HONG KONG, 15 December 2005 — The European Union and United States, already sharply at odds over who should make more concessions in global trade talks here, clashed yesterday on a new issue — food aid reform.
“Food aid policies are being exploited for commercial interest,” an EU official told journalists, hammering home an EU demand that Washington halt what critics claim is food aid that is really a disguised subsidy for US farmers. “This is a sensitive area, but we don’t want an emotional debate,” the official said on the second day of a World Trade Organization ministerial conference.
Washington’s critics argue that behind many of its food donation programs lies a system that helps US farmers to dump produce on poor countries. Such food donations work their way onto developing country markets, undercutting the local agricultural sector, say opponents. In WTO jargon, that is known as “commercial displacement.”
The UN’s World Food Program (WFP) gets 51 percent of its donations in cash and 49 percent in kind -- and 90 percent of the latter comes from the United States. Food donations have been spotlighted in the current Doha Round of WTO negotiations, which were launched in 2001 with the aim of breaking down barriers to global commerce and using freer trade to reduce poverty.
Other rich countries, including the 25 EU members, mostly give cash to aid agencies, allowing food to be purchased from poor farmers in a procedure that - according to Washington’s critics - boosts their national economies. “It’s not in any way about taking resources away from developing countries. It’s about converting policy A to policy B,” said the EU official.
Cash donations mean value for money, the official noted: “It is clear that commodities procured on the donor market are more expensive than those on the developing country market.” But US representatives here hit back yesterday.