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«PATRICK A. MESSERLIN 1/ August 2002 INTRODUCTION WTO negotiations in agriculture have embarked on a wild roller-coaster. In accordance with Article ...»

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Food safety groups (FSGs) are similar to EGs with two differences. First, during the recent years, they have been more easily captured by farmers’ lobbies than EGs–as best illustrated by the panic about unsafe food always presented as a synonym of foreign food (in fact, many European FSGs are run by farmers). However, recent food crises (mad cow, foot and mouth disease) have shown to the European population that domestic farmers are not more careful about health safety than foreign farmers undermining the general credibility of FSGs. Second, food safety raises more difficult issues than the environment, both from an economic point of view (what is the effective validity of the principle of scientific evidence and of the precautionary principle?) and from a legal perspective (how to manage the subtle relationships between technical standards, rules of origin, and labeling?).

The second kind of NGOs are those with a much broader portfolio of interests because they are interested in “development.” The wide scope of the issues they address makes these NGOs much more difficult to be captured by farmers’ lobbies from the OECD countries. But they are less immune to farmers’ lobbies from the developing countries (DCs), as illustrated by their support to the introduction of a “Development Box” in the Doha Round which would exempt DCs from WTO rules in order to “protect DC poorest farmers.” It is beyond the scope of the paper to examine the “Development Box” proposal in detail, and what follows presents only three comments. First, there is no need for such a Box if the Doha Round focuses on the peak barriers in agriculture, as it should. In such a case, protectionist OECD countries would reduce their own barriers by (much) more than DCs would reduce theirs. This observation assumes that DC farm support (tariffs and other border barriers, subsidies granted to and taxes imposed on farmers, this last element being often important in DCs) is (much) lower than OECD farm support–an assumption which seems plausible for many DCs. In such a scenario, the overproductions created by the current OECD farm trade policies will be reduced, and markets will induce DC farmers to produce more.

Second, most development-oriented NGOs are unlikely to be satisfied by this first argument because they see the Development Box above all as an instrument in favor of the poorest farmers. But, a key lesson to be drawn from the history of all OECD farm policies is that they have been introduced with the same focus on poorest farmers–only to turn, progressively but inexorably, to be a subsidy machine for large farmers, a machine of exclusion for small farmers (for instance, one may argue that the CAP has accelerated, not reduced, the rural exodus [Johnson 1995]) and a machine for increasing food prices at the detriment of the poorest of the poor, that is, the poor consumers who have not even a piece of land to cultivate. Farmers’ poverty would be much better addressed by appropriate income transfer policies, and/or by the re-allocation of the least efficient poor farmers to other activities–a growth path that the Development Box would artificially inhibit. (Addressing poverty in rural areas may be best achieved by industrialization, inducing the currently most efficient and largest farmers to stay in agriculture, while inducing the currently least efficient and poorest farmers to leave agriculture to become workers in manufacturing activities, with the same or higher income level than the richest farmers, as illustrated by the European growth of the 1950s and early 1960s). Using trade policies which can be so easily captured by the most powerful domestic vested interests (which almost surely include the richest farmers, and exclude the poorest farmers) is an almost certain recipe for not achieving the poverty eradication goal.

The Development Box may echo a last argument, generally only indirectly mentioned by the NGOs.

It is the rapidity of the changes which could be brought by trade liberalization in agriculture. In fact, there may be reasons for such concerns. But in this case, the problem should be addressed as directly as possible– that is, by fine-tuning the pace of the liberalization under the Doha Round.

SECTION 4. CONCLUDING REMARKS

This brief survey of the domestic political economy associated to WTO farm negotiations shows that the major task is still ahead for the OECD countries which, Australia and New Zealand excepted, are major culprits of the high level of protection still prevailing in “agricultures” (the plural underlining the fact that protection varies hugely between the least and most protected farm products). The task is particularly daunting for the U.S. and the EC which are yet largely prisoners of their dinosaurian farm policies, dating from the 1930s (at this time, their farm sector was dominated by homogeneously small farmers).

