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Last week, the former European Union Trade Commissioner and Chef de Cabinet to former European Commission President Jacques Delors, met Irish Agriculture Minister Mary Coughlan , at WTO headquarters in Geneva. Coughlan, representing one of the EU's wealthiest Member States, requested the meeting to impress on Lamy that no concessions should be made on farm import tariffs and subsides in the current trade talks, as concessions had already been made in the EU's 2003 Common Agricultural Policy (CAP) reform agreement in 2003. The new CAP system of direct payments (farm dole) provides Irish beef baron Larry Goodman with more than €500,00 annually for watching the grass on his estate grow, Some 3,000 Irish farmers are receiving farm dole of more than €40,000 annually and German, Dutch and British taxpayers are footing the bill. In 2004, Ireland received net funds from the EU Budget of €1.6 billion. The CAP reforms have been shown to primarily benefit big farmers (see section below). Coughlan's meeting with Lamy was merely a public relations exercise to impress farmers at home. Lamy met her as a courtesy but was hardly surprised with her self-interested case. In 2003, did Coughlan expect the US to offer to cut farm product tariff reductions by as much as 90 per cent? Here was a Minister from a country that had benefited enormously from tariff reduction on industrial goods to such an extent that 90% of Irish manufacturing exports are made by foreign-owned firms, arguing for the retention of high tariffs on farm imports. The World Bank says that 92 per cent of the benefit to Developing Countries from liberalising agricultural trade comes not from reducing subsidies but from cutting tariffs. The 2003 CAP reform "decoupled" payments from production but protective barriers for dairy, poultry and beef farmers continued. The EU regards these categories as "sensitive" areas and is refusing is refusing to cut the tariffs on them. New EU proposal
Peter Mandelson, the EU Trade Commissioner, said that the EU's “substantive, comprehensive and credible” offer “should bridge the sharply divergent interests in the membership of the World Trade Organisation”. However, some of the EU's main trading partners reacted without enthusiasm and said that the proposals contained exceptions for further European farm protectionism measures in key sectors such as beef and poultry. The EU said its offer would reduce European farm tariffs by an average of 46 per cent and reduce its highest tariffs by 60 per cent, compared with the 50 per cent cut tabled earlier this month. However, the US said the average tariff cut would actually amount to 39 per cent. A spokeswoman for Rob Portman, US Trade Representative said: ““From our early analysis, we are disappointed with the new EU proposal. While in some ways it is a step in the right direction and we acknowledge the EC’s efforts, much more needs to be done. First, the proposed tariff reductions are lower than proposals from the G-20 developing countries and far lower than the U.S. proposal. As concerning, the large number of exceptions for so-called sensitive products apparently has not changed from earlier EU proposals, and another element – the ‘pivot’ – actually walks back from their last proposal. Both of these elements would allow substantial loopholes to the relatively lower tariff cuts the EU has offered. If the final Doha agreement on agriculture were to go no further than this, other areas would also be weak and the Doha Round would not approach its potential for promoting development, opportunity and global economic growth.” The US criticised the EU's continued demand to maintain steeper tariffs on 8 per cent of its “sensitive” imports. The US and other countries have called on the EU to reduce the list of sensitive products to only 1 per cent of the total and have also set 54 per cent as the minimum average tariff cut that the EU should offer. Friday’s proposal came a day after Jacques Chirac, the French president, said at an EU summit in London that it was “out of the question for us to make another step” beyond the reform of the EU's Common Agricultural Policy that was agreed in 2003. Mandelson said that the trade round needed rapidly to move from an “agriculture only” negotiation to focus on other areas where the EU has more to gain, especially industrial tariffs and the opening of the services sector. He also put the onus on the US and others to improve parts of their agricultural offer, notably towards the world's 50 least developed countries. Economic Consequences of the Doha Round For Ireland Last month end, Alan Matthews and Keith Walsh, Department of Economics & Institute for International Integration Studies, Trinity College Dublin, produced a report Economic Consequences of the Doha Round For Ireland, that was commissioned by Forfás, the Irish State enterprise policy advice agency. Matthews and Walsh conclude: For Ireland, the results of further liberalisation are strongly positive. Two of the four simulations individually generate welfare gains, while agricultural trade liberalisation has a slightly negative effect on the overall economy as does improved trade facilitation. The gains from the liberalisation of service trade are particularly strong. This and the increased liberalisation of the industrial trade produce unambiguous gains for Irish welfare. The negative effect from agricultural trade liberalisation arises because gains in allocative efficiency from lower agricultural protection are offset by the loss of net transfers from the EU agricultural budget as export subsidies are eliminated. The small loss in welfare due to trade facilitation is driven by terms of trade effects from improvements in trade facilitation in other countries. Trade facilitation by Ireland itself has a positive impact on welfare. Coughlan is not interested in facts as Ireland's stance is driven solely by a combination of politics and the lucky situation that other European taxpayers are funding the farm dole payments to Irish farmers. World Bank Calls For 75 Percent Farm Tariff CutDeveloped countries must reduce their highest farm tariffs by 75 percent if the world's poorest nations are to benefit from a World Trade Organization attempt to liberalize agricultural trade, experts at the World Bank said this week.
