OECD agriculture reform process is like New Year resolutions

Geneva, 16 Jan (Chakravarthi Raghavan) - The OECD member countries should first reform their agriculture support and trade policies, giving high priority to reducing border protection - both high tariffs and the export subsidies - the Paris-based Organization for Economic Cooperation and Development has said in a study adopted in December by member-governments and presented to agriculture trade negotiators and the media in Geneva this week.

The OECD Director for Food, Agriculture and Fisheries, Mr. Stefan Tangermann, in presenting and explaining at a media briefing an executive summary of the publication, ‘Agricultural Policies in OECD countries: A positive reform Agenda’ (which has been on the OECD web site for some time), was hard put to explain why if member countries had agreed to the report, he had to come to Geneva to inject it into the WTO’s Agriculture trade negotiations.

Earlier, the chair of the OECD Joint Working Party on Agriculture and Trade, Mr.  Jonathan Knott of the United Kingdom, in introducing Tangermann and the report said that the OECD committee had approved the report in December and it had been presented to trade negotiators here.

At one point, the hard-pressed Tangermann, likened the adoption of the report (with a lot of analysis, but no recommendations) but non-implementation via policies of the OECD member-government to the New Year resolutions of a smoker to give up smoking (but never does).

While the report, and Mr. Tangermann’s presentation laid great emphasis on reducing border protection (tariffs and export subsidies), it was less forthright on domestic support, beyond arguing that domestic objectives should be pursued through ‘decoupled’ payments, targeted payments and reduced overall support.

Nor could Tangermann explain why the theory of unilateral liberalization and the welfare theory of economics that the OECD, the WTO and others promote for developing countries were not being adopted by the OECD member countries who approved the report, and why such a reduction needs to be ‘negotiated’ at the WTO.

The OECD countries, he said, had spent $310 billion in support to agriculture in 2001 - through the budget and also high prices by consumers - but could provide no estimate or analysis of the effects of the US farm bill or the EU’s support policies.

Most of the poverty, Tangermann said, was in the developing world, and it needed greater access to markets in the industrialized countries to enable them to tackle poverty.

The OECD team had come to Geneva to present it to agriculture trade negotiators here because “OECD governments respond to trade negotiators,” he said.

The OECD analysis of the reforms needed had no time-frame for implementation, Tangermann said. Nor was there any clear analysis or study about the influence of the transnational trading corporations who benefit the most from the support policies in agriculture and influence policy.

While the OECD had distinguished between ‘effective’ and ‘inefficient’ domestic policies, and promoted the former, “we have not suggested that there are policies of domestic support that do not have an effect on international trade.”

However, it was important to recognise that different types of payments have enormously different effects, he argued.

Said Tangermann, the OECD secretariat has made no analysis of the negotiating proposals of the OECD countries in the WTO agriculture trade talks - neither that of the US, the EU nor of Japan and other OECD member in the agriculture trade talks.

Tangermann was also asked about the ‘fungibility’ of money, whether by income or wealth, provided to farmers (in any form) through support, and the impracticality of distinguishing between border protection (tariffs and export subsidies) and domestic support in terms of agricultural competition among suppliers.

How for example could cotton farmers of Brazil or India be expected to compete in production and exports with US cotton farmers receiving so much domestic protection?

Would it not be unfair and unjust to ask India or Brazil or any other developing country to cut their border tariffs - the only measure of protection they had against unfair subsidised competition, since they could not provide export subsidy or budget de-coupled domestic support to their farmers?

There was no clear answer from Tangermann.

The OECD official spoke of tariff protection and export subsidies going hand in hand and need to cut both., but could not answer questions about the inequity and unfairness of focussing on these two and thus acting unfairly against developing countries.

Mr. Tangermann was also questioned, but could give no information, about the attempts to separate border protection from domestic support, and distinguishing between support for ‘effective domestic policies’ and inefficient production supports that benefit only the large traders and corporations. – SUNS5264

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