Washington, DC -- New data by the International Food Policy Research Institute (IFPRI) demonstrates the harm that trade-distorting agricultural policies of the wealthy nations countries cause the economies of poor countries, as a key deadline for WTO negotiations on agriculture draws near. Industrialized country subsidies and protectionist policies cost $26 billion annually in lost agricultural and agro-industrial income, and displace about $40 billion of net agricultural exports per year from developing countries. Policies of European Union countries cause over half those displacement effects; somewhat less than a third are due to U.S. policies; Japan and other high-income Asian countries cause another 10 percent.

Nearly three billion people live in rural areas of developing countries. Eighty percent of people in sub-Saharan Africa struggle to survive on less than $2 a day. IFPRI research indicates that for Sub-Saharan Africa alone, liberalization of agricultural policies in industrialized countries would add $2 billion dollars annually in agricultural and agro-industrial income. The actual harm to poor countries is greater than these numbers indicate, as lost agricultural income effects other sectors of the economy.

These results come as the March 31 deadline for WTO negotiators to agree on a framework for agricultural trade is approaching rapidly. Negotiations are deadlocked and it is unlikely that agreement will be reached.

What's at stake is how much - and when - the industrialized nations and developing countries will be willing to give up trade distorting measures. OECD countries spent $311 billion to support agriculture in 2001, which hurts farmers in developing countries and taxpayers and consumers in wealthy countries. The combination of agricultural protectionism and high subsidies in industrialized countries has limited agricultural growth in the developing world, increased poverty, and weakened food security in vulnerable countries.

Poor nations also need to consider their own policies. Several developing countries, such as India, Uganda, and El Salvador, have expressed concern that further agricultural trade liberalization could create problems for their large and predominantly poor agricultural populations. They need to protect the livelihoods of poor producers from sudden negative impacts resulting from unfair trade practices such as subsidized exports, and from import surges. Therefore, poor countries have argued for a slower pace in reducing their own tariffs on the premise that industrialized countries should first eliminate their higher levels of protection and subsidization.

Insisting in a rigid sequence in which wealthy countries first eliminate all of their own distortions seems a sure recipe for stalemate. Even so, developing countries seem justified in asking for significant down-payments in the reduction of protection and subsidies in industrialized countries. Furthermore, the final agreement should include other helpful proposals, such as providing longer transition periods for food-insecure countries and establishing mechanisms to manage unfair trade practices and shocks in vulnerable countries.

Clear progress in the negotiations - including a focus on addressing the needs of developing country farmers - would have important benefits for poor and hungry people. Unfortunately, however, much distance must be covered to reach agreement before the end of March. The rift between the United States and members of the European Union over the situation in Iraq may exacerbate existing differences on agriculture policies. This would not only affect the March 31 deadline, it could even threaten the success of the WTO meetings in Cancun in September. The fates of millions of people in developing countries throughout the world depend upon WTO representatives putting aside their differences to reach a fair agreement on global agricultural trade.

For more information, contact:

• Michael Rubinstein, 202/862.5670
  m.rubinstein@cgiar.org