Third World Irked at Farm Subsidies of Major Nations

Depressed and destabilized commodity markets have created a crisis in world trade, a group of agricultural exporting countries declared at the end of a three-day meeting here, and they demanded that the situation receive high priority in a proposed new round of multinational trade talks.

The participants put the blame largely on the agricultural policies of industrialized countries, specifically the United States, the European Communities and Japan.

“These problems have the capacity to destabilize international relationships,” they concluded in a statement Friday ending the three days of talks.

If the questions of agricultural price supports, export subsidies and dumping are not put high on the agenda of the new round of trade negotiations expected to open in Uruguay this September, the delegates said, their countries “would seriously question the value of participating.”

Critical of U.S.

Senior trade officials of 12 countries met here last week at the invitation of the Thai government, whose foreign minister, Siddhi Savetsila, declared at the opening session:

“The major cause of the consistent oversupply (in commodity markets) has always been the application of production and export subsidies and market protection by a few high-cost, inefficient, but usually rich and influential producers, who can afford to maintain their considerable share in the already oversupplied market.”

Thailand has been sharply critical of subsidy provisions of the 1985 U.S. Farm Act that, the Thais charge, give U.S. rice farmers an unfair export advantage. Thailand is the world’s No. 1 exporter of rice, the United States is No. 2, and the gap between them has narrowed since the rice subsidy went into effect this spring.

U.S. officials readily admit that the subsidy is designed to increase the American share of the world market but deny Thai accusations of “predatory pricing.”

Many of the countries represented here have not been as deeply affected by market pressures as the Thais, whose economy depends heavily on rice production and export, but they all agreed on the gravity of agricultural trade problems.

Policies Belittled

“We have reached a common perspective,” said Danai Tulalampa, head of the Thai Foreign Ministry’s economic department and chairman of the conference here, which bore the unwieldy name of Senior Officials’ Meeting of the Non-Subsidizing Agricultural Producing Countries. “We just call it the non-sinners,” Danai joked.

In hallway conversation, the delegates belittled the policies of the big countries. One described Japanese farmers as a “bunch of hobby gardeners” in criticizing Tokyo’s tariff protection of some minor commodities.

Others disparaged the heavy subsidies paid to farmers in the EC countries, which they said had made European farming a business with a guaranteed income. One delegate repeated an often-told tale of Yorkshiremen digging up the English countryside in order to qualify for subsidies.

“The best example I can give,” said Peter Field, head of the Australian delegation, “is that Britain was a net exporter of grains last year. That hasn’t happened since the Corn Act of 1850.”

The closing statement argued that liberalization of agricultural trade would benefit both developing and developed countries. The statement cited a World Bank study that concluded that eliminating protectionism in grains, meat, rice, dairy products and sugar could increase the national income of developing countries by more than $18 billion a year and of developed countries by $46 billion annually.

The main problem--Public Enemy No. 1, Field called it--is that domestic agricultural policies often bear no relation to world commodity prices, particularly in industrialized countries. Those prices, he said, have a far more direct effect on small countries whose economies are heavily dependent on commodities.

“It is the interest of the countries here,” Field said, “to gather the strongest possible coalition of smaller nations,” which he agreed would be necessary to lead the industrial giants to take up the politically sensitive issue of world agricultural trade. “Why do you think nobody has wanted to talk about it for the last 25 years?” he asked.

The delegates said they hoped to expand their numbers for a follow-up ministerial conference scheduled in Australia next month.