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Agricultural trade and global justice

Ricardo Parellada
Universidad Complutense

Resumen
Se ofrecen primero datos sencillos sobre reglas e impuestos comerciales que tratan a distintos países de forma muy desigual, en particular en el terreno agrícola. A continuación se muestra que, a pesar de la sencillez de algunos de esos ejemplos, es preciso un conocimiento técnico y empírico sólido para orientarse en la complejidad de estos fenómenos. Y se concluye que la perspectiva de la justicia global es relevante para las consideraciones de economía y política internacional, siempre y cuando las aportaciones filosóficas cuenten con suficiente información inter-disciplinar. Palabras clave: comercio agrícola, justicia global, Política Agrícola Común, subvenciones.

Abstract
First, I offer simple data about commercial rules and tariffs that are very unequal for different countries, particularly in agriculture. Next, I argue that, despite the eloquence of these examples, deep technical expertise and empirical knowledge are necessary for a fuller understanding of these issues. Finally, I argue that the perspective of global justice is indeed relevant for international economics and politics, but only if it takes into account relevant inter-disciplinary data. Keywords: agricultural trade, global justice, Common Agricultural Policy, subsidies.

the more you pay”. Mr. because this way a lot more sugar is consumed. and has imposed on foreign sugar an entry prize that is higher than the European guaranteed prize. I would like to join the “not rearing pigs” business. Finally. 2005). why does delicious chocolate come from Switzerland and Germany? Is it because cocoa beans grow in the Alps or the Black Forest? No. as dictated by the EU under the Common Agricultural Policy. It is because tariffs imposed on cocoa beans range between 0% and 9%. 2005). Food and Rural Affairs (DEFRA). when he received a cheque for not rearing any. The guiding principle seems to be: “The poorer you are. David Miliband. Silly countries grow cocoa beans. and 5% of them get 50% of the money.422 in 1968. Dear Secretary of State. the more you get paid”. Do you know why in Spanish cafeterias and restaurants there are saltcellars. 75% of resources goes to 10% of farmers. almost half of the EU budget goes to the CAP (Common Agricultural Policy). This can be clearly shown with the Gini indexes. the hardest part of this programme will be keeping an accurate record of how many pigs I haven’t reared. For example. and which is the best breed of pigs not to rear? I want to be sure I approach this endeavor in keeping with all government policies. Second. But worse still. and clever countries manufacture it. recently received a cheque for £3. the next change in regulation is planned for 2050. As it is well known. Are there any advantages in not rearing rare breeds such as Saddlebacks or Goucester Old Spots. I present some examples of rich countries’ protectionist measures. I believe this sort of irony or even sarcasm not to be inappropriate. which argue these rules to be deeply unjust. most of which happen to be the richest. Nigel Johnson-Hill. 2007. He has been rearing pigs for forty years or so. such as the UNDP or the World Bank.000 from the Rural Payments Agency for not rearing pigs. In order these changes not to be too dramatical. Hampshire. subsidies independent of production benefit greatly the richest landowners. That is – until this year. and also expressed his interest in the “not growing crops” and “not milking cows” businesses. Well. but no sugar bowls? Why does sugar come in individual tiny envelopes so that we can throw away what we do not want? Well. four times higher than those rich countries lay on one another (UNDP. In Europe. The guiding principle seems to read: “The richer you are. because the EU has paid European producers until recently four times the world prize. That is a striking upside down tax progressivity.000 for not rearing 100?” Agricultural trade and global justice and effective consideration of complex empirical data and information. In Spain. and the best he ever made on them was £1. Import tariffs. sir. such as the duchess of Alba. 1. In this paper. addressed an extraordinary letter to Mr. on average. I will just as gladly not rear porkers. In your opinion. will I get £6. distribution of subsidies is more unequal than distribution of income in the most unequal countries on earth. Agricultural subsidies A.398 On May 16. I would prefer not to rear bacon pigs. My friend. Johnson-Hill went on with a few more technical questions about “not rearing pigs”. Subsidies. B. Tariffs imposed by rich countries on poor countries are. First. Secretary of State of the British Department of Environment. I mention contrary opinions and argue that it is essential to take an ethical perspective on these issues. I want to do three things. only 40% of farmers are subsidized. whereas tariffs enforced on elaborate chocolate amount to 30%. from Liphook. but also that the viewpoint of ethics and global justice can not offer much political guidance without a technical .000 for not rearing 50 pigs. but if this is not the type you want not rearing. In the US. yes. a British farmer. I believe it presents crudely a difficult issue with deep implications for human development and global justice: the legitimacy or outrageousness of rich countries’ agricultural subsidies and protectionism. Mr. Are there any Government or Local Authority courses on this? My friend is very satisfied with this business. You say this is changing? We shall see. such as Brazil (UNDP. who is in farming at the moment. I refer to the view of international institutions. If I get £3. what is the best kind of farm not to rear pigs on. or are there too many people already not rearing these? As I see it.

