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A report in the Financial Times by John Thornhill leads with a remarkable quote from French President Nicolas Sarkozy warning the EU that he would block a proposed World Trade Organization (WTO) agreement on agriculture that would reduce European production incentives:
In a world where there are 800m poor people who cannot satisfy their hunger and where a kid dies every 30 seconds from hunger, I will never accept a reduction in agricultural production on the altar of global liberalism.
President Sarkozy is happy to have French farmers feed poor, hungry people in developing countries, but not happy to have those people improve their livelihoods by competing with French farmers on a level playing field. According to the OECD, between a quarter and a third of European Union farm receipts in recent years are the result of government subsidies and price support programs. Until the recent price spikes, one effect of the generous farm subsidies provided by Europe, the United States, Japan and other rich countries was to push down world prices, thereby depressing the incomes of farmers in countries that could not afford such largesse and reducing incentives for farmers in those countries to produce more domestically. France has been one of the strongest advocates of retaining these trade-distorting policies.
With elections in the United States this fall and in India next year, the barely alive Doha Round of international trade negotiations is facing a long hiatus or even failure if ministers cannot achieve a breakthrough in meetings later this month at the WTO. Success in these negotiations would not have any immediate impact on the current food crisis, both because any agreement would be phased in over a number of years and because feasible reforms are likely to be modest. But an agreement to reduce trade and production-distorting policies in rich countries would create opportunities and incentives for farmers in developing countries to increase production over the longer run. If President Sarkozy succeeds in blocking progress at the WTO in Geneva, no one should be fooled into thinking that failure of the talks is somehow in the interest of poor and hungry people around the world.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.