Source:
IMF - IPS
Mon Oct 31 2005
Press Release No. 05/243
October 29, 2005
Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund, and Mr. Paul Wolfowitz, President of the World Bank Group, issued the following statement today regarding the World Trade Organization's Doha Round negotiations.
"WTO member governments have the chance to move collectively toward more open markets, lifting millions of people in developing countries from poverty and boosting growth in rich and poor countries alike. This opportunity may be lost in the coming days unless key governments face down interest groups that would perpetuate high trade barriers benefiting relatively few at a cost to many. Failure would cast a shadow over the multilateral trading system and further embolden protectionists, at a time when the world needs cooperation rather than conflict.
"It is clear what needs to be done. At the heart of the Doha Round lies agriculture, and appropriately so. The sector remains riddled with trade distortions that penalize consumers everywhere and the many poor in developing countries who earn their living from it. Comprehensive and sharp reduction of tariffs in the largest countries will deliver the greatest development gains. Trade-distorting subsidies must also be cut, however, and not simply through technical maneuvers.
"Agriculture, important as it is, should not have a monopoly on this Round. The growth potential in other sectors is at least as large. All countries stand to make real gains from removing high tariffs that sap their competitiveness, and from reforming the inefficient services that act as brakes on their own development. Active and fruitful negotiations in services and manufactures are not simply a question of self-interest; they are essential to maintaining the balance of all countries' interests in the negotiations.
"Ambitious market opening in agriculture, services and manufactures must be accompanied by significantly increased aid for trade to help the poorest countries take advantage of new opportunities and cope with any adjustment costs. The Bank and Fund are working with donors and beneficiaries to make sure that more and more effective aid for trade is ready to support a Doha outcome.
"We urge all Doha participants to remember that trade reform is not a zero-sum game. It is a step toward enhanced opportunity and productivity that benefits all, and that can make a durable contribution to poverty reduction around the world.
"Some important progress has been made in the last few weeks. Success will now require key players to set aside their narrow interests, show flexibility and forge the ambitious Doha outcome that the world expects and needs. The stakes are too great to contemplate failure."
IMF and Bank press for cut in farm subsidies (IPS)
by Emad Mekay
The World Bank and the International Monetary Fund (IMF) have joined forces to call for a cut in global agricultural subsidies and push for successful global trade talks at the already stalled World Trade Organisation meeting in Hong Kong in December.
In a joint statement on the so-called Doha round of talks, the heads of the IMF and the World Bank said that a breakthrough in the meeting could lift millions of people in developing countries from poverty and would boost growth in rich nations.
Rodrigo de Rato, the managing director of the IMF, and Paul Wolfowitz, president of the World Bank, said in their statement that "interest groups" stand to gain from the failure of the meeting and that global trade diplomats should ignore their pressure.
"This opportunity may be lost in the coming days unless key governments face down interest groups that would perpetuate high trade barriers benefiting relatively few at a cost to many," the chiefs of the two institutions said.
"Failure would cast a shadow over the multilateral trading system and further embolden protectionists, at a time when the world needs cooperation rather than conflict."
The two Washington-based institutions say that agriculture, which lies at the heart of the World Trade Organisation (WTO) round, remains a major obstacle to the full liberalisation of trade, which they both advocate.
Developing nations like Brazil and India complain that industrialised countries heavily subsidise their farmers, making their products artificially cheaper in the global market and hurting farmers in developing nations.
There are 2.5 billion people around the world who rely on agriculture for their livelihood, and figures from international financial institutions show that world poverty is still concentrated mostly in rural areas.
Rich nations say they want more liberalised markets in developing nations, and that significant cuts in agricultural tariffs and subsidies should be part of a more comprehensive deal that would open more markets for their goods and services.
The European Union, Japan and the United States provide massive support to their agricultural sectors -- more than 250 billion dollars every year.
According to the international charity Oxfam, 78 percent of subsidies in the United States alone go to the largest eight percent of producers. It says that loopholes in the U.S. rules allow mega-farms to collect payments of more than a million dollars while smaller farmers both in the country and overseas are driven into bankruptcy by low commodity prices and high land costs.
Both the IMF and the World Bank report that the global agricultural sector remains riddled with trade distortions that penalise consumers everywhere and the many poor in developing countries who earn their living from it.
"Comprehensive and sharp reduction of tariffs in the largest countries will deliver the greatest development gains. Trade-distorting subsidies must also be cut, however, and not simply through technical maneuvers," the two organisations said.
The IMF and the World Bank, two of the most important architects of the current global economic system, have long argued that getting agriculture out of the way will open the way for the liberalisation of other services and products, especially those coming from rich countries to developing nations.
"We urge all Doha participants to remember that trade reform is not a zero-sum game," the statement said. "It is a step toward enhanced opportunity and productivity that benefits all, and that can make a durable contribution to poverty reduction around the world."
The United States moved the stalled talks slightly forward earlier this month when it floated a proposal to cut parts of its subsidies and tariffs. However, Washington made the deal contingent upon aggressive reforms from other WTO member countries.
The United States says it is willing to slash its subsidies, but wants the EU and Japan to cut their farm payments by more than 80 percent since they pay out more subsidies than the United States.
The EU, under pressure from France, which gives its farmers the largest support, has said it can only go as high as 47 percent.
Moreover, calls from institutions like the IMF and the World Bank have faced stiff opposition in the U.S. Congress, which must approve most agriculture reforms.
On Friday, the House Agriculture Committee voted on a budget reconciliation effort that slashed funding for some local programmes but did not touch agricultural subsidy programmes, especially those that civil society groups and developing nations say hurt family farmers in the United States and threaten the livelihoods of farmers in developing countries.
"The opportunity was there to reform a system rife with loopholes that has allowed mega-farms to collect subsidies that exceed one million dollars," said Charly Moore, legislative director for Oxfam America. "What's worse is that not only did the committee take a pass on reforming subsidies via budget reconciliation, they slashed anti-hunger and conservation programmes instead."
The House deficit-reduction measure would cut one billion from commodity programmes, including the removal of a federal cotton marketing subsidy in 2006.
But although the deal removes some support for U.S. cotton, it is still a far cry from total compliance with a WTO ruling in March that declared all cotton subsidies illegal under international law.
The WTO ruling was in favour of Brazil and some West African cotton-producing nations who challenged several types of U.S. agricultural support measures, including financial backing for cotton farmers.
The Brazilians have said that the U.S. Congress has failed to comply with the WTO ruling and that they are left with few other options but to consider retaliation through ignoring intellectual property protections.
"While the administration has said they are committed to ending trade distorting subsidies, both the House and Senate Agriculture Committees do not seem poised to make a similar commitment, instead signaling to U.S. trade negotiators that touching subsidies is off the table," Moore said.
On the other hand, some civil society groups have said that the WTO setting is the wrong one for dealing with important issues like agriculture and food.
The WTO, they say, considers in its rules that food should be treated like any other good or commodity, and that it should come under the force of the market like computers, cars and other products.
The IMF and the World Bank, both seen by critics as backing the industrialised nations that are trying to crack developing nations' resistance to expanding global trade, have not objected to that definition. Instead, they continue to call for trade liberalisation on all fronts.
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