Sign in Subscribe
European Union

WTO Agrees to Eliminate Billions in Farm Subsidies in New Framework

Strategic Insights

— 2 min read

The World Trade Organization has approved a framework agreement aimed at eliminating billions of dollars in farm subsidies for rich nations, marking a significant step forward in the Doha round of trade talks. The agreement, reached in Geneva, Switzerland, on Saturday night, is seen as a milestone for the world's poorest farmers, who have been struggling to compete with heavily subsidized crops from wealthy nations. Foreign Minister Celso Amorim of Brazil hailed the accord as "the beginning of the end of subsidies," noting that it would bring social justice and trade together.

Key Takeaways:

  • The framework agreement approved by the WTO amounts to the halfway point in the Doha round of talks and sets the stage for a successful conclusion by 2006.
  • The agreement requires rich nations to eliminate billions of dollars in farm subsidies, with the US agreeing to a 20% cut in some of its farm subsidies.
  • The cuts could include some of the $19 billion given annually to US farmers who raise cotton, rice, corn, wheat, and soybeans.
  • The US has also agreed to speed up its reduction of subsidies for cotton, which were recently declared illegal by a WTO tribunal.
  • The agreement calls for a deeper reduction in the highest agricultural tariffs than the lowest ones, with countries with state trading enterprises, such as Canada, accepting new restrictions on how they sell their commodities.
  • The agreement was reached through a compromise negotiated by US Trade Representative Robert B. Zoellick and EU Trade Commissioner Pascal Lamy, with the support of a small group of countries that included the US, EU, Australia, and Brazil.
  • The Doha round is expected to add $3 trillion to the world economy, according to WTO Director General Supachai Panitchpakdi.

Statistics:

  • $300 billion: The annual subsidies and supports given to farmers in the world's wealthiest nations, which the World Bank, International Monetary Fund, and United Nations have called some of the worst injustices in the global economy.
  • $19 billion: The annual subsidies given to US farmers who raise cotton, rice, corn, wheat, and soybeans.
  • $3 trillion: The estimated economic benefit of the Doha round, according to WTO Director General Supachai Panitchpakdi.
  • 20%: The cut in some of the US farm subsidies agreed to by the US in the framework agreement.
  • 2006: The target date for the successful conclusion of the Doha round of talks.

Sources:

  • The New York Times (no date provided)
  • "WTO agrees on plan to trim farm subsidies" (no date provided)
  • World Trade Organization (no date provided)
  • European Pressphoto Agency (no date provided)

Read more