Inter Press Service | August 22, 2001 | By Mario Osava
RIO DE JANEIRO - Brazilian economists, scoffing at recent calls for liberalization of agricultural markets in Europe, the United States and Japan, say that the failure of developed countries to open their doors to farm imports reveals a double standard of practicing protectionism at home and preaching free trade for others.
Economist Jos Eli da Veiga of the University of Sao Paulo, says there is little hope that developing countries will be successful in winning the elimination of barriers -- primarily in the form of farm subsidies -- that stand in the way of free-flowing global agricultural trade.
Protectionism in this sector is the basis of the positive economic performance that has allowed the countries of North America, of the European Union (EU) and of East Asia to ensure abundant food supplies for their citizens, while hunger affects much of the rest of the world.
The protectionist policies, consolidated over several decades, respond to "demands for local development and social cohesion" and have never taken into account matters of international competition. This will not easily be changed, commented Da Veiga, an expert in U.S. agricultural history. His view is that it is "naive" to believe in the possibility of altering the central matters of farm policy in the EU or the United States in the next few decades, whether attempted via a new round of world trade talks or, much less, through negotiations between regions or trade blocs.
But the distortions existing in world agricultural trade, with its high-barrier markets and its low prices resulting from subsidized production, at least constitute a strong argument for the nations of the developing South in their fight for a trade system that benefits them more than the current one, he said.
For his part, international law and economics expert Durval de Noronha Goyos said the outcome of the Uruguay Round of multilateral trade talks, which led to the creation in 1995 of the World Trade Organization (WTO), was a major defeat for countries like Brazil, India and Indonesia.
As a result of the rules approved under the WTO regimen, subsidies are "technically legal, though immoral," and the countries of the South lose 80 percent of the claims brought before the WTO Dispute Settlement Body, while the EU and the United States are victorious to the same extent, said Noronha Goyos, a dispute arbitrator at the Geneva-based organization.
Nevertheless, developing countries still have a chance of achieving changes to their benefit if a new round of multilateral talks is launched, itself a matter to be resolved by the WTO's Fourth Ministerial Conference in Qatar this November, said another University of Sao Paulo professor, Marcos Jank, in agreement with Noronha Goyos.
The United States and the EU have already made it clear that they will not negotiate areas like farm subsidies in the discussions for setting up trade accords with the nations of Latin America, said Jank, author of a new study about U.S. agricultural policy and its effects on world trade.
Washington emphasized this stance with respect to the creation of the Free Trade Area of the Americas (FTAA), which is to extend from Canada to Chile, and, like the Europeans, has set related limits in its talks with Mercosur (Southern Common Market -- Argentina, Brazil, Paraguay and Uruguay), he pointed out.
Furthermore, the United States and the EU have taken decisions that aim at maintaining, or even increasing, their internal farm subsidy levels.
The United States plans to boost its farm supports by 73 billion dollars over the next decade, according to new agricultural legislation. Since 1990, government assistance for local U.S. agro-production has increased four-fold, reports Jank.
For its part, the EU disappointed Mercosur in July when it proposed speeding up talks to liberalize trade but did not incorporate effective changes in its farm policies, maintaining quotas and barriers that restrict the entry of South American agricultural products.
The Brazilian experts explain that the financial power of the industrialized North allows it to sustain its inefficient agricultural sector. Farm subsidies in the 30 wealthiest countries reached 360 billion dollars in 1999, according to a report released in April by the Organization for Economic Cooperation and Development (OECD).
The OECD study indicates further that 90 percent of that sum is concentrated in the EU, United States and Japan.
Trade liberalization in recent decades led to a decline in tariffs on imports of manufactured goods to an average of just four percent, but that process did not extend to agricultural goods, which continue to be taxed at an average rate of 40 percent, concedes the Paris-based OECD, a group of 29 wealthy nations.
As a result of the liberalization process, the participation of developing countries in the global trade of industrial goods doubled in the last 20 years to stand at 28.8 percent, but it stagnated at 40 percent for agricultural trade, the sector in which the South is most competitive.
Within this framework, Brazil has made a poor showing. Its insertion in global trade actually declined during the last decade.
"The country is de-globalizing" just when the globalization process is accelerating, commented Theotonio dos Santos Junior, professor of world economy at the Federal Fluminense University of Niteroi, near Rio de Janeiro.
Dos Santos Junior commented that the problem lies in the fact that countries like Brazil, dependent on foreign capital, do not have sufficient financial resources to subsidize local food production.
As such, they are obligated to export "out of necessity, in order to pay their foreign debt," and not as part of a development policy -- and this is a reality that deepens internal and external economic imbalances, he said.
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