A free world market for agricultural products is a utopian dream

August 13, 2008 8:26 | by Krista van Velzen and Eric Smaling

Further liberalisation is not the answer to current problems in agriculture and the food supply. Developing countries are giving the priority instead to providing for themselves and are not looking towards a free market, argue Krista van Velzen and Eric Smaling.

"A shortage of rice remains a different order of thing from a shortage of cars or Barbie dolls."

As an answer to the food crisis, Dutch Secretary of State for Foreign Trade Frank Heemskerk was among many who said that the World Trade Organisation (WTO) negotiations simply had to succeed. Poor countries would have been helped in particular by a further liberalisation of the agricultural markets, he argued.

This is just the kind of neoliberal dogma which the Socialist Party of the Netherlands (SP) rejects - that salvation for agriculture and the supply of food is to be found on the free world market. Although Brazilian President Lula is still trying to keep things afloat, it turns out from the failed WTO negotiations that the Doha round was never really a development round at all. The United States and the European Union did not only want more access for their industrial products and services, but also for their agricultural products. The EU was prepared to make concessions by lowering import tariffs, which was extremely favourable for major agricultural exporters such as Brazil. Against this stood the fact that agricultural subsidies, which are much more damaging to developing countries, would be subject only to cosmetic reductions.

And then the Indian trade minister, Kamal Nath, said that each country must in principle take care of its own food needs. Nath returned to Delhi as a hero. Self-sufficiency seems an old-fashioned and outdated concept. But the extreme reactions during the recent food crisis ( limitations on exports, lifting of import tariffs) demonstrate that a shortage of rice remains a different order of thing from a shortage of products such as cars, music centres or Barbie dolls.

The Common Agricultural Policy (CAP) also had 'hunger never again' as its first principle. Nath's statement is a new reality. The North must recognise this reality. It is becoming ever more evident that a free world market for agricultural products is a utopian dream. The WTO has bitten off more than it can chew. It idealises a so-called level playing field with equal market chances for everyone. This situation will, however, never come to pass.

Africa will never be able to develop adequately without investment in agriculture, for which market protection is crucial - market protection along the lines of the CAP. A number of matters, however, should in the meantime to be addressed as priorities: the phasing out of tariff escalation (the system whereby the more processed a product is after it leaves the farm, the higher the tariff) on processed tropical products such as coffee, chocolate and tea; the better functioning of the instruments for market access in the EU, such as the Everything but Arms initiative, which has led to very little increase in imports from Africa; and the ending of export subsidies which frustrate the development of agriculture in developing countries. Furthermore, countries must have the right to protect their markets from dumping.

Let's not forget the following: the biggest proponents of free trade began life within tightly closed markets. These brought development. And only after that did free trade become attractive. But not everyone is there yet, and Africa certainly isn't.

Krista van Velzen is a Member of Parliament for the Socialist Party of the Netherlands (SP). Senator Eric Smaling, also of the SP, is Professor of Sustainable Agriculture at the Technical University of Enschede. This article first appeared in the daily agricultural newspaper Agrarisch Dagblad on 7th August 2008 and was translated by Steve McGiffen.