Top Nations Agree Over Farm Trade Issue

Ministers from the major trading nations have for the first time made a concerted commitment to review the whole distorted structure of world farm trade, Canadian Trade Minister Patricia Carney said.

“We think we can get some movement on this,” she told reporters at a briefing following informal talks with the U.S., Japanese and European Community (EC) trade ministers here.

Canada, strongly supported by Australia, has championed the cause of both developed and developing nations which have seen their farm trade suffer largely due to a farm subsidy war between the United States and the EC.

Japan"s protected agricultural markets have also attracted criticism.

The issue is of extreme importance to many indebted, developing nations which often rely totally on one or two farm sector exports to sustain their economies but which cannot compete with the subsidised U.S. And EC products.

“Canada can afford so many billions of dollars (to do so), but many countries cannot,” said Carney.

She said the EC had changed its previous unhelpful attitude and had raised proposals similar to those of Canada under which to discuss the issue.

Talks will now continue at the Organisation of Economic Cooperation and Development (OECD), which meets next month, and at the series of discussions on a new world trading framework, begun at Punta del Este, Uruguay, last year.

Carney said Japan had also agreed to take a positive role in the farm talks, and that the United States was willing to see short-term progress, as long as long-term solutions were not affected.

Canada"s five point programme demands that farm product prices must reflect open world market prices, that any support for farmers incomes should not be linked to production incentives, that there should be no new farm subsidies, no new farm import barriers, and that any decisions should be implemented collectively.

The farm trade problem was almost completely ignored by the industrialised world until Canada raised it last year at the Tokyo summit of seven leading industrial powers.

The distortions created by subsidies and protectionism have created some absurd situations.

For example, to protect its farmers the Japanese government buys Canadian wheat and sells it at 10 times the purchase price to Japanese consumers.

“So we end up borrowing in the Japanese (financial) market to help pay subsidies to keep our farmers while they make a profit on our wheat to help pay the price support for their farmers,” said Carney.

The problem causes pain for many nations and increases the already dangerously high debts that they owe mainly to U.S., Japanese and EC banks.