Bush to Drop Farm Subsidies if EU Does the Same

[Vicsun]

http://www.timesonline.co.uk/article...679916,00.html

I'll drop farming subsidies if EU does the same, says Bush
By Steve Bird and Helen Rumbelow
President issues challenge to leaders with claim that opening markets to Africa would reduce the need for aid

PRESIDENT BUSH yesterday challenged EU leaders to scrap massive subsidies paid to their farmers, saying free trade with Africa would eliminate the need for Third World aid.

Mr Bush, on the eve of the G8 summit in Gleneagles, said that Europe paid “tremendous” agricultural subsidies, and that the US was ready to drop its own payouts to American farmers if Europe had the courage to do the same.

Mr Bush’s challenge — in an interview with Sir Trevor McDonald to be screened by ITV tonight — is likely to be rejected not only by France and Germany, but by many in his own country. But it appeared to be a bold rhetorical step by his Administration to get the world’s richest nations away from talk of aid and toward free-market solutions in the quest to alleviate poverty in Africa.

Asked directly if America would drop its subsidy system if the EU abandoned the Common Agricultural Policy (CAP), Mr Bush said: “Absolutely. And I think we have an obligation to work together to do that.

“Because if we do achieve this business of free trade, and if markets in the West are opened up to countries in Africa, they could be so successful, they could eliminate the need for aid. The benefits that have come from opening up markets — our markets to them and their markets to us — far outweigh the benefits of aid.”

Mr Bush’s call to scrap agricultural subsidies in the developed world follows that of Tony Blair, who recently said the system of over-generous subsidies was “hypocrisy” that could no longer be ignored.

Farmers in developed countries receive more than £150 billion in subsidies, which Mr Blair said gives them an unfair advantage which holds back Africa’s poorest nations. He has also suggested that the CAP, which is fiercely defended by President Chirac of France, should be abandoned as part of a complete overhaul of the EU’s finances.

Mr Bush added: “Let’s join hands as wealthy industrialised nations and say to the world, we are going to get rid of all our agricultural subsidies together. And so the position of the US Government is, we are willing to do so, and we will do so with our fine friends in the European Union.”

A senior source close to the British G8 negotiating team last night welcomed Mr Bush’s comments, saying he had delivered a “major challenge to the European Union”. He added: “Mr Bush has just upped the pressure. The seeds are there of a potential breakthrough.” The British, he said, were last night in talks aimed at persuading the G8 to wipe out all export subsidies in the next five years.

Peter Mandelson, the European Trade Commissioner, said: “Don’t underestimate the vested interests. But we have seen reform take place before. The Common Agricultural Policy in Europe has seen considerable reform over the past decade and it can go on.”

Gordon Brown said that, in the longer term, reform of global trading rules, with the removal of distorting tariffs and subsidies, would allow African countries to grow their economies. However, he was criticised for saying that some of the fundamental pillars of a new deal for Africa — 100 per cent debt relief for the poorest countries and a doubling in aid — were now already in place.

Oxfam and ActionAid said that the deals fell short of what was required and urged the G8 leaders to take a further step. “Given the events of this weekend, there are millions of people expecting G8 to come up with something extraordinary, and this isn’t it,” an Oxfam spokesman said.

A spokeswoman for ActionAid, one of the members of the Make Poverty History campaign, welcomed Mr Bush’s comments. “The subsidies have been extremely damaging and if the G8 leaders can agree to end that system it will be an important move towards making poverty history and something the billions of people who watched Live 8 are demanding.”

Both Mr Blair and Gordon Brown have been pushing to emerge from Gleneagles with an agreement for Africa to trade its way out of poverty. They want a formal agreement ratified at the World Trade Organisation talks in Hong Kong in December.

Mr Brown is also due to announce the launch of a fund to pay for life-saving vaccines for children in Africa. He hopes to announce that five million lives will be saved in Africa by vaccinating against measles, TB and polio. The Chancellor has secured funding from Bill Gates, the Microsoft founder, as well as Scandinavia and Italy.

