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Double unfair

What will the government and the Trade Campaign respond to the challenge from Brazil's President Lula da Silva?




(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)

By: Mekonnen Germiso, Head of Research, The Future in Our Hands, Magnus Bjørnsen, Joint Council for Africa and Helene Hoggen, Global Economy Counselor, Norwegian Church Aid

[essay] When Brazil's President Lula da Silva visited Norway in September, the Norwegian government's subsidy policy was challenged. Lula's challenge is linked to the negotiations on agricultural commodities in the World Trade Organization (WTO), where there is a constant movement.

The subsidy policy that rich countries, including Norway, are currently leading is doubly unfair. Poor countries do not even have the opportunity to use subsidies, either because the World Bank has imposed such demands on them or because they simply cannot afford them, and in addition, their own markets are destroyed by foods that the EU and the US dump at a price poor farmers cannot compete with. Although we have some understanding that the government rejects Lula's challenge, this highlights a dilemma in Norwegian agricultural policy that must be taken seriously.

Paving the way for dumping.

The subsidies Norway supports in the WTO thus pave the way for continued massive dumping of agricultural products from rich countries in poor countries' markets. It is interesting that this is done with broad support from the organization coalition Trade Campaign (HK), in which both the Development Fund and the Bondelaget participate. Against this background, we now want to challenge HK in addition to the government on what solutions they promote in the subsidy debate. Like the Norwegian government, HK rejects Lula's challenge. HK thus upholds its previous call on the government to "reject the lead in new rounds of negotiations for further cuts". We find it difficult to see how this can be combined with the distinction between subsidies for exports and for domestic consumption, which HK has said they support.

The government has previously proposed that the subsidy problems can be solved by distinguishing between subsidies for domestic consumption and for export. This proposal is supported by HK. We also support such a separation, but we are concerned that neither the government nor HK has specified what they themselves believe. The problem is that no one in the rich part of the world has so far presented any proposal for how the current subsidy problem can be solved. A necessary tool is the poor countries' ability to politically protect their own markets. Here we completely agree with HK. But we do not think such room for maneuver is sufficient. We must also work to ensure that subsidized goods do not end up on the world market at all.

Constructive proposal.

However, a constructive proposal, which could lead to a real distinction between the two types of subsidies, has come from a larger group of developing countries, led by the G20 countries (the G20 includes countries such as South Africa, Tanzania, the Philippines and Brazil). They propose a full review of the "green box" to ensure that these subsidies are not really export-driven. In other words, make sure they are nothing more than what they claim to be. The EU and the US, with support from Norway, have long opposed the proposal.

The UNCTAD report "Green Box Subsidies" (2007) shows that reducing or eliminating green box subsidies will lead to a significant increase in exports from developing countries including the least developed countries (LDCs) (up to 20% increase), and correspondingly declining exports from rich countries. countries such as the EU and the US (up to 60% decline). UNCTAD thus shows how today's green box subsidies create unfair trade conditions. Therefore, it is high time that the Norwegian government dares to support developing countries in this matter.

Maintain Norwegians' income?

It is time to admit that Norway actually exports agricultural goods. The typical resentment among HK's member organizations is that the EU and the USA are "large" agricultural exporters while Norway "does not export". According to the FAO, US agricultural exports were NOK 1386 per capita in 2004, while the EU was NOK 1049 and Norway's NOK 865 per capita. What distinguishes for HK a "large agricultural exporter" (EU) and one that "does not export" (Norway) is thus 20 percent. The figures provide a significant nuance of the picture that HK often paints of an internationally insignificant Norwegian self-sufficiency agriculture in contrast to the "bad" export agriculture in other western countries. In other words, there is no reason why Norwegian agriculture should be exempted from structural changes that are generally necessary in the rich countries.

The undersigned organizations have tried to reach an agreement with several of HK's member organizations on the Norwegian subsidy policy. We have not succeeded in our endeavors. We want a clear assurance from the government and HK's members – especially the Norwegian Farmers' Association – that they actually believe that Norway should not be allowed to export agricultural products below production cost, and that Norway should therefore support a full review of WTO subsidies ( especially green box). Then we would feel far more confident that the government's and HK's distinction between subsidy types is in fact a solidarity project, and not just a smart solution designed for the purpose of maintaining Norwegians' income.

Concrete test.

Furthermore, we actively support the government's goal of distorting imports, so that the goods we already import will come from developing countries instead of rich countries. There is now a fair test of how sincere HK's position on turning imports is. Before the summer, the Ministry of Foreign Affairs presented its report on how to increase imports from developing countries, and thus precisely contribute to distorting imports without going the way of the WTO. Specifically, it is proposed to increase market access for goods from poor countries by e.g. to extend "zero (customs) for LDCs" to 14 very poor countries without LDC status. Admittedly, a bunch of reservations are suggested. Market access is not legally bound, as required by the LDCs, and the security mechanisms are recommended to be continued. This means that Norway can close its borders again at any time if trade with developing countries should affect our own producers. The debate in Ny Tid earlier this year clearly showed that HK's perception of a solidarity trade policy lies in a twist and not in an increase in food imports. We now want to challenge HK's members to show solidarity with poor people by supporting the Foreign Ministry's proposal and all that entails of increased market access in Norway for poor countries.

Norwegian imports of grain and cereal products from the EU / EFTA last year were NOK 2,6 billion, while imports from developing countries were only NOK 80 million. How much are HK's members – including Bondelaget – willing to lower tariffs on grain from developing countries? country to twist imports? The distribution in meat imports was 65% from EU / EFTA and 35% from developing countries. The latter both can and will sell more to us. How much are they willing to lower tariffs on meat from developing countries to twist imports? Are they ultimately willing to tie up market access so that farmers in African countries can bet, in the safe assurance that the door will not slam shut in their faces as soon as they have their production up and running?

We agree with HK that for the majority of poor farmers, access to their own markets is most important. Precisely for this reason, we believe that Norway in the WTO must ensure a real reduction in subsidized exports from the rich part of the world, in parallel with ensuring the markets in the South flexibility for customs protection for vulnerable products. By doing just this, Norway can give Lula and the developing countries an answer that is the first step towards solving a number of problems in the current WTO negotiations.

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