Agricultural subsidies harm own consumers

In the wake of the collapse of the World Trade Organisation's Doha round of trade liberalisation talks in Cancun there is one unilateral step President Bush should take. That would be to announce that the United States is phasing out subsidies for agricultural production and export, says Clyde Prestowitz, president of the Economic Strategy Institute.

While the United States and other developed countries of Europe and Asia have preached free trade, in the area of agriculture, where 70 percent of developing countries make their living, they have practiced protectionism and subsidization:

  • For example, the North American Free Trade Agreement (NAFTA) was supposed to open U.S. markets to Mexican products so that Mexican people would not find it so necessary to enter the United States themselves.

  • Yet as a low-cost sugar producer, Mexico still finds itself virtually locked out of the U.S. sugar market.

    Even more egregious is the case of cotton:

  • In Muslim West Africa it costs 23 cents to produce a pound of cotton, while in the Mississippi Delta of the United States the cost is 60 to 80 cents.

  • Yet the U.S. growers are driving down world prices and literally killing the West Africans by dumping huge amounts of cotton on world markets at prices far below their cost of production.

  • They do they do this by receiving $3.5 billion in subsidies from the U.S. taxpayer.

    Cutting subsidies unilaterally would help U.S. consumers and set a tremendous example that would break the logjam holding up the Doha round. And it would help preserve the principles and framework of nondiscriminatory global trade, to which this country has long been committed, says Prestowitz.

    Source: Clyde Prestowitz, Cut the Farm Subsidies, Washington Post, September 29, 2003.

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    FMF Policy Bulletin\7 October 2003
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