This weeks condemnation of European Union sugar subsidies by a World Trade Organization disputes panel strikes a blow for justice and good sense, writes The Financial Times in Fridays editorial, according to the World Bank press review.
The grossly distortive and wasteful EU sugar regime is an affront to free trade principles, the paper notes. As well as speeding its demise, the WTO decision should add to the impetus imparted to the Doha trade round by last weekends deal on a negotiating framework.
The judgments resonance is all the greater because it follows a WTO ruling against US cotton subsidies, which are economically and morally as indefensible as the EUs sugar policy. But it would be wrong to conclude that all developing nations will gain from the dismantling of farm subsidies.
Overall, the biggest beneficiaries will be the economies of the rich countries that use them most. And while efficient exporters in some developing countries, such as Argentina and Brazil, will be winners, so will producers in the US, Australia and other wealthy nations.
However, as Arvind Panagariya of Columbia University argued in the Financial Times on Tuesday, many poorer ones stand to lose. Among the most vulnerable are those with preferential access to rich markets, such as the African, Caribbean and Pacific states that export bananas and sugar to the EU on favorable terms.
Unsurprisingly, these countries oppose a reduction in trade barriers that would threaten their privileged position and expose them to competition. Weak economies need generous and carefully targeted international assistance to help them adjust to freer trade. How the US and EU respond will test the strength of their commitments to promoting global development.
The Bangkok Post further comments that Thailands joint victory with Australia and Brazil in winning the sugar war against the European Union serves as a confidence booster in the workings of the WTO. Thailand is the third largest sugar exporter, accounting for 9,8 percent of the world market last year.
The EU is a major player, as the worlds second biggest exporter, with 14,5 percent of the market, and the number one importer, with 12,6 percent.
The August 4 ruling further brightens the prospects for Thai sugar, seen as a major beneficiary of the July 31 decision that the WTO describes as a “package of framework and other agreements” towards completing the Doha Round. This weeks developments have restored confidence in the WTO as a forum where smaller countries can win, the Thai newspaper concludes.
Writing on the WTOs recent negotiations on agricultural subsidies The Economist notes that grading this agreement overall is hard.
Jeffrey Schott, of the Institute for International Economics in Washington, DC, says that the Geneva agreement “leaves the door open” for an ambitious Doha deal. But that is a long way from securing either an ambitious or a successful conclusion.
The farm text, in particular, is welcome; yet the agreement as a whole is suffused with special treatment for poor countries. The 50 poorest are excused virtually everything. Richer developing countries have long implementation periods and plenty of exceptions.
If all this special treatment restricts tariff-cutting by poor countries, it will limit the benefits of the Doha round.
According to the World Bank, over half of the potential economic gains would consist of the benefits to poor countries of their own liberalization.
Kilde: www.worldbank.org
