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U.S. Still Massively Subsidizing Crop Exports & Impoverishing the Developing World

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Published on Wednesday, June 15, 2005 by Inter Press Service

Oxfam Accuses Wealthy Nations of Cheating

by Gustavo Capdevila

GENEVA - The industrialized world is acting with "duplicity" in the WTO Doha Round trade negotiations, which threatens to turn the whole round of development talks into a farce, according to the international humanitarian organization Oxfam.

The non-governmental group warns that with the way the negotiations are currently proceeding, the Doha Round will end up allowing the wealthy nations to continue the practice of dumping, or exporting goods at prices below the cost of production.

"Rich countries are dodging the commitments they have made to reduce subsidies that hurt poor farmers overseas," said Celine Charveriat, spokeswoman for Oxfam's Make Trade Fair campaign.

The Doha Round of negotiations was launched at the 4th Ministerial Conference of the WTO (World Trade Organization) held in the Qatari capital in December 2001, with the aim of promoting further opening of international markets.

Since then, the talks have come up against countless obstacles and even moments of complete stalemate, as was the case at the 5th WTO conference in September 2003 in the Mexican resort city of Cancún.

The Doha negotiating agenda encompasses various components of trade, such as industrial tariffs, services, trade facilitation and fundamentally agriculture, the subject of a new study released by Oxfam on Wednesday.

The document focuses particular emphasis on Europe and the United States, which "claim to have cut their subsidies over the years but to date, there has been no substantial reduction, merely a re-labeling of existing support," noted Charveriat, the head of Oxfam International in Geneva.

The research conducted by the humanitarian agency established that since 1986, the beginning of the previous series of trade negotiations known as the Uruguay Round, the assistance provided to farmers in the industrialized nations has consistently remained at levels of over 250 billion dollars annually.

In particular, Oxfam has calculated that the EU and the United States are massively understating the real levels of export subsidization.

The United States provides hidden aid that is 200 times greater than the amount it declares, to the tune of 6.6 billion dollars annually, says Oxfam. For its part, the EU pays out 5.2 billion dollars in secret assistance - four times more than the sum it acknowledges in the WTO.

Export subsidies are only one of the many forms of support given to farmers in the industrialized countries, which have been classified into different "boxes", the Oxfam representative explained.

Only payments that fell into the amber box, that is, the category for subsidies that were unequivocally trade-distorting, were liable to be cut during the Uruguay Round.

Green box exemptions are support measures that were considered non trade-distorting, while blue box exemptions were the category used for payments that were trade-distorting, but included an element of production

But the Oxfam report reveals that instead of making substantial cuts to its domestic support measures, the EU and the United States have merely re-classified the subsidies they provide in a practice known as "box shifting".

Subsidies that previously fell into the amber box and were thus subject to elimination have been moved into the blue or green boxes, for measures that are minimally or non-trade-distorting.

Argentine WTO representative Alberto Dumont remarked that "one of the problems we are coming up against in the negotiations is what is known as box shifting, or the moving of subsidies into different boxes."

This operation consists of changing measures from amber to blue, and moving programs that are now in the blue box into the green box. "In fact, we are adapting trade realities to the situation in the United States, since we are creating another box specifically for that country," said Dumont.

In other words, there is going to be a modified blue box, he explained.

Given this situation, Charveriat warned that "the rich countries could even increase their massive agricultural subsidies if world trade negotiations do not change track."

The Doha Round will face a decisive test in December, when the 6th WTO Ministerial Conference in Hong Kong assesses the current state of negotiations.

Dumont said the alliance of countries pushing for a greater freeing up of agricultural trade, known as the Group of 20 (G-20), have issued firm proposals to prevent box shifting and press for an actual reduction of domestic support.

The G-20, formed in the days prior to the Cancún conference, deals solely with agricultural trade issues and is coordinated by Brazil and India.

The Argentine WTO negotiator noted that the G-20 is also demanding changes in the criteria for green box measures, so that they solely include income supports for farmers that are not related to (or are "decoupled" from) production levels or prices.

The Oxfam report released Wednesday calls on the 148 WTO member states to set an end date of 2010 for export subsidies. The organization is also demanding recognition of the right of poor countries to protect vulnerable sectors as long as dumping continues.

Charveriat stressed that alongside development aid and debt relief, trade reform is crucial to help end poverty in the developing world.

© Copyright 2005 IPS - Inter Press Service