Dumping on the poor: the Common Agricultural Policy, the WTO and International Development

Dumping on the poor: the Common Agricultural Policy, the WTO and International Development

Confronting unequal agricultural trade relations: policy recommendations

This paper critiques the EU's Common Agricultural Policy as a mechanism that promotes over-production and dumping of cheap goods that undercut local markets in developing countries. At the same time tariffs and other obstacles prevent agricultural producers in these countries from accessing the European markets for their own goods. The paper calls for the EU to support the proposal for the a proposal for a "development box" in the WTO’s Agreement on Agriculture, which would change the rules to allow governments the right to protect small-scale farmers from influxes of cheap goods.

The paper makes the key points that:

  • the annual EU support of US$16,000 per farmer allows farmers to sell their cropsat lower prices than they otherwise would have done, thereby leading to the dumping of EU produce at artificially cheap prices on the world market
  • CAFOD’s research shows, for example, that dumped EU powdered milk has wrought havoc among small-scale dairy farmers in countries such as Brazil, India and Jamaica
  • European governments and the EuropeanCommission must be prepared to face down the farm lobby of large-scale farmers, while small-scale farmers must realise that their interests do not necessarily coincide with those of their larger rivals.

The paper makes a number of recommendations, including:

  • the total volume of EU subsidies should be substantially reduced
  • all production-linked measures should be removed
  • all tariff escalation should be eliminated and all tariff peaks reduced below a maximum level of 10 per cent by 2005 for imports from all developing countries

The authors urge the UK government to convince their European negotiators at the WTO to:

  • fulfil their pledge in the Doha declaration for reductions of, with a view to phasing out, all forms of export subsidies and substantial reductions in trade distorting domestic support
  • agree new WTO rules on domestic support by rich countries to outlaw the dumping of agricultural goods at below the costs of production

They also ask the UK government to:

  • call on the OECD to publish each year a full cost-of-production estimate for different crops, that could be used a reference for establishing minimum import prices
  • call on the OECD to put all information on subsidies (export refunds, export credits, direct payments, market price support etc.) into the public domain
  • press for an OECD-wide agreement to give tariff and quota-free access to developed country markets to all products, except arms.