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European Union agricultural subsidies are destroying livelihoods in developing countries. By encouraging over-production and export dumping, these subsidies are driving down world prices of key commodities, such as sugar, dairy, and cereals. Reforming a system in which Europe's large landowners and agribusinesses get rich on subsidies, while smallholder farmers in developing countries suffer the consequences, is an essential step towards making trade fair.
Summary
Europe's agricultural subsidies are inflicting enormous damage on producers in developing countries. The practice of dumping - exporting at prices far below the costs of production - is destroying domestic markets in poor countries. This paper shows the impact of dumping EU sugar and dairy products on the livelihoods of farmers in Mozambique, India, and Jamaica.
The mid-term review of the Common Agricultural Policy (CAP) is an historic opportunity for the European Union to address the devastating impact of its agricultural policies on developing countries. However, there is no evidence so far of the political will necessary to do this, as demonstrated by the recent Franco-German deal at the Brussels Summit, which delays substantive reform until 2006.
Oxfam recognises that an end to dumping will generate adjustment costs in Europe. Policy makers in Europe have responsibilities for rural development and the environment. But as representatives of one of the world's richest and most powerful trading blocs, they also have responsibilities towards developing countries. Reforming a system that reaps big rewards for a minority in Europe, while undermining the markets and opportunities for farmers and agricultural labourers in the developing world, is an essential step towards making trade fair and making globalisation work for the poor. If European governments fail to grasp this opportunity, then the EU's exclusive focus on domestic interests will continue to prevail, at the expense of its poverty-reduction objectives.
Oxfam is calling on the EU to use the mid-term review of the CAP to agree a plan which will stop the dumping of EU agricultural produce on world markets. To this end, the EU should:
- Agree a plan for phasing out all agricultural subsidies that facilitate export dumping, or the sale on world markets of goods at prices below their costs of production. As an immediate step, the EU should agree a binding timetable to eliminate all forms of export subsidies before the 5th WTO Ministerial Conference in Mexico (September 2003).
- Reform the EU's sugar and dairy regimes, in order to avoid the damaging effects on developing country interests.
- Assess the impact of proposed CAP reforms on poverty reduction and food security in developing countries.
- Include a specific objective that CAP reform should foster poverty reduction and food security in developing countries.
- Support the introduction of a 'Development Box' in the WTO Agreement on Agriculture, giving developing-country governments the flexibility to protect their small farmers from dumping.
- Restructure domestic support towards less industrial agriculture and measures aimed at enhancing the welfare of small farmers and the environment, rather than large-scale corporate agriculture.
В© Oxfam International 2002, October 2002
This paper was written by Claire Godfrey. It is part of a series of papers written to inform public debate on development and humanitarian policy issues. The text may be freely used for the purposes of campaigning, education, and research, provided that the source is acknowledged in full.
For further information please email advocacy@oxfaminternational.org
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