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Sentenced to Norwegian agriculture?

Are Norwegian farmers the big losers in the WTO negotiations? This is how it can work in the Norwegian media, and so it can go. But nothing is safe in the WTO


Hectic media reports in recent days may indicate that big things may happen in the WTO negotiations on agricultural trade. It is reported that rich countries must give up large parts of the customs protection, perhaps more than half, and reduce agricultural subsidies sharply.

But that is far ahead of any negotiation result. When it comes to agricultural negotiations, there is a black-tie game between the US and the EU. They have different profiles on customs protection and their support schemes. The EU is therefore constantly promoting proposals where it sacrifices part of its own interests, but so that the proposal strikes the United States so hard that the proposal is doomed to fall.

Proposals from the United States, of course, have the opposite profile. In this way, the United States and the EU try to push each other's responsibilities to one another so that developing countries do not have an impact on their wishes.

Preventive cutting suggestions

Norway is part of a small group of countries (G10) that protects agriculture extra strongly. This group is said to have issued an offer to cut tariffs by up to 45-50 percent. The offer is not public, so there is great uncertainty about the details of the proposal. It is probable that – at least at this stage – it is connected that each country can shield certain so-called "sensitive" goods from such hard cuts. The tug-of-war over what is sensitive, and how much of it can be shielded, becomes fierce.

When the G10 has gone out with such an offer, it is to meet other, far harder cut proposals in part. This was also the purpose of the original offer from Norway. That offer was tough enough – seen from rural Norway. This meant that customs duties were to be reduced by an average of 36 per cent, and that at least 10 per cent was to be cut on all goods.

USA with limited freedom of action

But WTO negotiations are about much more than agriculture. Both the United States and the EU link agricultural trade directly to trade in industrial goods and services. The United States would like to be free to trade in services everywhere, but has less to offer the rest of the world due to strong protectionist sentiment domestically.

For example, the agricultural lobby is much more than the farms. Today, they are strongly integrated into an agro-capital that controls everything that comes from deliveries to and from agriculture, and which controls large parts of world trade in food.

The trade deficit in relation to China creates drama in US politics, and on the services side, the fear of entering foreign companies into a previously well-shielded market is great. It says a lot about the situation that the Free Trade Agreement with the small states of Central America (Cafta) was approved with an emergency scream in Congress.

Split in the EU

The EU is also divided across the board. 13 EU governments, led by France, have this week criticized the European Commission for promising far too much in the agricultural negotiations – yes, for breaking the negotiating mandate it has been given.

The criticism is directed at British Peter Mandelson, who is responsible for foreign trade in the European Commission. As his former employer Tony Blair, he is far more concerned with winning markets for European industry and service industries than by protecting farmers in France and Eastern Europe.

The EU has therefore gone much further than the US in saying it is willing to phase out all export subsidies for agricultural products – at least in principle and without any deadline. The EU's offer of cuts in agricultural support also goes further than the offer from the USA.

But here in both the USA and the EU (and Norway) there is a lot of unclear juggling between yellow, blue and green "boxes", where yellow box stands for support for production, blue box for support that is independent of production (area subsidy, etc.) and green box for support for environmental measures, landscape protection and rural development.

Developing countries equally divide

Developing countries are equally divisive. About twenty countries (G20) stand together to demand market access for agricultural products in Europe, North America and Japan. They require that both the Customs and Agricultural Aid must be severely reduced.

The G20 includes countries with over half of the world's population. It forces the EU and the US to find allies among them. The United States is trying to join forces with India and Brazil to push the EU into greater cuts in tariffs. The EU is trying to forge an alliance that can push the US to cut its support for agriculture.

A third of other developing countries (G33) are most concerned with shielding their own business from all open competition from outside. They demand the right to shield industries that are strategically important.

The vast majority of developing countries (G90) have little to gain in this round of negotiations. But they can lose a lot. Most of them are net importers of food. They are worthy of protecting their own farmers against excessive competition from outside, but at the same time it is possible to buy cheap food from other countries.

MUL land in squeeze

The world's "least developed countries", the 48 so-called LDCs, could get into a bad squeeze in these WTO negotiations. Today, they have advantages in exporting to the EU and a number of other rich countries. To Norway, for example, they have full duty-free access to all goods.

But these benefits are less important if the WTO negotiations end up providing better access for everyone to the food markets in Europe, North America and Japan. Then LDC countries will face increased competition in such markets not only from other developing countries, but also from exporting countries such as the USA, Canada, Australia and New Zealand.

When sugar support goes down

The sugar regime of the EU shows what problems can arise even when it is improved. The EU recently lost a dispute in the WTO and was required to change its sugar subsidy. The European Commission has tabled a proposal to reduce aid to sugar producers by 39%. It will lower the price of sugar in the EU and open up the possibility of exporting sugar to the EU.

However, many sugar-producing countries in Africa and the Caribbean have, through the Cotonou Agreement, sold sugar to the EU within certain quotas and been well paid for the sugar. They will still have their quotas, but will be paid less. Countries such as Australia, Brazil, Cuba and Thailand have the most to gain from easier access to the EU sugar market – not far poorer countries in Africa and the Caribbean.

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