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Developed nations call the shots on subsidies
Developed nations have reiterated during the World Trade Organization (WTO) meeting that developing countries have only four years to run their food security programs without breaching a 10 percent limit on their agricultural output
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Developed nations have reiterated during the World Trade Organization (WTO) meeting that developing countries have only four years to run their food security programs without breaching a 10 percent limit on their agricultural output.
In the meantime, developed nations would maintain their immense agricultural subsidies in return for offering developing and least-developed countries (LDCs) aid for trade facilitation, in an attempt to ease trade flows.
The United States spent in 1995 US$46 billion of taxpayers' money on numerous forms of agricultural subsidies; a figure that skyrocketed to $130 billion in 2010, according to various reports from a number of NGOs.
European Union agricultural subsidies stood at ¤19 billion ($25.8 billion) in 1995, before rising to ¤64 billion in 2010.
In total, agricultural subsidies in developed countries reportedly increased from $350 billion in 1996 to $406 billion in 2011.
Meanwhile, Indonesia spent a total Rp 57.9 trillion ($4.83 billion) on agricultural subsidies last year, according to the NGO, Indonesia for Global Justice.
Indonesia, like other developing countries, has less room for maneuver compared to developed countries to increase the level of its subsidies because of the WTO's 1995 Agreement on Agriculture, which utilizes market-price preference applied in 1986-1988, diplomatic sources say.
'[In Indonesia's case, for example], there's a special formula set by the WTO to calculate legal 'subsidies', using the market-price reference of Rp 377 per kilogram of rice, while the current market price is around Rp 6,700,' the sources said.
'The price reference is no longer relevant, making Indonesia appear to be spending a huge amount of money on subsidies and exceeding the 10 percent limit, while the real figure is less than 10 percent,' they said.
Spokesman for the EU commissioner for agriculture and rural development, Roger Waite, said the EU had reduced its support drastically since the implementation of the Agreement on Agriculture.
'More than 90 percent of our subsidies are non-trade distorting,' he told The Jakarta Post in an email interview.
Press attaché at the US Embassy in Jakarta, Troy Pederson, could not provide an immediate response to the Post's inquiry.
Agricultural subsidies are one of two contentious issues ' the other being trade facilitation ' being discussed at the ninth WTO Ministerial Meeting in Nusa Dua, Bali.
The developed nations' proposal on agriculture has resulted in uncertainty among developing nations about what will happen after the four-year time frame.
This has led to protracted negotiations between developed and developing nations, with India insisting the proposal be part of an interim solution that is linked to a permanent solution.
The US has just responded with a counter proposal to tame India, offering leniency to developing countries, other diplomatic sources said.
Under the US' latest proposal, the sources said, developing countries that could not meet the four-year deadline would be permitted an extension by submitting early notification.
They added, however, that India was unlikely to give a nod to the proposal during the Bali meeting as its contingent would have to discuss the matter with other Cabinet ministers at home.
Centre for Strategic and International Studies (CSIS) economist Djisman Simanjuntak said the four-year time frame proposed by developed nations was unrealistic.
'Even New Zealand, which is highly competitive in agriculture, is being realistic and understands the conditions faced by developing countries, like food insufficiency and poverty, when food prices spike,' Djisman told the Post.
Special presidential envoy for poverty alleviation HS Dillon and University of Indonesia (UI) international trade expert Mahmud Syaltout hit out at the US and the EU for 'kicking away the ladder'.
'The Agreement on Agriculture is merely a bilateral agreement designed by the US and European countries to be forced upon developing countries,' Dillon told the Post.
He said developing countries should have used terminology like 'leveling the playing field' rather than 'subsidies', because 'developed nations have no political will to help them improve'.
'They have seen the damage caused by neoliberalism: The widening inequality gap in developing countries during the past 20 years [when the Agreement on Agriculture began to take effect],' he said.
Likewise, Syaltout said developed nations would go to any lengths to keep developing countries, most of whom were now emerging economies set to become developed economies, from beating them.
