Ten years after the WTO came into existence, and after six ministerial conferences, developing countries have failed miserably to force the rich industrialised countries to remove even one dollar from the massive agricultural support they provide to agribusiness corporations in the name of farmers. Unable to make any dent in the citadel of unfair trade – farm subsidy of US $ 1 billion a day – developing countries have time and again taken refuge behind an illusionary smoke screen. After each of the ministerial conferences, they have returned ‘victorious’, and the price has been paid by millions of small farmers edged out of farming.

The recently concluded Hong Kong Ministerial (Dec 13-18, 2005) was no exception. Much excitement has been over the promise by developed nations to eliminate export subsidies by 2013. This is the first time developing countries have managed to get a mention of reduction in subsidies. Except, at present, export subsidies do not even constitute one per cent of the total support of US $ 360 billion that the richest trading block – 30 countries forming the Organisation for Economic Cooperation and Development (OECD) – provide for agriculture. In any case, FAO projects that export subsidies have been steadily on the decline, falling from US $ 7.5 billion in 1995 to US $ 3 billion in 2001.

False victory

Much excitement has been over the promise by developed nations to eliminate export subsidies by 2013.

But at present, export subsidies do not even constitute one per cent of the total support of US $ 360 billion that the richest trading block – 30 countries forming the Organisation for Economic Cooperation and Development (OECD) – provide for agriculture.


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EU provides 90 per cent of the global export subsidies. But over the years, it has very conveniently shifted the export subsidies to be part of the domestic support. Some estimates point out that EU does not shell out more than US $ 1.2 billion as export subsidies. As the French economist, Jacques Berthelot explains: "Formal export subsidies to EU cereals were reduced from Euro 2.2 billion in 1992 to 121 million in 2002. But domestic support in the form of direct payments that helped exported cereals rose from 117 million euros in 1992 to 1.3 billion euros in 2002."

Other subsidies to be eliminated as part of the promise to developing countries include export credits, guarantees and insurance in excess of 180 days. These pertain essentially to the US, which provides 95 per cent of such global export measures.

In return, developing countries have agreed to a "high level of ambition for market access in agriculture and non-agriculture goods." The text links the market access in both areas, stating that the "ambition is to be achieved in a balanced and proportionate manner." This is what exactly the developed countries had been keenly looking forward, and this is where the developing countries gave in. Step by step, developed countries have been able to get more market access from the developing countries, without showing an equal reciprocation.

Another key "achievement" developing countries are touting is the promise of elimination of much-maligned US cotton subsidies. Let me first make it clear, it is not cotton subsidies that the US has promised to remove by 2006. It is the export subsidies on cotton that the US is willing to do away with. In reality, as some estimates show, it does not translate to more than $ 30 million, which is not even a drop in the ocean for American cotton growers. In any case, the US provides barely 1.4 per cent of the global export subsidies.

Let me explain. For the 20,000 cotton growers in America, it will be business as usual. In 2004, US cotton farmers got federal support to the tune of $ 4 billion, which means $ 10.1 million a day. In 2005, UN Human Development Report 2005 states the cotton growers were paid an additional $ 700 million thereby jacking up the total subsidy to reach a staggering figure of $ 4.7 billion. It is this huge subsidy support, much of it considered non-trade distorting that actually causes the global prices to slump. Indian cotton growers or for that matter cotton farmers in western Africa are thereby priced out of the international market.

The 'accepted' position taken at the WTO on direct payment programmes is one that favours the US and the EU. These subsidies are considered non-trade distorting. This was agreed much earlier at the time of Marrakesh Agreement in 1994.