WTO members will meet in Hong Kong December to finalise a deal that would lower global trade barriers in an attempt to lift millions out of poverty.
"Unless you have a 75 percent cut in the highest tariffs there would be very little outcome at all," Will Martin, lead economist of the World Bank development research group, told the Reuters news agency in an interview.
Market access, or lowering duties on imported farm goods, is a major issue of dispute. The
"A 50 percent cut in tariffs is nowhere near enough," he said. "The 75 percent would generate global welfare gains of about $75 billion out of a potential welfare gain of $182 billion if you had complete liberalization of agriculture."
Referring to figures from research just completed by the World Bank, Martin added this scenario envisaged no special protection for particular commodities, or politically sensitive products such as rice, sugar and dairy. The EU has proposed excluding 8 percent of sensitive products from tariff cuts.
"Once you've got to 8 percent you've given away the whole game," Martin said. Excluding even 2 percent of sensitive products from tariff cuts means "the welfare gains dropped from $75 billion down to $16 billion," he added.
Significant cuts in tariffs are required to make a real impact for less-developed countries, many of which depend on exports of agricultural goods to raise revenue, the World Bank says.
Because the rate at which tariffs are set is often much higher than the actual tariff applied, smaller cuts could bring down the symbolic tariff but not the real, applied one.
The tariff cap is "very important," Martin said. "As long as that covers the sensitive products it can really bring back a lot of the potential benefits. An all-encompassing cap of 75 percent would generate substantial benefits."
The new World Bank report has also found that removing cotton subsidies would allow Developing Countries to raise their share of global exports to 85 percent in 2015 instead of 56 percent, and would raise the export price of cotton.
"West African cotton is actually very competitive, both in terms of cost and quality," Uri Dadush, director of the World Bank International Trade Department, said in the interview.
"Yes, they have big competitiveness problems in terms of infrastructure. Yes, they have weak capacity. Even with weak capacity and weak infrastructure, they are actually competitive in that area, period, and the subsidies are hurting them."
While Developing Countries are under limited pressure in the current talks, Dadush said the World Bank's new $200 million to $400 million in trade assistance would help poor countries open their markets and navigate future trade negotiations. CAP main beneficiaries are rich big farmers New research has provided further support for UK Prime Minister Tony Blair’s call for Europe’s Common Agricultural Policy (CAP) to be reformed. It concludes that the current distribution of over €90 billion in farming subsidies will lead to even greater inequalities between rich and poor regions of Europe. In the first comprehensive study of the effect of CAP on Europe’s regions, a team from the Universities of Aberdeen and Newcastle upon Tyne has found that, even after the CAP reforms agreed in 2003-04, rich, core regions in Germany, the UK, France and the Netherlands are collectively taking a greater slice than poorer, peripheral regions in Spain, Italy, Poland and southern and central Europe.
Tony Blair is urging EU member states to reform the CAP, saying that more money needs to be directed away from farming production towards technology and research to boost Europe’s economy. He also says that the EU must act before 2013 - the end-year of the current CAP deal. In the new book, CAP and the Regions: The Territorial Impact of the Common Agricultural Policy, Professor Mark Shucksmith (now at Newcastle University’s School of Architecture, Planning and Landscape), Emeritus Professor Ken Thomson, College of Physical Sciences and Dr Deb Roberts of Aberdeen University’s Business School, base their conclusions on various official data sources on EU funding.
Currently, CAP subsidies are awarded from two pots, called Pillar One and Pillar Two. Pillar One, worth €90bn per year (€191 per man, woman and child), is made up of direct subsidies paid to farmers and the economic cost of ‘market price support’ - consumers paying higher prices for farm products. This overwhelmingly favours the prosperous, core regions, with large farms producing grain, milk and beef, rather than poorer, peripheral regions with smaller farms and products such as olive oil and wine. This is mainly because these measures are more used by the rich countries of North West Europe, who are more able to exploit the relevant Regulation.
Chirac issues veto threat on Doha trade talks with Ireland's support
Mandelson says trade talks are on "knife-edge" as Bono and Geldof remain on sidelines Mandelson rejects France and Ireland's claims on Doha Round trade talks at Luxembourg EU meeting Success of Doha Round trade talks dependent on EU/US agreement on farm product import tariff cuts Wolfowitz: Trade concessions critical for world's poor © Copyright 2007 by Finfacts.com |