I'd be really happy if I wasn't convinced it's a bluff the EU won't call. The CAP needs to go; if not for Africa's sake (despite it being one of the absolutely best things that can happen to them at this point), then for Europe's and America's. Few systems are as grossly inefficient and downright wasteful as 'our' agricultural subsidies.

[C Elegans]

Originally Posted by Vicsun

Few systems are as grossly inefficient and downright wasteful as 'our' agricultural subsidies.

Don't even get me started on Europe's agricultural subsidies. Unfortunately I am convinced we will never learn whether Shrub bluffs or or not since I believe the EU would prefer to sink in the Atlantic rather than allowing a free market for agricultural products.

[Dottie]

Originally Posted by Vicsun

I'd be really happy if I wasn't convinced it's a bluff the EU won't call. The CAP needs to go; if not for Africa's sake (despite it being one of the absolutely best things that can happen to them at this point), then for Europe's and America's. Few systems are as grossly inefficient and downright wasteful as 'our' agricultural subsidies.

Certainly agree about all points here. While I think that Blair and some other might actually consider it I having a very difficult time seeing Chirac make such a move.

[fable]

Originally Posted by C Elegans

Don't even get me started on Europe's agricultural subsidies. Unfortunately I am convinced we will never learn whether Shrub bluffs or or not since I believe the EU would prefer to sink in the Atlantic rather than allowing a free market for agricultural products.

Agreed. Too many votes in certain nations that have gotten used to those agricultural subsidies over the years. I'm sure Bush knows that as sensitive as the EU is right now to the recent constitution rejection, they're not about to drop farm subsidies. And as for Bush, this has his usual air of grandstanding when engaged in a bluff. Typcially, when he really wants something accomplished, he goes about it in a sneaky, quiet, backroom manner, then reveals it to the public as a fait accompli.

[jopperm2]

I saw a great deal of ag subsidies being abused during my ubbringing in the agricultural midwest. I'd hate to see my lovely homeland go to waste, but my conservative pocketbook morals say pull the plug. I'm sure it won't happen though.

[fable]

Originally Posted by jopperm2

I saw a great deal of ag subsidies being abused during my ubbringing in the agricultural midwest. I'd hate to see my lovely homeland go to waste, but my conservative pocketbook morals say pull the plug. I'm sure it won't happen though.

I doubt the Republicans in Congress from the Midwest and South would ever approve it, Jop. As much as they scream continuously for Free Trade, they'll line up in favor of protectionist policies when it concerns their states and their presence in Congress. And of course, Bush is the same. He wouldn't dare have said this if it stood a chance of passage, because it could have cost the Republicans the the Congress in 2006, and the White House in 2008.

[Cuchulain82]

This step alone, of dropping farm subsidies, has the potential to change the global economic reality more than any other single action in the world. I'm really not overstating this, but unfortunately I don't have time to expound.

[giles337]

I think dropping subsidies and quotas can only be a good thing. At the moment, for example, it is cheaper for a farm to tip spare (i.e, above quota) milk down the drain than to over produce.

[Lestat]

With half the money that goes into the CAP currently, you could probably pay all the adjustment costs for farmers in Europe. Especially since most of the money goes to a few big farmers and the agro-industry. BTW I thought I read somewhere that Prince Charles is one of the biggest recipients in England of EU farm subsidies. I'll try to find that...

[Lestat]

From the Economist June 19th 2003 (long live search engines and my memory)

The commission also wants to cap the amount that the largest farms receive, so ending the anomaly of the wealthiest landholders, such as England's Prince Charles, doing particularly well out of the CAP.

The full article (still relevant):
http://www.economist.com/displaystor...ory_id=1859183

[Aegis]

It's NAFTA all over again. Talks to scrap farm subsidies were discussed between Canada and the US during the initial penning of the NAFTA agreement (amongst other things). Many of these things, Canada accepted in faith that American business and administrative groups would do the same.