Having promised to cut agricultural support in the last round of world trade negotiations—the Uruguay Round—the world’s richest countries have increased the overall level of producer subsidies. Some say that rich country subsidies harm the poorest of the poor. actors disagree. and fruit and nuts—keep domestic prices above world market levels. and outnumber the aid of this country to the whole Sub-Saharan Africa (World Bank. it would be possible to meet the 2. The problem at the heart of the Doha Round negotiations can be summarized in three words: rich country subsidies.Ricardo Parellada C. Import tariffs. which was shortly after sent to oblivion by the financial crisis. Rich countries spend just over $1 billion a year on aid to developing country agriculture and just under $1 billion a day supporting their own agricultural systems. For a fraction of what rich countries spend subsidizing the overproduction of crops like rice and sugar. When it comes to agricultural policy.11). However. speculative movements and bio-fuels. The very evangelical principle is: “Whoever has will be given more. it attracted more attention than usual because of the food crisis. even what he has will be taken from him” (Mt 13:12). let me quote subversive institutions such as the UN and the World Bank. the UN Food and Agriculture Organization (FAO) held an important meeting. Research carried out for this Report estimates that subsidy distribution in rich countries is more unequal than income distribution in Brazil (box 4. which dramatically lower the prize of cotton in world markets and ruin local African producers. The summit was intended to diagnose problems and offer solutions. 2006). The financial commitment to a small group of largely high-income beneficiaries in developed countries puts the financing requirements for the MDGs in perspective. Most developed country governments would take a dim view of any developing country contemplating tariffs and subsidies on this scale. but no true compromise on specific policies. It would be hard to design a more regressive—or less efficient—system of financial transfer than currently provided through agricultural subsidies. the weather. these payments generate enormous overproduction for exportation. NGOs) argued that rich countries’ agricultural protectionism has pernicious effects on agriculture and trade of poor countries. Of course. when it is highly dependent on cotton. They agreed publicly that the world does not lack resources to surmount the food crisis and even make poverty history. The Rome summit gathered an unusual number of prime ministers and heads of state from around the world. the growth of demand. 399 contrary. Although it had been long scheduled. But given the conflicting interests involved. most of which have the effect of raising prices. This GDP fall amounts to the difference between life and death for a lot of people. There is little evidence to support this justification. But they could not agree at all as to the means and the economic and commercial policies best suited for this acclaimed goal. such as the cost of oil. Some calculations translate this dumping practice into a fall of several points in some African countries’ GDP. increasing output and boosting exports. In the real world the winners in the annual cycle of multibillion dollar subsidies are large-scale farmers. Important elements that influenced the rise of food prizes were analyzed. corporate agribusiness interests and landowners. the European Union and the United States. Some political leaders in developed countries seek to justify agricultural support by reference to rural development objectives and the interests of vulnerable communities. Nobody says that to harm the poor is right. Direct support to producers can be calculated on different measures. and he will have an abundance. the final document offered general remarks. and benefit mainly rich farmers and agribusinesses in rich countries. while budget transfers inflate incomes. developed country support to agricultural production amounts to $350 billion a year. Dumping. Others maintain the . This support comes in different forms. Now. Led by the world’s farm subsidy superpowers. developed countries are able to set their own standards. A few voices (some Northern European governments. for instance. or one-third of the value of production— and rising to more than one-half for Japan (figure 4. The Organization for Economic Co-operation and Development’s (OECD) producer support estimate measures the cost of all policies and transfers that maintain domestic prices above world levels at about $279 billion. Whoever does not have. sugar. amount to its market value. Subsidies for cultivating and exporting cotton in the US. an agreement on this point was not possible either. but when it comes to agriculture.5). rising to more than 100% for several products—including rice. Policy In June 2008.

