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[24/08/2005] EU world trade distortion

COMMENT: The first article below is the measure of how the EU
distorts world trade and beggars poorer nations.  It is not subsidies TO
farmers that are the problem but EXPORT subsidies of EU produce.  In this
the EU accounts for the vast majority of such subsidies.


By Lisbeth Kirk, from EU OBSERVER, Wednesday 24 August 2005

The EU is the world's largest provider of export subsidies by far, providing
85 percent to 90 percent of the world's total, according to a new report
from the US Congressional Budget Office.

The report is published as work intensifies ahead of a crucial World Trade
Organization (WTO) summit in Hong Kong in December.

Developing nations are accusing the rich of using subsidies to lower
international prices and hurt farmers in poor countries.

In total, 64 out of 76 countries have reported to the WTO that they granted
subsidies of some kind to farmers in at least one of the years from 1998
through 2004, the report said.

But a few countries dominate the total dollar value of subsidies granted.

The EU and the US each grant about one-third of the world's total - the EU a
little more than the US because its agricultural sector is a little larger.

The countries with the highest rates of total subsidy - that is, total
subsidies as a percentage of agricultural output - are almost entirely
high-income countries.

Members of the European Free Trade Association (Iceland, Norway, and
Switzerland-Liechtenstein) top the list, followed by Japan, the US, and the
EU at substantially lower but still sizeable rates.

Australia and New Zealand have very low rates of total subsidy.

A substantial portion of agricultural production is protected from
international competition by extreme tariffs - tariffs of over 100 percent.

This holds true for 50 percent of eastern European production, 39 percent of
EU production and 26 percent of US production, the report revealed.

The EU provides over half of the world's most trade-distorting category of
domestic support (so-called amber-box support), according to the American

Amber-box support can be limited and reduced by the WTO's agriculture

In contrast roughly 70 percent of US subsidies fall into the so-called green
box, which is exempted from reduction requirements.

The green box is for measures that were deemed to have little or no
distorting effects on trade or production, such as income support that is
decoupled from production.

The EU has also pushed through reforms of its Common Agricultural Policy in
recent years, aiming to decouple farm subsidies from production.

The US report is mainly based on statistics from 2002 or earlier, so that
enlargement of the EU and the 2002 US farm bill might have changed the

The Congressional Budget Office assists the US House and Senate Budget
Committees, and the Congress more generally, by preparing reports and[]


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