U.N. Adviser: Africa Should Refuse Talks

Original Publication Date: 
18 July, 2005

NAIROBI, Kenya -- The United Nations' top poverty adviser said Monday that African countries should refuse to begin negotiations on a new round of world trade talks if rich nations do not cut farm subsidies and tariffs, as they agreed.

Meetings have been taking place this year in different countries to resolve difference between negotiators before the World Trade Organization summit in December in Hong Kong.

Trade officials have warned, however, that huge efforts are needed to reach agreements on tariff and agricultural-subsidy reductions before then.

Jeffrey Sachs, a top economic adviser to U.N. Secretary General Kofi Annan, said that existing tariffs meant cocoa-producing countries such as Ghana were unable to export chocolate to Europe and had to remain exporters of cocoa, used in making chocolate. European tariffs on raw material are lower than tariffs on final product.

He said that it was a similar case with cotton, an industry in which, for example, the United States spends $3 billion in annual subsidies to 26,000 cotton farmers.

'These farmers are averaging something like $140,000 per farmer of subsidies per year. They are growing subsidies, they are not growing cotton,' Sachs told journalists.

'One of the things that needs to be done is for Africa to say 'we're not signing on to another trade round if you don't get this right,'' he said. 'That's why the (WTO) meetings in Mexico stopped, because cotton subsidies played such a large part, and I think everyone's heard this now, that there needs to be a trading system that is decent and fair to agricultural production here (in Africa).'

Poor nations say subsidies in rich nations cause artificially low international prices and hurt farmers in developing countries because rich country producers are able to 'dump' their cheap cotton on the world market.

The current round of treaty talks _ launched in Doha, Qatar, in 2001 _ aims to slash subsidies, tariffs and other barriers to global commerce, and to use trade to help poor nations. The original plan was to conclude a new global trade treaty by the end of 2004, but a WTO conference in 2003 collapsed amid disagreements over agriculture and investment rules.

The WTO now hopes that an agreement at the Hong Kong conference will lead to a final treaty in 2006 or early 2007.

Sachs said that U.S. cotton farmers were subsidized because of their political muscle, not because anyone deliberately wanted to hurt African farmers.

'These are politically powerful interests in United States. They are not out to wreck Africa. That's the side effect,' he said. 'The core effect is politics, and these subsidies are illegal from the World Trade Organization point of view.'

In March, the WTO upheld a ruling condemning government help for cotton producers in the United States, saying that many U.S. programs included illegal export subsidies or domestic payments that were higher than the commerce body's rules allow.

The U.S. government is proposing to repeal a federal cotton subsidy in an effort to comply with the WTO ruling. The legislation would eliminate the government's cotton-marketing program, called Step-2, which makes payments to exporters and domestic mill users to compensate them for buying higher-priced U.S. cotton.

The United States has already altered three export credit guarantee programs to comply with the ruling. The alterations were intended to satisfy the WTO's finding against the guarantees, which help U.S. growers sell commodities by making financing available to foreign customers.