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Business

Putting the Money where the Mouths are

At a conference in Bonn this week, free trade advocates urged industrialized nations like those in the European Union to dismantle farming subsidies they say directly contribute to world poverty.

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Harvesting coffee beans in Nicaragua, losing out on trade internationally.

Next month, the members of the World Trade Organization will meet in the resort town of Cancún, Mexico to discuss progress made so far on the dicey topic of farming subsidies.

The money countries like the United States and the member states in the European Union give to their farmers has long angered countries in the developing world and could now lead to the collapse of the "round" of trade talks begun by WTO countries in Qatar in 2001.

Critics say agricultural subsidies not only create an overabundance of food, they lead to lost business and poverty in third world countries, which without artificial support could often produce farm products more cheaply than richer nations.

"This is about the money in the shacks of the poor," said Joachim von Braun, director of the Washington-based International Food Policy Research Institute.

Braun was one of the speakers at a conference in Bonn this week, which sought to push the topic of agricultural protectionism to the top of the agenda when WTO ministers meet on September 10-14. Failure to do so could mean the failure of the "Doha Round" of talks and lead to serious consequences for the third world.

U.S., Europe trade jabs

Few observers dispute that developing countries in South America, Asia and Africa have suffered from the farm protectionism of industrialized nations, many of which pledged free trade at the trade talks in 2001.

International outcry greeted the passage of a bill by the U.S. Senate in May 2002 that gave more than $170 billion (€149 billion) in subsidies to American farmers over 10 years. Non-profit organizations, as well as the European Union criticized the U.S. for encouraging overproduction and reneging on the promises of the Doha trade talks.

Just one year later, the European Union came under criticism itself. The U.S. and roughly a dozen countries took aim at the Union's protectionist measures against the import of genetically-modified food.

Some EU countries are wary of possible long-term health risks induced by gm foods. The U.S. says Europe is contributing to poverty in Africa by not buying genetically-modified products, which are cheaper to produce.

The bitter war of words has so far produced only one clear loser, says Braun. Third world countries are overloaded with agricultural products "dumped" by industrialized countries who over-produce.


Farmers in developing countries are asking for the trade rules to be relaxed. Braun said that could bring in more than €30 billion.
"It's about opening more markets," he said at the Bonn conference. "It's about giving developing countries the chance to earn money on the agricultural market."

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