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Will the rich world sacrifice its sacred cows

Daniel Sternoff in New York

If rich nations genuinely want to stamp out the global poverty that sows the seeds of terrorism, world leaders gathered in New York say they will have to slaughter a few sacred cows.

Dairy cows, that is.

They will also have to sacrifice subsidies of rice, cotton, sugar, wheat and other farm products that leaders of developing nations say deny them a fair share in exporting agricultural products.

"Instead of aid, we need greater market access," Ecuador's finance minister, Carlos Julio Emanuel, told Reuters on the sidelines of the World Economic Forum in New York.

"Will the industrialised countries pass from rhetoric to action and actually put into place those ideas of a free market?" he asked.

Narrowing the yawning gap between rich and poor emerged as a central theme at this year's WEF summit, held just three miles (5 km) from the wreckage of the World Trade Center.

The proximity to Ground Zero has appeared to focus the minds of leaders of Group of Seven industrial nations, with officials such as French Finance Minister Laurent Fabius urging rich nations to be more generous toward the developing world in the name of global stability.

But G7 officials, who have tried to focus the development debate on issues such as debt relief and foreign aid, have shown considerable discomfort when asked to do what poor nations say matters most: Open up their farm markets.

A senior US official, asked point-blank at a closed-door session attended by ministers from developing nations when America was going to reduce barriers to textile and farm imports, just waffled. He only spoke about awaiting the outcome of three-year trade talks launched in Doha in late 2001.

The head of the World Trade Organisation, Mike Moore, bluntly told the WEF that the Doha round would fail without a farm deal that assists poor countries.

France's Fabius dodged a reporter's question about whether his country, a top beneficiary of European Union subsidies, was willing to open its markets.

LITTLE URGENCY ON BREAD-AND-BUTTER ISSUE

Rich countries, where agricultural lobbies are powerful and organised, have shown little sense of urgency in addressing the issue. The European Union is not due to mount a large-scale review of its program of agricultural subsidies until well after the Doha talks are supposed to conclude.

"They must urgently take the hard political decisions to abandon protectionist measures that affect our countries," said Ecuador's Emanuel.

While rich nations have carried the banner of freer world trade in services and manufactured goods, they have dragged their feet on agriculture.

Farmers are often seen as guardians of a mythic national identity, and many nations protect their farm sectors in the name of ensuring food security.

They are a power to be reckoned with. French farmers are known for blocking highways with tractors when their subsidies are threatened. Britain has a Countryside Alliance fighting to save farms.

And in the United States, the Bush administration has just proposed a 78 per cent increase in agricultural spending, including more money for subsidies.

Both houses of Congress want to add $5 billion a year to grain, cotton and soybean subsidies as well as release additional billions of dollars whenever returns to farmers from sales and subsidies were below targets set by law.

But it is agriculture that offers poor nations the greatest hopes of growing their way out of poverty.

A WEF task force on agricultural trade report released on Monday said that OECD nations spent $327 billion supporting domestic farmers in 2000, dwarfing agricultural exports from developing nations of some $170 billion.

Agriculture accounts for more than one-third of all economic activity and 65 per cent of the work force in low-income countries, compared with only 2 per cent of the economy and 5 per cent of workers in the richest nations, the report said.

Freeing up agricultural trade should expand global farm activity by some $250 billion by 2015, of which $150 billion would accrue to poor nations, the task force found.

Peruvian President Alejandro Toledo said rich nations needed to recognise that scrapping farm subsidies was not an act of charity, it was just good business.

"By building that bridge to the developing world, industrial countries are expanding their markets," Toledo said.

"When you have 54 per cent of a country living below the poverty line, and 16 per cent below the extreme poverty line, that's a wasted market if you look at it from a business point of view," he said.

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