Tuesday, October 18, 2005

Trade not aid (update)

At the recent UN World Summit Bush, among other important things, said:

We must work together in the Doha negotiations to eliminate agricultural subsidies that distort trade and stunt development, and to eliminate tariffs and other barriers to open markets for farmers around the world. Today I broaden the challenge by making this pledge: The United States is ready to eliminate all tariffs, subsidies and other barriers to free flow of goods and services as other nations do the same. This is key to overcoming poverty in the world's poorest nations.

It is a fact that trade and not indiscriminate financial aid will eventually help the developing nations to improve their economies and Bush has made the first step. Naturally, agricultural supports cannot be eliminated at once or unilaterally, so the United States has made a concrete and generous offer expecting Europe, who spends an enormous amount on subsidies, to reciprocate.

America has offered to cut by 60% the $19.1 billion (£10.8 billion) it spends on agricultural subsidies if the EU will cut its $75 billion of permitted subsidies by 80%. Moreover, America is proposing sharp reductions in tariffs on imported agricultural products, with the aim of eventually eliminating these tariffs and, indeed, all trade-distorting measures.

The eternal Janus, France, while pretending to be concerned about third world development and always quick to echo UN appeals to combat hunger and poverty, is furiously opposing it.

The European Union will test its commitment to reviving global trade talks instead of protecting its own farmers as France tries to keep the EU trade commissioner, Peter Mandelson, from giving away the store.

With global trade talks at a critical juncture, France has corralled European foreign ministers to a gathering here in a bid to block further cuts to European Union farm aid - a sticking point in the discussions. But the angry French reaction to Mandelson's proposal - which the United States has rejected as not ambitious enough - shows that a deal is far from assured.

Which is exactly what the French want:

EU trade commissioner Peter Mandelson said a French proposal to have all of his new negotiating initiatives vetted by a team of technical experts would halt the current round of WTO trade negotiations.
'If taken literally, that procedure would stop the Doha talks in their tracks,' Mandelson said at a press conference during an emergency ministerial meeting here.

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