GLOBAL ECONOMIC VIEWPOINT
FAIR GLOBALIZATION MEANS RICH COUNTRIES MUST ALLOW FREE TRADE IN AGRICULTURE
By Marcus Vincius Pratini de Moraes
Marcus Vincius Pratini de Moraes is the minister of agriculture and food supply of Brazil. Brazil and the United States are the key players in the Summit of the Americas in Quebec City, which convenes April 20-22. Brazil's leaders want to delay the initiation of the Free Trade Area of the Americas (FTAA) beyond the set launch date of Jan. 1, 2005, in order to better prepare their economy for competition.
BRASILIA -- Much has been said and written about globalization, both from the perspective of those who view the process as the unavoidable result of integration of economic production on a planetary basis, as well as from the critical standpoint of those who consider that globalization will significantly increase concentration of political power and economic prosperity within a small number of countries, further marginalizing the poor.
The noisy and sometimes violent demonstrations that we have recently witnessed at many international gatherings should not be interpreted as romantic moves or as the result of organized action by extreme radicals. Although we cannot accept that violence replace civilized and democratic exchange of views, demonstrations do reflect the controversies stirred by globalization. They call for a more responsive and serious consideration on what is generating this "malaise'' with regards to globalization.
From the perspective of Brazil, globalization -- while an inescapable reality resulting from an evolutionary process -- must follow generally agreed governance rules to ensure that the process leads not only to a more equitable distribution of benefits among countries, but also to a widespread perception that this goal can actually be achieved.
If one shares a genuine concern about a more equitable distribution of the benefits of globalization, there needs to be a serious discussion on liberalization of trade in agriculture.
Agriculture cannot continue to be subjected to "special rules'' that maintain inefficient production thanks to heavy subsidies granted by national treasuries. If we want to ensure that developing counties benefit from the results of globalization, we must ensure that their farm exports remain competitive in the international market.
Brazil's treasury cannot compete with those of developed economies that grant subsidies to agricultural exports. The Organization for Economic Cooperation and Development (OECD) estimates that more than $360 billion in agricultural subsidies were given in developed countries. This represents roughly $1 billion a day.
Many will hastily argue that trade liberalization alone will not help solve the problems faced by the net food importing countries or by those facing serious hunger. But heavy subsidization in rich countries not only depresses commodity prices but also enhances dependency of developing countries and discourages new investment in expanding agricultural production in less developed ones.
The resistance by some developed countries to the idea of achieving a widespread liberalization of agricultural trade "demoralizes'' the very concept of trade liberalization.
On the one hand, developing countries are given lessons on the benefits of opening up their markets, reducing their tariff rates and liberalizing their services sector. But the same countries that preach the opening of developing countries' economies resist clearing the barriers that restrict access to their markets for agricultural exports from developing countries.
Globalization cannot be acceptable if it perpetuates ever more asymmetrical gains for the developed countries, increasing their opportunities for exports of high-technology products and widening their access to the services sector in developing countries, while agriculture is kept apart. And ever more sophisticated mechanisms of protection and additional subsidies to agriculture are proposed on the grounds of "preserving green landscapes,'' "enhancing small family farming,'' "keeping mountain pastures,'' or "ensuring food security.''
Over the last two decades Brazil has developed one of the most efficient agricultures in the world. We rank as the leading world producer of sugar cane (334.5 million tons), oranges (19.4 million tons) and coffee (3.3 million tons). We also rank as the second largest producer of soybeans (30.8 million tons), corn (32.4 million tons), beef (6.4 million tons) and poultry (4.4 million tons).
We have also made huge efforts to increase the quality and sanitation of our agricultural products. We have managed to eradicate foot and mouth disease (FMD) in the southern, central and eastern Brazil. This means that 80 percent of our national cattle herd is now free from FMD. The classic swine pest has also been eradicated.
Yet, despite all our efforts, our export performance has been hindered by a growing array of ever more sophisticated barriers:
-- In spite of its position as the largest orange producer, Brazil's exports of orange juice face stiff tariffs in the U.S. market ($418 per ton);
-- Despite the fact that Brazil has attained the highest productivity standards in sugar cane production, we still face serious difficulties in the heavily regulated international sugar market. Access to the U.S. market is limited by import quotas. In Europe, high levels of subsidies given to beet sugar producers simply render exports of Brazilian sugar to African countries virtually impossible;
-- Heavy subsidies to poultry exports in Europe also displace competitive Brazilian exports into third markets;
-- Despite the fact that Brazil has eradicated FMD from the most important breeding areas, our exports of fresh and chilled beef are still barred from a number of markets.
-- Exports of tropical fruits are also hindered by "sanitary'' barriers in industrialized markets.
Brazil obviously acknowledges the need to ensure high standards to protect consumers' health, but a zero-risk policy hampers access of competitive products from developing countries to the markets of developed countries.
Over the last few years, the Brazilian economy has undergone deep and far-reaching reforms to ensure its competitive integration in the international economy. We have managed to reduce inflation, to stabilize our economy and to open our market to competition. Since 1994, our trade deficit has grown to billions of U.S. dollars.
But we have reached the limit.
We have to harvest the results of all efforts spent in the pursuit of economic stability and modernization of the economy. Brazil must now improve our agribusiness trade balance in order to be in a position to honor our external financial commitments.
Coming from a developing country that has been asked in a Uruguay Round to make important concessions to benefit exports of industrial products and services from rich and developed countries, I must confess my extreme difficulty in understanding why there is still so much resistance to liberalizing trade in agriculture.
Trade liberalization of agriculture is mandatory to ensure that developing countries benefit equitably from globalization.
(c) 2001, Global Viewpoint. Distributed by Los Angeles Times Syndicate International, a division of Tribune Media Services.
For immediate release (Distributed 4/17/01)