Western states' agriculture subsidies operate against poor states: UNDP report

Human Development Report 2005 lashes at the agricultural subsidies given by western countries and also at WTO regulations, which operate against the poor countries.
The report, an annual feature of the UNDP, extensively explains how trade which has strong links with human development and global prosperity, has not been able to achieve this objective because of the persistent structural inequalities and unfair rules of the rich countries.
It noted that in some cases the inequalities widened. For instance, Sub-Saharan Africa became increasingly marginalised. The region, with 689 million people, accounts for a share of world exports smaller than Belgium with 10 million people. If it had enjoyed that same share of world exports as in 1980, its foreign exchange earning would represent about eight times the aid it received in 2003.
Calling for more attention to the terms of trade for integration of countries into the world market, the Report suggests that fairer trade rules would certainly help, especially regarding market access.
It says that the world's highest trade barriers are erected against some of the poorest countries. "On average, trade barriers faced by the developing countries vis-à-vis rich countries are three to four times higher than the trade within the rich countries themselves.
For example, the report says, the European Union sets great store by its commitment to open markets for the poorest countries, yet the rules of "origin" for trade preferences minimise such opportunities.
The report takes up the agricultural subsidies as a special concern. Two-thirds of the poor, with (average per capita income of) about one dollar a day, live in rural areas. Their livelihood is governed directly by the rules of agricultural trade.
The basic point to be addressed by WTO is rich countries' subsidies. Though in the last round, the rich countries promised to cut agricultural subsidies, in fact, these have been increased. Ironically, they spend just about $1 billion a year in aid for agricultural development in poor countries, and just over $1 billion a day on subsidising production at home!
A less appropriate ordering of priorities is difficult to imagine. To make matters worse, rich countries' subsidies are destroying the markets on which small holders in poor countries depend, driving down the prices they receive and denying them their share of the benefits of trade.
As an illustration, the report says that US cotton growers are receiving more than $4 billion a year in subsidies that exceeds the total national income of Burkina Faso, and this practice is putting the cotton growers of Burkina Faso in the worst situation.
Similarly, European Union's extravagant 'Common Agriculture Policy' (CAP) wreaks havoc on global sugar markets, denying the developing countries access to European markets. Rich country consumers and taxpayers are locked into financial policies that are destroying livelihoods in some of the world's poorest countries.
The report says that in some areas, WTO rules threaten to multiply the disadvantages suffered by the developing countries, and deny them the benefits of global integration. An example is the set of rules limiting the scope of the poor countries to develop the active industrial and technology policies needed to raise productivity and succeed in world markets.
Besides, the current WTO regime outlaws many of the policies that helped East Asian countries to make rapid advances.
It says that WTO rules on intellectual property rights pose a twin threat: they raise the cost of technology transfer, and, potentially, increase the prices of medicines, posing risks for public health of the poor.
In WTO negotiations on services, rich countries have sought to create investment opportunities for companies in banking and insurance while limiting opportunities for poor countries to export in an area of obvious advantage: temporary transfers of labour. It is estimated that a small increase in inflows of skilled and unskilled labour could generate more than $150 billion annually--a far greater gain than from liberalisation in other areas.
The Doha Round of WTO negotiations provided an opportunity to start aligning multilateral trade rules with commitment to human development and the MDGs. The opportunity has so far been wasted. Four years into the talks, and nothing of substance has been achieved. The unbalanced agenda, pursued by rich countries, and failure to tackle agricultural subsidies are at the core of the problem.
"In the WTO negotiations on services, rich countries have sought to create investment opportunities for companies in banking and insurance while limiting opportunities for poor countries to export in an area of obvious advantage," the report says.
It says that The Doha Round of WTO negotiations provided an opportunity to start aligning multilateral trade rules with a commitment to human development and the MDGs. It failed, because an unbalanced agenda was pursued by rich countries, and the core issue of agricultural subsidies was not tackled.
The report says that the emergence of new trading structures under WTO regime poses new threats to more equitable trade in agriculture, and supermarket chains have become gatekeepers to agricultural markets in rich countries.
"But small-hold farmers are excluded by the purchasing practices of some supermarkets, weakening the links between trade and human development," it adds.