Wednesday, April 14, 2004

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The EU's divide-and-conquer strategy on agricultural trade

The Financial Times reports that the European Union has a strategy for getting its egregious Common Agricultural Policy through the Doha round to WTO talks unscathed -- buying off Mercosur:

The European Union plans to splinter opposition to its Common Agricultural Policy this week by offering members of Mercosur, the Latin American customs union, a deal aimed at winning their support in the Doha trade round.

The move is designed to weaken pressure on the EU to lower its farm trade barriers by, in effect, buying off Argentina, Brazil, Paraguay and Uruguay with the offer of preferential trade concessions. These countries have been among the fiercest adversaries of Brussels in the global trade talks.

The EU proposals, if accepted, risk splitting the Cairns Group of 18 agricultural exporters as well as the Group of 20 developing countries, led by Brazil, which want the rich nations to reform their farm policies....

The proposals are expected to anger other developing country farm exporters, such as Chile and Thailand, which belong to both the Cairns Group and the G20, as well as richer countries including Australia and New Zealand.

As well as placing their exports to the EU at a disadvantage, a preferential deal for Mercosur would undermine their efforts to present a united front in the Doha round.

Politically, this is a clever move on the EU's part, though it puts Brazil in the awkward position of simultaneously trying to act as a leader of the Global South while cutting most of these countries out of any EU benefits.

Economically, the perpetuation of the CAP is, as always, unambiguously stupid.

Meanwhile, the FT also reports that Oxfam has "accused the European Union on Tuesday of employing 'economic sophistry' to conceal the true costs of its controversial sugar regime, saying the policy inflicted big losses on poor countries and reduced the value of EU development aid." Here's a link to the press release and full version of Oxfam's report, "Dumping on the World."

posted by Dan on 04.14.04 at 02:06 PM


If I am your typical third-world politician with delusions of third-world leadership, I'm not sure I'd bite. As a matter of fact, I'd publicize the offer, ostentatiously turn it down (establishing my third world cred), and use the uproar to guilt the Euros into something better for everyone.

So, for the sake of the world, that the demagogues, rather than cold-hearted realists, are in charge.

posted by: Appalled Moderate on 04.14.04 at 02:06 PM [permalink]

Quite an impressive display of lowdown, devious, sneaky, bastardry from the EU on this topic. To bad they can't aim it at someone who deserves it for a change.

posted by: sam on 04.14.04 at 02:06 PM [permalink]

I'm also surprised at the willingness of Brazil to consider the offer. If they do this, their future "leadership" of the Third World - something Lula has seemed to set much store by - will be seriously imperilled.

But, then, at least this story made me feel like the coalitional game theory I learned was useful.

posted by: Bob McGrew on 04.14.04 at 02:06 PM [permalink]

If you stay a bit longer at the Oxfam site (USA), you'll see they oppose FTAA and CAFTA.

So Dan, nice use of Oxfam as a cudgel to selectively bash the EU on an issue, when our own country is doing the same with a lot of other agricultural products, sugar included.

posted by: ch2 on 04.14.04 at 02:06 PM [permalink]

I noticed that nowhere in the FT article is the United States even mentioned.

During the Reagan years you could barely read anything about the Cairns Group or farm trade liberalization without coming across the American position in support of both. Now in the Bush years we have decided to give the EU and its CAP a pass, because the absurdly expensive, overtly protectionist farm bill passed two years ago is seen as useful to the Bush campaign and CAP can't be attacked without putting the farm bill in jeopardy. We have traded controversy in a good cause for irrelevance on behalf of a minor component of the President's reelection strategy.

posted by: Zathras on 04.14.04 at 02:06 PM [permalink]

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