5 March 2007

Africa: U.S. Farm Subsidies Hurt Africa's Progress

"We need to maintain pressure on the U.S. to remove agriculture subsidies because this is an impediment to our development," said Moody Awori, Kenya's Vice President, when opening a one-day meeting in the capital Nairobi, Friday.

'The removal of these subsidies will be a clear demonstration of the ability of the multilateral trading system to respond positively to the genuine cry of the many poor African farmers who live on less than one dollar a day," he said.

The 20 trade ministers, who met under the auspices of the 53-member African Union (AU), called on the United States to indicate when it would stop subsidising its farmers, as the Doha round of World Trade Organisation (WTO) negotiations get close to conclusion in 2006. This round began in 2001 at a WTO ministerial conference held in Doha, Qatar. The negotiations seek to reduce trade barriers and make trade fairer for developing countries. The talks subsequently continued in Cancun, Mexico, Geneva, Switzerland and Hong Kong, China in 2003, 2004 and 2005 respectively. But they failed to make any headway because agricultural protectionisms, including providing agricultural subsidies to farmers, have continued to be observed in rich countries.

The European Union (EU) has also urged the United States to tackle the issues around subsidies. Critics contend that the EU reform on subsidies is still disadvantageous to poor countries which cannot afford to subsidise their farmers to produce more, let alone quality products. According to Oxfam, an international charity, between 1999 and July 2005, American producers of cotton received more than 18 billion dollars in U.S. subsidies.

"The market value of this production during this same period was $23.39billion. This translates into a subsidisation rate of 86%, which means for every dollar received by cotton farmers from their sales, they received an additional 86% in subsidies," it said. According to the charity, African countries have lost more than $350million in potential export revenue as a result of depressed world prices in the last two years.

"For some very poor countries, achieving progress on cotton offers the biggest opportunity of the Doha Round. With 20 million African farmers, dependent on cotton for their livelihoods, you can understand why. But, since this issue emerged in 2002, there has been virtually no progress. Everyone knows what needs to be done: there is no excuse for delay, this cannot be brushed under the carpet,' said Celine Charveriat, head of Oxfam International's Make Trade Fair campaign, in a statement late last year. The Nairobi meeting also urged Africa to resist any measures imposed on it. 'Africa has a right to insist that an outcome of the Doha round of negotiations that does not take adequate account of its major interests and concerns will not be acceptable," Elizabeth Tankeu, the AU Commissioner for Trade and Industry, told the gathering.

Agriculture subsidies are not the only headache Africa is grappling with. At the WTO ministerial meeting in Hong Kong in 2005, members adopted a provision that seeks to reduce and eliminate tariffs, especially on products of export crucial to developing countries. African civil society groups have warned that Africa and other developing countries rely on tariffs for industrial development, as well as for government revenue.

"We reiterate our call to African governments not to undertake further commitments to reduce their tariffs on products that are essential for food security, the protection of small farmers' livelihood and income, and for rural development and poverty eradication," said a memorandum presented to the Nairobi trade ministers meeting. The document was signed by about 50 organisations. Tariff cuts have led to an influx of cheaper imports that have threatened local production. In Kenya, for example, the dairy sector has been a casualty for a long time. All, but one milk processing plants closed down, resulting into a surge in imported milk products in the 1990s and in 2001. This prompted the government to raise the tariff on imported dairy products in 2002 from 35 to 60% to protect local production.

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