Friday, November 11, 2005

France Fries Farmers

French hypocriscy (and stupidity) on its position on free trade is covered in a WSJ commentary piece. (The WSJ has been free for a week, so better link there soon if you want the whole article.) I will extract the key points:

"France's tirades have helped negotiators wake up to the fact that the 2003 reform was largely a shell game, shifting only a portion of European farm subsidies from the WTO's prohibited list of trade-distorting payments to its "acceptable" subsidy list. This was achieved primarily by "decoupling" subsidies from production, with the idea that this would discourage the overproduction of goods that has wreaked havoc on agricultural markets. At the end of the day, however, there was no change in support prices and subsidy levels, and hence no change in the overall level of European protection. As shown by an OECD study, this was a liberalization in name only, reducing the overall level of support by a meager two percentage points, from 57% to 55% -- nothing much to celebrate for Europe's WTO partners.

..... This means foreign access to European markets remains difficult, if not impossible -- even for producers from Europe's former colonies in the African, Caribbean and Pacific regions and other least developed countries that face no tariffs. .... These countries are shocked by the incredible cynicism of a position that preaches development, but practices market closure when it comes to developing countries' farm exports....

The French position is even less understandable when it is recalled that, on the whole, French agriculture is amongst the most efficient in Europe. French farmers seem not to realize that they will be the main beneficiaries of even the limited farm liberalization that the Doha round appears capable of delivering. Take domestic subsidies, for example. European subsidies spent in the most inefficient member states keep their farmers in operation, and thereby restrict the sales of more efficient farmers, be they from the rest of the world or from the rest of Europe. The CAP is the most implacable foe of the European single market in farm products, and it is particularly harmful for the most efficient European -- often French -- farmers.

If reason were to prevail, French farmers would be among those pushing for deeper reductions in European subsidies than those tabled by the Commission. They would clearly win from such an approach."

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