23 February 2004

Push to revive world trade talks

Now, the challenge is for the Cairns Group and G-20 to move closer to maximise the pressure on the EU and US. Reports from Brazil quote Agriculture Minister Roberto Rodrigues as saying that he wants 'the two groups to converge' at the Costa Rica meeting, which Brazil will attend.

A senior Australian official says the 17-member Cairns Group - Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, The Philippines, South Africa, Thailand and Uruguay - will also be looking at how to bring the two groups closer.

'I think the time has come where the combination of the Cairns Group and the G-20 perspectives coming into play in a complementary and parallel way is going to be very important,' the official says.

Australia wants to play a bridging role, but 'everybody has to make a significant contribution (to cutting trade barriers)'.

The challenge is enormous. The US, EU and Japan continue to spend about $US311billion ($404billion) a year on subsidies that drive down world prices and block market access for poor countries.

There are three main areas of dispute:

Tariffs and quotas, which limit free market access by setting strict amounts of a product that can be imported, to protect domestic industry.

Domestic support schemes that give farmers subsidies or guaranteed prices to produce their goods. Without this aid, the farmers would not be able to compete with cheaper imports, and the subsidies encourage them to oversupply the market, thus driving down prices for everyone.

Export subsidies, which may or may not be combined with domestic supports. These allow countries to undercut their competitors on the world market by offering special payments or interest-free loans.

Because developing nations' economies tend to be agriculture-based, major cuts to these subsidies could help lift 144 million people out of poverty, the World Bank argues.

One wonders what kind of bridge to the G-20 we can be after our recent signature of a US preferential trade agreement where we accepted the continuation of agricultural subsidies, tariffs and quotas.

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