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Draft Paper – Not to be cited without author’s permission

compensate farmers for low profit or negative profit margins. While the U.S. and EU officially endorse slashing subsidies, in practice they have been very reluctant to do so, and have often resorted to what critics and Southern governments perceive as disguising trade-distorting subsidies as non-trade distorting ones. Thus the subsidy issue has played a key role in many failed trade summits. Farmer organizations, on the other hand, and many trade economists, see the subsidy issue very differently. They point to studies showing that even if all Northern trade distorting subsidies were removed tomorrow, excessively low crop

and livestock prices would still pervade global importantly, farm groups make a critical, yet between what might be termed “inappropriate and

commodity markets.

Just as

often

overlooked,

distinction

wasteful

subsidies,”

and

other

components of public boosted for legitimate

sector services environmental,

and budgets that need to be maintained or economic and rural development purposes,

and to maintain cultural activity.

the fundamental viability of Unfortunately, say farmers,

farming as the current

an economic, tendency is to

social and “throw the

baby out with the bathwater,” as lumped wasteful practices under eliminated.

legitimate government services are typically the rubric of subsidies to be slashed or

  • Export Subsidies This is another major bone of contention, but one in which apparent U.S. and EU concessions recently help re-start stalled WTO negotiations. According to WTO logic, these nations, especially the EU, have massive subsidies for exporters (largely agribusinesses and not farmers), which are heavily trade distorting. The US has long used export credits—not included in the WTO’s technical definition of export subsidies—to evade the export subsidy issue and point the finger at the EU. In the 2004 July framework, however, the

    • U.

      S. in principle accepted the possibility of eliminating the “trade-distorting element” of export credits–, and both the U.S. and EU agreed for the first time to place the possible elimination of all export subsidies on the negotiating table .

Dumping

Although

there

are

technical

disagreements

and

confusion

over

its

definition, in general dumping refers to export products to third countries at prices below the cost of production, though sometimes it has been defined at prices below those in the home market. The point is that when foreign products enter a local market at prices below the cost of production, local farmers cannot compete and are driven off the land and into deepening poverty. It is thus classified as a prohibited, anti-competitive practice by the WTO. However, loopholes in the technical definitions, and costly and bureaucratic procedures for enforcement, have meant that typical anti-dumping cases are brought by the U.S. or the EU, and

rarely reality comes

by poorer countries, despite the widespread perception and underlying

that to

the latter are the more frequent victims of dumping,

food

and

agriculture.

While

Southern

country

especially when it governments see

dumping as a and subsidies

very important in the actual

issue, they give it lower priority negotiations. This highlights a

than market access critical distinction

within the broader category of farmers and an underlying the levers of political power. Every country in the Third

difference in access to World is characterized

9

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