The paper focuses on the coalitions which could be helpful for WTO negotiators. Support from individual final consumers and taxpayers is far from being guaranteed–the former because consumers are spending less and less on food (hence less induced to oppose a costly protection), the latter because taxpayers support, more or less willingly, non-trade concerns, such as environment or food safety, that they tend to associate to domestic farmers. Recent evolutions, such as food crises revealing that domestic farmers are relatively careless about the health of their compatriots, or massive pollutions due to domestic farm production, may induce individual consumers and taxpayers to become more supportive of freer trade. But such a change of attitude will take too long for offering strong support, on time, to the Doha negotiators who look at the years 2003-2006 for the completion of the Round–because of the commitments of the Doha Ministerial, and much more importantly because of domestic agendas (such as the renewal of the U.S. farm Bill in 2008, and the EC enlargement in 2005-2008).





As a result, trade negotiators should look at other allies. A natural candidate is a powerful group of consumers–the agribusiness industries for which a reduction of the still high protection of their products under the Doha Round requires a corresponding reduction of protection in their farm inputs.

Trade negotiators should also talk to farmers–hence sharpen their arguments. The key point seems to be the distinction between small and large farmers–the latter being, by far, the main beneficiaries of the current farm protectionist policies. One could reasonably argue that small farmers contribute little to the existing chaos in world farm production and trade–hence that they could continue to benefit from public support (based on pure income-support schemes, likely to be much more efficient in terms of income transfer capacity than the current instruments of protection) without any serious damage for the world trading system.

Farm liberalization will thus essentially concern the vested interests of the large farmers who, in terms of power, size and income, are not different from manufacturers to the point to deserve a treatment different to the one imposed on businessmen in manufacturing during the last fifty years of liberalization in this sector.

Doha negotiators should focus, as much as possible, on the peaks of protection in order to make as uniform (close) as possible the level of protection faced by the different “agricultures.” This objective will ensure that farmers will be induced to invest in the right crops or animals–that is, those in which they have comparative advantages, not in those for which they enjoy the highest protection. Any attempt to get an early harvest by liberalizing the least protected farm products (and pressures on trade negotiators to do so will be enormous because an early harvest will be politically much easier than an uniform policy) will make future farm liberalization extremely difficult because it will push all farmers in the same highly protected sectors– with ultimately huge costs of adjustment in case of further liberalization. In this perspective (and for taking into account fears of adjustment capacity in developing countries) it would be much better to envisage longer deadlines for implementing a higher level of uniform protection than to adopt shorter deadlines for more limited commitments in the most protected agricultures.

This survey leads to a final astonishing conclusion. The key information useful for such a coalitionbuilding exercise is rarely available. Total, producer, and consumer supports to farmers in developing countries are not available, though it is crucial information for the fairness of the negotiations between OECD and developing countries (which have very different ways to protect their agricultures). Similarly, detailed information on the inefficiency of the existing instruments of protection, on the distribution of large farmers in key countries, etc., are rarely available–particularly at the politically crucial level of the member-states of the two dinosaurs (U.S. and EC).

REFERENCES

Abare. 2000. U.S. and EU Agricultural Support: Who Does It Benefit? October. Current Issues. Canberra:

Abare.

Anderson, Kym. 1994. Multilateral Trade Negotiations, European Integration, and Farm Policy. Economic Policy. April. No.18.

Blandford, David. 2000. Oceans Apart? Reaching an Understanding on Farm Policy between the European Union and the United States. Mimeo. University Park: Pennsylvania State University.

Chambre Régionale d’Agriculture de Normandie. 2001. Organisation Mondiale du Commerce: Sensibilité des Filières Agroalimentaires Normandes. Caen: CRAN.

Diakosavvas, Dimitris. 2001. The Uruguay Round Agreement on Agriculture in Practice: How Open are OECD Markets? Mimeo. Directorate for Food, Agriculture and Fisheries. Paris: OECD.

Haskins, Christopher. 2002. The Seeds of Reform. Personal View (July 9). Financial Times.

Johnson, D. Gale, 1995, Less Than Meets the Eye: The modest impact of CAP reform, Trade Policy Unit, London: Centre for Policy Studies.

Messerlin, Patrick A., 2001. Measuring the costs of protection in Europe: European Commercial Policy in the 2000s, Washington: Institute for International Economics.

OECD. 2001. The Uruguay Round Agreement on Agriculture: An Evaluation of its Implementation. Paris:

OECD OECD. 2002. Agricultural Policies in the OECD Countries: Monitoring and Evaluation. Paris: OECD.

Tangermann, Stefan. 2001. Has the Uruguay Round Agreement on Agriculture Worked Well? Mimeo.

Directorate for Food, Agriculture and Fisheries. Paris: OECD.

Table 1. Total support, value added and labor in agriculture, and food in total consumer expenses, selected countries and years

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