• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Why is the issue of agricultural subsidies such a contentious issue in WTO negotiations?

Extracts from this document...

Introduction

Why is the issue of agricultural subsidies such a contentious issue in WTO negotiations? BACKGROUND In the early(till 1960s) years of WTO, most countries were not keen on bringing in agriculture under the gamut of trade. That was because most of the countries were keen on protecting their domestic trade. So the countries were free to provide subsidies and domestic support to their farmers, esp. because the US was keen on doing so. CHANGE IN ATTITUDE But in 1960s two things forced US and other countries to change their attitude towards the inclusion of agriculture in GATT: 1. Large stocks of food that US had when brought to the market, lowered the prices which infuriated US farmers. 2. Soviet Union had become a major importer of food, which created a panic amongst US farmers. This was because they thought it would lead to shortage of food, hence farmers raised barriers to protect themselves. All this uncertainty led to countries renewing the multilateral efforts to improve rules in agriculture, which ultimately led to a group of food exporting countries (also called Cairns countries) ...read more.

Middle

And to make matters worse for developing countries, the high guaranteed price of EU sugar leads to overproduction in Europe. This excess production is then dumped (sold below cost) on the world market so that the world price is depressed to around �121 per tonne. Peace clause comes to end: Hundreds of billions of dollars of largesse that governments bestow upon their farmers could not be contested at the WTO. Until now the so-called "peace clause", agreed nine years ago, gave most agricultural subsidies immunity from the WTO's punishments and procedures for settling disputes. But the clause expired on December 31st. Now countries have started accusing each other on the issue of subsidies. For example EU has come under attack by various countries related to sundry goods. Countries that import food (many of them poor) benefit from the largesse of rich-world subsidies, but agricultural exporters suffer. They are no longer willing to suffer in silence. The 17 countries of the Cairns Group, which includes Australia, Brazil and Argentina, have campaigned long and hard against export subsidies. ...read more.

Conclusion

Domestic production serves as an insurance against these risks associated with imports. And high import tariffs are essential to ensure the survival of farmers. The Road Ahead If the EU,US and the developed world want to wrap up Doha round, they will have to respond to G-20's justified demands on agriculture. The EU and US argue that the developing countries need to reduce their tariffs that act as very strong non-trade barriers. But if we see the figures, the applied tariff rates for developing countries are quite low. Also developing countries face market access problems due to the subsidies given by the developed countries like Japan and EU. The countries cannot compete with the relatively low prices prevalent in these developed countries and thus lose out on some markets. Though the AoA agreed upon during the formation of WTO, required a 36% reduction in agricultural tariffs, the developed countries used already inflated rates as a base point for calculating reduction levels. The use of this technicality resulted in the actual decrease being much less than the stipulated figure. Given the disputes which can arise due to above mentioned differences in policies, agriculture is going to remain a contentious issue in foreseeable future. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Production - Location & Change section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Production - Location & Change essays

  1. The Role and Importance of Agriculture In the Carribean. Organisations involved in its ...

    infrastructure with a view to improving the quality of life in rural communities. * To develop and operate service centres at strategic locations around the island thus bringing the service closer to farmers. * To be the implementing agency for selected projects that impact on farmers and the biological environment.

  2. Development Essay - BRAZIL

    With the increased economic stability provided by the "Real" plan. Brazilian firms have invested heavily in new equipment and technology, a large share of which has been purchased from U.S. firms. Brazil has a sophisticated tertiary sector too. During the early 1990's, the banking sector accounted for 16% of the GDP.

  1. WHY CANNOT U.S. AND EU REACH AGREEMENT ON AGRICULTURE (DOHA ROUND)?

    The purpose is to correct and prevent restrictions and distortions in world agricultural markets. Again, the comprehensive negotiations on agricultute were verified but sufficient. So, before answering the question which is why US and EU cannot reach agreement on agriculture in Doha Round, it is necessary to see the aims and the framework of the negotiation.

  2. Were the Rebecca Riots a justifiable expression of rural discontent?

    This is a primary source given by a farmers' wife. It states the financial struggle the farmers were under.

  1. How successful was Stalin's attempt to industrialise the Soviet Union?

    destruction of the cottage industries that had taken place previously in the rural areas of the country as a direct consequence of collectivisation. The development of the housing industry was virtually ignored by the government. However, during the Second & Third Five Year Plans, the situation improved considerably as money was pumped into the consumer goods industry.

  2. Why have agricultural surpluses become a feature of many countries in the developed world ...

    rotation, soil conservation and improving water control. All of these factors allowed the greatest output possible from the land. As there was such a vast output, over production is more likely to occur. Also, farming was extended to land thought to be 'marginal' by developing new strains of seeds more tolerant to 'difficult' physical conditions, e.g.

  1. The Future of the British Countryside.

    Recent reforms of the CAP have also moved payments away from production and towards a land area payment. It is hoped that the de-coupling of financial support from production will discourage intensification and, together with new environmentally-focused grants and

  2. The Indutries and Energy Resousces of Brazil.

    Brazil's use of energy has increased by 15 times what it was in the 1950's this is because there are now more people living in the cities and there are so many people living there that shantytowns have developed on the outskirts.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work