisation of sectors where principles of public interest are at stake. Eoropean Union’s stand was that Doha Development Agenda succeed only if development opportunities of individual members, makes a tangible contribution to international efforts in favour of sustainable development and increases in coherence of action between the WTO and other international organisations such as the World Bank, the United Nations Conference on Trade and Development (UNCTAD) and the International Monetary Fund. http://europa.eu.int/comm/trade/issues/newround/doha_da/index_en.htm) The lack of progress on developing countries' concerns puts at risk the entire trade agenda set at the 2001 WTO meeting in Doha. While European and Union and other developed countries insisted on further liberalise the market opening in developing countries, it has strongly opposed any moves to cut short subsidies existed in their region. This decision was more political than trade related. There have been strong protest movements by farmer groups in these markets against any change in the existing subsidy policy. There are enough reasons to believe that a fair international trade was not possible if developed world continue with its protectionist postures. It was against the basic principles of level playing field. The competitive advantage of the developing countries should not be challenged by the subsidy policy of the developed block. The last one decade has seen a tremendous effort from the developing countries going for substantial efforts to make structural changes in their economies as part of reform agenda. Elimination of export subsidies , reductions in, and tighter criteria for, domestic "trade distorting" subsidies in developed countries, reduction of tariff peaks and standardization and rationalization of food safety and processing requirements In this back ground there should have been some efforts from the developed world to genuinely address the concern of the developing world. Any how Doha meet was failed in reaching at any concrete step before the next talk. In the year2003, Members again get together at Cancún to forge concrete agreement on the Doha round objectives. The focus of Cancun negotiations were on agriculture, industrial goods, trade services and custome codes reforms. But again the developed world and developing world fight on agriculture sector.Here also rich countries’ farm subsidies suchas European Unions’s Common Agriculture Policies and US governments agro subsidies were the major road block. A group spearheaded by G4 nations consist of China, India, Brazil and South had vehemently opposed the G20 nation’s policies on agricultural subsidies.These accounts for approximately 65% of the world population, 72% of its farmers and 22% of its agricultural output. But in the Ganeva Round held in August, 2004, there has been some movement for the talk.. It had achieved a framework agreement on opening global trade. The U.S., EU, Japan and Brazil agreed to end export subsidies, reduce agricultural subsidies and lower tariff barriers. Developing nations agreed to reduce tariffs on manufactured goods, but gain the right to specially protect key industries. The agreement also provides for simplified customs, and stricter rules for rural development aid. (http://en.wikipedia.org/wiki/Doha_round) Next time when Members joined together in Paris, there have been concrete efforts to make tangible progress in the talk before WTO meeting in Hong Kong on 2005, December. There need to reach at some agreemnt before 2007 when US fast track legislation expires. If this legislation is not place it would be difficult to get a senate ratification.. Due to domestic political issues again played a major role in delaying decisions. But in Hong Kong in December 2005, the picture was little different. Trade ministers of Member countries had reached a deal and fixed a deadline for eliminating subsidies of agricultural exports by 2013. The important decision asked industrialized countries to open their markets to goods from the world's po orest nations. (http://en.wikipedia.org/wiki/Doha_round) It was a fact that Europe’s agricultural subsidies are a major cause of worry for the fair international trade practices. It is said that European countries are offering huge dividends to farmers and agriculturalists. According to figures available Northern countries are subsidizing their farmers at a rate of about $250 bn a year. It is clear that agricultural subsidies in developed countries reduce world prices and affect the competitveness of the farmers in other areas. It is accused that US and the EU were using the rules of the World Trade Organisation 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 £20bn a year, and the US by £5bn. (Larry Elliott, economics editor, Wednesday June 15, 2005, The Guardian) According to Oxfam's report, rich countries have been redefining subsidy tactics rather than reducing subsidies.It says that overall farm support in developed countries has not changed substantially from 1986.The report also says that rich countries will not eliminate export subsidies until 216. It reveals the US pays out the equivalent of $6.6bn in hidden subsidies a year to its farmers - 200 times more than it declares to the WTO. The EU pays $5.2bn, four times the reported amount. (http://www.guardian.co.uk/guardianpolitics/story/0,,1506687,00.html) From these revelations it is clear that developing countries have been making major road block of the international trade negotiations to support some domestic political groups. The developed world, who is making large benefits out of their competitive advantage in technology, know how and knowledge level have been cross subsidizing the agriculture sector. The major challenge for the international trade regime is this kind of protectionism. The developed world should try to improve its competitiveness by using technology and other structural adjustments rather than resorting to back door petty political tactics. A fair global trade will always helped developed world not less developed world. Reference: http://pubs.wri.org/0-pub-4141.html http://www.cfr.org/publication/9445/blend_of_strong_measures_puts_trade_talks_back_together.html http://www.guardian.co.uk/guardianpolitics/story/0,,1506687,00.html http://europa.eu.int/comm/trade/issues/newround/doha_da/index_en.htm Read More