G-20 Ask Developed Nations to Eliminate Agriculture Export Subsidies in Five Years

NEW DELHI--Trade ministers from the Group of 20 (G-20) developing countries, including India, China, and Brazil, March 19 asked rich nations to eliminate all subsidies for agricultural products within five years of the completion of a Doha Round agreement.

In a statement, the G-20 said there could be no talk of opening developing country economies to foreign goods, services, and investment in the ongoing Doha Round negotiations, conducted under the World Trade Organization, unless rich nations ended farm subsidies and other forms of support that distort trade.

Indian Minister of Commerce and Industry Kamal Nath said developing countries are alarmed at the 'enormity of farm subsidies in rich countries, which creates artificial prices.' He said this practice drives millions of developing country farmers into poverty as their goods cannot compete with cheaper products in global markets. 'This has to be corrected,' he said.

Besides asking for an end to direct export subsidies, the G-20 asked the EU and other rich country governments to 'front load' their commitments to cut support, so that actual reductions begin sooner rather than several years down the road.

A draft text prepared in Geneva for the G-20 ministerial meeting in New Delhi March 18-19 called for a standstill on future export subsidy payments to ensure that they remain at or below current spending levels during the negotiations (51 ITD, 03/17/05) .

The G-20 emerged prior to the WTO's 2003 ministerial conference in Cancun, Mexico, under the leadership of Brazil to promote developing country interests as a counterweight against the United States and the European Union in the farm trade negotiations.

In its statement released March 19, the G-20 also asked rich nations to convert specific duties into ad valorem duties, which would make it easier to determine the real level of support given to farmers.

However, the draft text contained a bracketed paragraph (indicating noagreement) relating to the conversion of specific tariffs and other non-ad valorem tariffs into ad valorem equivalents (AVEs) for use in the tariff-cutting formula. The text stressed the importance of preventing the conversion from becoming a means to circumvent market access commitments and the need to subject the AVEs to WTO tariff bindings.

Oxfam Sees Coalition Likely to Grow

Nongovernmental organizations in New Delhi observing the two-day meeting of trade ministers from the G-20 praised the united stand on agriculture. They said the unity displayed by the diverse group of countries had put pressure on the European Union--the biggest giver of farm aid--and on the United States and Japan ahead of crucial global trade talks in December.

Celine Charveriat of Oxfam International said developing countries had laid the building blocks for 'an ambitious agreement on agricultural reform.'

She said the meeting of trade ministers in the Indian capital fostered 'trust and understanding at the ministerial level, which are two critical elements of a coalition.'

Charveriat noted that representatives of several other developing country alliances attended the G-20 meeting in New Delhi. She saw this as a sign that the group was ready to emphasize the demands of many more countries in global trade negotiations. For example, she said the G-20 had 'clearly supported' a call by West African nations for the United States and other major cotton-producing countries to spell out their respective positions on cotton subsidies.

In addition to Brazil, G-20 members are Argentina, Bolivia, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, the Philippines, South Africa, Thailand, Venezuela, and Zimbabwe. Uruguay joined last week.

WTO members agreed as part of their Aug. 1 'framework' package for advancing the Doha negotiations to eliminate export subsidies and other trade-distorting forms of export support by an end date to be agreed later in the negotiations.