These policies . The EU classifies products that are eligible for subsidies in three categories: orange box. Matthew Lockwood. and discourage value-added processing in developing countries. Adding insult to injury. But even these reforms still call for comment. 2005. such as suppressing subsidies that distort markets and export subsidies that lead directly to dumping. which are intended to benefit farmers of these countries. Development experts offer few certainties. If we consider that the basic rules and structure of a state are just or unjust because of their effects not only on citizens of that state. most international institutions called for their complete suppression in 2007. they usually refer to the good direction of recent reforms. 210). They provide handsome subsidies to their farmers. the discourse of justice alone does not seem to me to take us very far. we step form domestic to global justice (Follesdal and Pogge. To quote another revolutionary institution: Inequities in the trade arena are well known: rich countries protect their markets with tariff and nontariff barriers on the goods that poor countries produce more advantageously (such as agricultural produce and textiles). These officials probably forget that these shy reforms (that they consider positive) are usually introduced with great difficulties and despite heavy opposition of their own countries. market success is determined not by comparative advantage. The viewpoint of global justice Following the lead of John Rawls. the removal of trade barriers imposed by rich countries on agricultural goods would not make a big difference (Lockwood. regardless of their devastating effects on farmers in very poor countries. he argues that internal factors to African states are much more decisive for development than external ones. Agricultural trade and global justice 3. 2005. and interested in justice in general and global justice in particular. p. 2006. is an independent expert who has worked both in academia and NGOs. If we believe that our idea of justice should be somehow broader than our countries’ borders. the green box gradually grows thicker and thicker at the expense of the other boxes. such as France or Spain) still defend the PAC openly.). When it comes to world agricultural trade. I wanted to bring up this instance of a contrary view in order to raise a worry about the viewpoints of philosophy and global justice. 2005. rich country agricultural subsidies. good management and transparency. growth. Among the favorite examples of unfair regulations from an international point of view are. but by comparative access to subsidies—an area in which producers in poor countries are unable to compete (UNDP. But who says they do not? International agencies? The WTO? No. but rich countries have only agreed to put a slow end to them by 2013. What could the discourse of global justice possibly add to expert discussions about the effects of different policies in the lot of the poor? As a person trained in philosophy. despite the difficulty of dealing with very powerful agricultural lobbies in our own countries. 2006. I just want to mention two. And yet. Some politicians and government officials (mainly from countries which benefit greatly from abundant PAC cash. 133). 8). Products in the green box are supposed not to distort markets. precisely. These are theories of domestic justice. But curiously enough. First. the fact that rich country agricultural subsidies have pernicious effects is not undisputed among experts.400 financing requirements for achieving the MDGs in areas such as education. Needless to say. blue box and green box. chapters 1 and 3). Reducing such protection and subsidies would have a beneficial impact on world trade. in particular. As for export subsidies. when philosophy relies just on philosophy for these matters. After having quoted extensively the UNDP and World Bank on agricultural trade. Industrial countries are locked into a system that wastes money at home and destroys livelihoods abroad. I personally find it frustrating. In his The State They’re In: An Agenda for International Action on Poverty in Africa. for instance. then we will have to take into account the lot of these people. I believe it to be absolutely necessary to take into account technical information and expert knowledge on issues about which. and poverty reduction (World Bank. Policies intended to protect weak and underdeveloped economies should be respected. without this knowledge. 129 s. sir. and only thanks to hard work by some Northern European countries. health and water. They talk of solidarity. but also on foreigners and other states. the subsidies in rich countries not only divert resources but also reinforce rural poverty in poor countries. He stresses that. subsidize their exports. contemporary theories of justice usually apply to the political and economic structure of a state. there is no single road to development and prosperity for all peoples on earth. when they go into any details. the EU itself (UNDP.

Dordrecht. Real world justice: grounds. A. P. F. 2002). Springer. Globalization and its Discontents. there are many more important factors into trade and development. Human Development Reports. . since 1990. Stiglitz. (2006). in order to protect the local economy. principles. since 1978. New York and London. and other times impose tariffs on imports of basic products. Intermediate Technology Publications. en A. whereas changing and wise protection has made possible for some countries to strengthen their economies before opening them to world markets. and social institutions.. despite some controversy.Ricardo Parellada sometimes prevent exports of basic goods. such as food. World Development Reports. Norton. “Introducción”. Warwick. they cannot continue to dissociate aid and agricultural policies. (2002). particularly in Asia (Stiglitz. Early imposed liberalization has ruined small economies. Lockwood. The State They’re In: An Agenda for International Action on Poverty in Africa. if rich countries want to be serious about world hunger. UNDP. Second. & Thomas Pogge (2005). UK. But. J. and T. Of course. World Bank. it seems that rich country agricultural protectionism heavily harms farmers and the economy in general of many poor countries. human rights. eds. M. 401 References Follesdal.