agriculture remains the biggest source of inequity in the world trading system. Unlike telecom, financial, and legal services, farming practices in the North have stoutly resisted the logic of market forces. Farming in the North thrives on prodigious subsidies and price support systems combined with coddling protection through high tariffs on competing imports. The agriculture-reliant South is incapable of providing matching support systems for its produce, rendering it less competitive in the lucrative northern markets.
The developing country demand for lower tariffs and reforms in the domestic agriculture of the developed countries is echoed by the free traders of the North. Chief among them is the Cairns Group of agricultural exporters (composed of 18 countries including Australia and Argentina) and the us . Their common enemy is the profligate eu and Japan. An extravagant 46 per cent of the eu 's total budget goes to farming subsidies. Japan subsidises its equally notorious inefficient farms apparently for maintaining rural communities.
After long hours of negotiations at Doha, the eu had to finally give in to the demands of developing countries and major agriculture-exporting countries on the reduction of its agricultural subsidies. The Doha declaration calls for the reduction of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support . The declaration also agrees that special and differentiated treatment for developing countries shall be an integral part of all elements of the negotiations to enable developing countries to effectively take account of their development needs, including food security and development . The modalities for special and differential treatment are to be established by March 2003.
The wto agreement on agriculture (aoa), effective since the wto was established in 1995, poses a dilemma for development. Allegedly intended to decrease market-distorting subsidies on food products, it ends up allowing industrialised countries to use direct and indirect subsidies for their agricultural produce. At the same time, manipulation of tariff reduction commitments in the North has resulted in a phenomenon known as
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