Wednesday, July 05, 2006

EU is the bad guy in world trade

Latest OECD data on agricultural subsidies shows that by far the greatest culprit is Europe. In 2005, the European Union spent nearly US$134 billion on propping up its agricultural sector. These subsidies generated around one-third of the average farm’s income. Don’t forget most of these are sucked up by large farms, including ones owned by the British Royal Family and others who can hardly start to argue they deserve to money taken from others.
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The United States, typically pointed out to be the bad boy spends LESS THAN ONE-THIRD what the European Union spends, at just short of US$43 billion. This is 44% of the EU’s budget. Although the US is the third biggest agricultural subsidiser, after Japan which spends US$47.4 billion on securing votes for the Liberal Democratic Party by propping up inefficient rice farmers. Fourth is South Korea, spending US$23.3 million on pretty much the same as Japan. Interestingly the only OECD country to significantly increase subsidies since 1988 has been Turkey, which has seen the proportion of farmer’s income supported by subsidies increase from 15% to 25%
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So why doesn’t Oxfam storm Brussels? It does call for reform, but it is muted compared to its call for aid. Why isn’t Bob Geldof and Bono damning France, the primary culprit in this? The Bush Administration is very keen on cutting subsidies as long as it is done multilaterally, and France in the EU says it has “done enough”. No it hasn’t, not by a very long shot.
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It is time for all those give a damn about reducing poverty in developing countries to tell the EU and France in particular to move – to abolish export subsidies, cut subsidies for the “old” EU states by 70%, to the same level now offered the new EU accession countries (Hungary, Poland etc) immediately and abolish non-tariff barriers to agricultural imports. Do that, it would challenge the US to do the same and it would almost certainly wake up the developing world to open up its markets in manufactured goods.
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and yes, New Zealand does have the moral highground on this, as subsidies in New Zealand are comparatively non-existent.

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