commentary

(Wall Street Journal )

June 18, 2002

Want to Help Africa? Stop Farm Subsidies

by Carl Bildt

Reprinted with permission of The Wall Street Journal, © 2002 Dow Jones & Company, Inc.

The hard issues of the future of Africa are finally starting to emerge on the international agenda. But until the European Union and United States are willing to fully practice what they preach about free trade, poor nations will be denied the opportunity to lift themselves out of a vicious cycle of poverty. As they prepare for their summit in Kananaskis at the end of this month, G-7 leaders should confront the hard truth about development in Africa and the world's poorest nations.

The last few months have seen important progress in the debate on trade and poverty. The U.N. conference in Monterrey on financing of development produced a new consensus on the need for both reforms in the developing countries and increased aid to them. And there is no doubt that the swing through Africa by both U.S. Treasury Secretary Paul O'Neil and rock-star Bono has had an impact on the debate.

But there is still a tendency to avoid some of the hard issues -- and go for diversionary tactics.

Endorse Globalization

Developing countries need free trade even more than increased aid. The lesson both of the history of the present industrialized countries and of the developing world during the past decades is crystal clear. It is those that endorse globalization, and take part in the global trading economy, that prosper over time.

But this is a message that should work both ways. We can't preach the virtues of free trade to others, and then do differently ourselves, and deny them access to our markets. Hypocrisy will be recognized.

According to the World Trade Organization, rich countries now spend $1 billion per day to subsidize their agricultural sectors. This policy succeeds in creating both more expensive food in the developed countries and poorer farmers in the developing one. It's not only foolish -- it's doubly foolish.

Developing countries would earn eight times all the debt relief granted to them if the First World ended these agricultural subsidies and tariffs. Nearly 50 developing countries depend on agriculture for over a third of their export earnings -- nearly 40 of them depend on agriculture for over half of those earnings.

For many, the manufacturing of textiles represents the first step on the long road to industrialization. And yet we often block our markets to their food and textile products. Europe is sinning more with the former, and the United States more with the later. The effect of each is equally bad.

Too often, the United States and European Union have raised smokescreens to obscure their own responsibility for policies that discriminate against developing economies and render much of our foreign assistance less effective. Last November, for example, by championing the "Declaration on the Trips Agreement and Public Health" at Doha, the European Union managed to divert attention away from its own distortive agricultural policies.

Thus, African nations missed a key opportunity to place greater emphasis on the need for the European Union and other developed countries to significantly reform their agricultural policies in a way that contributes to development policies. Instead of using their limited political capital to fight against EU and U.S. agriculture subsidies, they went along with a dubious bargain.

At Doha, the European Union promoted a statement that reaffirmed the right of countries to manufacture and use patented drugs without the agreement of the patent holder during times of public emergency. Though widely perceived as a political victory, the declaration will do little to improve access to life saving drugs for AIDS, malaria, or tuberculosis. Indeed, it offered nothing new as it spelled out rights already enshrined in the Trips agreement. Worse, it diverted attention away from the need for Europe and others to reform their agriculture policies.

Contrary to popular belief, weakening intellectual property laws will not improve access to life-saving drugs for millions of Africans and countless others who need them. Poverty, and not patents, is the prime cause of the horrible devastation caused by HIV/AIDS and other health epidemics.

We have every reason to take action to help the nations of Africa counter the new waves of HIV/AIDS, malaria and tuberculosis now affecting the continent. As recent studies have shown, this is not only imperative from a humanitarian point of view, but also imperative in order to get their economies growing in the years ahead. And for those that need further arguments, it should be evident that a pandemic in one part of the world sooner or later will affect every part of the world.

Thus, substantial contributions to the Global Health Fund set up at the initiative of U.N. Secretary-General Kofi Annan should form part of any credible Africa initiative by the G8 countries. It's been estimated that $7-$10 billion is needed annually, but contributions so far are well below this sum.

If wealthy nations take the goal of eradicating poverty seriously, they must work during the new Doha round to reform their policies that limit trade from developing economies.

Hope for the Future

In the more immediate perspective, increased contributions to the Global Health Fund will be of great importance. Over the longer term, sustainable economic growth will free up the resources needed to strengthen educational and health infrastructures and create hope for the future.

Oxfam has estimated that Africa would generate $70 billion in income if it increased its share of world exports by one percentage point -- approximately five times what the continent receives in aid. Many African nations also recognize that increased trade will help lift them out of poverty. President Yoweri Museveni of Uganda said recently, "The biggest request we are making of Western countries is to open their markets . . . Debt relief has saved us some money, but the real money will come from trade. Give us the opportunities, and we will compete."

With Africa slowly getting the attention it deserves, the G8 nations must sit down and agree on a package of policies that will give real help. This will by necessity involve decisions that might be seen as painful with different political constituencies in either the United States or the countries of the European Union.

But we can't ask the countries of Africa to reform their policies if we are not ready to reform ours. And in the world without walls that we have been seeking, we should recognize that their future development is our future security.


Mr. Bildt is former prime minister of Sweden. He's also on the board of the Center for European Reform in London as well as the RAND Corporation in the U.S.

This commentary originally appeared in Wall Street Journal on June 18, 2002.