Agricultural trade - Sen. Edgardo Angara
--------------------------------------------------------------------------------
OPINION By Sen. EDGARDO ANGARA
--------------------------------------------------------------------------------
Fair trade is a crucial component in agricultural development. And rural development is critical to poverty alleviation in developing countries. Farmers of the developing world should be given a level-playing field so that they can ramp up production, and allowed a certain leeway to make their products more competitive through preferential and special trade agreements, and elimination of trade-distorting subsidies.
--------------------------------------------------------------------------------
Global trade in agriculture is unfair, skewed in favor of rich countries and against the poor.
Huge domestic support and export subsidies provided by developed countries to their farmers render the farm products of developing countries uncompetitive.
The total subsidy to agriculture in 2005 in OECD countries (the rich countries’ club) amounted to $385 billion, more than double the Philippines’ gross national product (GNP) last year, and over $1 billion a day. Developing countries like the Philippines cannot afford to provide its farmers the same subsidies that developed countries grant theirs.
As a result of this unfair trade regime, developing countries are inherent losers. Since its launch, the World Trade Organization (WTO) turned many countries from net exporters to net importers. In Asia’s developing countries, agricultural imports started exceeding exports by an average of 4 percent since 1994.
The Philippines, now considered one of the countries most vulnerable to the global rice crisis, was a net exporter of agricultural products pre-WTO membership. It enjoyed a trade surplus averaging $157 million a year from 1985 to 1994. Upon accession to the WTO in 1995, the country registered its first trade deficit in agriculture in a decade, and has never gotten over that slump ever since. Its export earnings grew 0.18 percent a year on average, while imports ballooned by 8.01 percent a year, with the trade deficit reaching $1.53 billion by 2006.
A study by Sandra Polanski of the Carnegie Foundation revealed that with the so-called propoor development programs under negotiation in the Doha Development Round, developing countries as a group will be net losers in agricultural trade while most of the gains will go to developed countries.
In its model, the World Bank simulated that middle-income countries will have a one-time loss of $500 million in real income in agriculture, while high-income countries will gain $18.1 billion.
This net loss means scarcer food and fewer livelihoods for people in the countryside, where poverty is most rampant. Seventy-five percent of the world’s poor reside in the rural areas.
Agriculture and rural development and international trade are strongly intertwined. The current unfair terms in agricultural trade, while beneficial for urban consumers, are driving farmers of the developing world into subsistence living.
Fair trade is a crucial component in agricultural development. And rural development is critical to poverty alleviation in developing countries. Farmers of the developing world should be given a level-playing field so that they can ramp up production, and allowed a certain leeway to make their products more competitive through preferential and special trade agreements, and elimination of trade-distorting subsidies.
E-mail: edgardo_angara@hotmail.com. Web site:
www.edangara.com.