- The Washington Times - Tuesday, October 8, 2002

The European farm-subsidy debate is growing just as contentious as expected three months ago, when an EU official floated a plan to reform the current system. In August the Bush administration upped the ante by challenging members of the World Trade Organization (WTO) to downscale their farm subsidies in tandem with ours. Last week, European leaders stated their positions on the reform plan outlined by the EU farm commissioner, Franz Fischler, in July. The issue looks as far as ever from being resolved.

Europe is split roughly down the middle on the issue. France is the main cheerleader for EU farm subsidies, joined by Austria, Ireland, Luxembourg, Portugal, Spain and the French-speaking part of Belgium. Britain, Germany, Holland and Sweden are backing the reform proposal. Under Mr. Fischler's plan, Europe's $43 billion annual subsidies won't be reduced, but the criteria for awarding payments would be changed. Instead of linking subsidies to production, producers would get federal support for adhering to food safety, animal treatment and environmental standards. Although the price tag for farm supports wouldn't be cut, the proposal would be an improvement over existing policy, as it would stop feeding agricultural gluts in the global market. But opposition by half of Europe to a plan that keeps total payouts steady augurs badly for more comprehensive reform.

Predictably, the opposition in Europe to even moderate changes in subsidy policies clash glaringly with European criticism of America's $100-billion-plus farm bill, which was passed in May. "The United States is increasing trade-distorting support for [U.S.] farmers that will harm developing countries. This is what we are fiercely opposed to," EU spokesman Gregor Kreuzhuber said. But since EU farm subsidies are double U.S. subsidies as a percentage of gross domestic product, Europe may want to temper its self-righteousness.

Mr. Kreuzhuber's statement is hypocritical, but accurate. Rich countries' farm supports certainly hit developing countries hard. According to a report by the International Monetary Fund (IMF), if rich countries eliminated their farm subsidies, the main agricultural exporters of Latin America and sub-Saharan Africa would see their economic growth climb between 0.3 percent and 0.6 percent. Rich countries, meanwhile, would grow 0.4 percent, as a result of consumers' increased spending power. Countries that are experiencing severe economic crises, such as Argentina, would benefit greatly from a cut in agricultural supports. Argentina's agricultural commodities account for 52 percent of its total exports. For Brazil, which was recently given an IMF loan due to its economic problems, those commodities make up 33 percent of its total exports.

But given the raging controversy in Europe, reform appears elusive. And while the passage of the U.S. farm bill was certainly lamentable for America and the world, Europe would be wise to turn its wagging finger inwards. The widespread opposition to Mr. Fischler's proposed reforms only highlights its hypocrisy.


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