As it stands now, American business has done little to hold up their end of the bargin, leaving Canadian industry and agriculture a frail shadow of what it once was, not to mention having taking American business to court numerous times on such issues (soft timbre, produce, Alberta beef, Maritime potatoes. The list can go on.)

In this particular case, I don't think the EU should back down in the CAP program, and they should use Canada as an example as to why not.

[Lestat]

Originally Posted by Aegis

In this particular case, I don't think the EU should back down in the CAP program, and they should use Canada as an example as to why not.

Well I think we should... and at the least it we should reform it:
- because it is a friggin' waste of money that could be better used
- because it makes Europeans pay a higher price for foodstuffs (and that hits the poor the most since they spend a higher percentage of their disposable income on food than the rich).
- because it distorts world trade in agricultural products and depresses prices on the world market. This hurts countries in the developing world the most since agriculture is a far bigger part of their economy. It would help Africa more than all the aid money that is poured into it now (if they grasp the opportunity).
- because it doesn't do what it is supposed to: help struggling European farmers. 80% of subsidies go to the 20% biggest farmers (see article I posted).
- because Chichi likes the CAP (and that is why it won't get reformed, sadly enough ).

[Chanak]

Originally Posted by fable

...And as for Bush, this has his usual air of grandstanding when engaged in a bluff. Typcially, when he really wants something accomplished, he goes about it in a sneaky, quiet, backroom manner, then reveals it to the public as a fait accompli.

The actions of his administration agree with you, fable. My first impression when learning of this from a newscast is "it's a bluff." The farm subsidies in the US has been a scandalous, wasteful affair for far too long, thanks to representatives of those interested in seeing these continue being in Congress (there are no partisan lines with this issue, interestingly enough). This is classic absurd Dubyah.

As the neo-cons fancy themselves a corporate "world leader", they should lead the way by ending this waste of taxpayer's money here in the US with no ballyhoo until it's done. *Then* approach the EU - that move would have much more effect. Of course, if anyone thinks this would actually happen, I would advise you to wake up out of that dream.

[Fiona]

I would be grateful if someone could explain all this to me. Obviously most of the people who have posted here know about farm subsidies and are against them. It is not clear to me why they are seen as clearly bad and I would like to know more of the arguments. In particular:

I see that 80% of the subsidy goes to large Agribusiness farms. Is this true in every country which gives subsidy? Is it possible that this is only true in countries where other pressures have led to centrilisation in agriculture. For example that process followed the "cheap food" policy pursued in the UK before that country joined the EU. That was nothing to do with the CAP but it did meant that when Britain joined the large farmers benefited most as they were also the biggest sector in the business. Could the CAP work better if it was implemented before that change had started ?

In France I have noticed a very wide range of food options and a diversity of outlets even in the smallest places. This does not exist in the UK where small villages and towns; and even poor parts of cities are food deserts where little is available and what there is is expensive. What role does the CAP play in this difference?

If food subsidies are removed then what evidence is there that food prices will fall. On the face of it this doesn't make sense to me since the costs of importing food are surely fairly fixed. If a country cannot produce what it needs it must import. Even leaving aside the environmental impact and the uncertaintly of the subsidies to fuel which lead to imported food being artificially cheaper than the real cost, it seems possible that food prices will rise, not fall. At least in some years. In the UK this would mean that the poorest could not afford even the very poor diet they eat at present. What proportion of any savings would have to be spent to raise low wages and benefits to compensate for this ?

[Lestat]

@ Fiona: check out the link to the article, it answers quite a few of your questions. The viewpoint is clearly of the freetrade liberal sort, so if you are leftleaning, you might be offended . But it explains things in a nutshell and in a way that is comprehensible, even without having a background in economics.

If questions still remain, then we'll have to start a course in Agricultural & International Economics.