Conference organized by the World Organization for Agriculture (WOAgri) 19th October 2006 at the French Senate
Messrs and Mmes Senators,
Ladies and Gentlemen,
First, I would like to thank you on behalf of Mrs. Lagarde, minister for foreign trade, and also to present her apologies for not being able to participate in your work today. Mrs. Lagarde has been particularly interested in the actions of WOAgri since its creation and above all in the philosophy that is behind its work.
She has been retained in Brussels today by an important trip during which she will reiterate before the European Commission the commitment of the French government in favor of better access for small and medium-sized businesses to bids for government contracts. I think it is important to point this out because this is in line with the philosophy I mentioned before: the need for regulation to support free trade.
The question that you have raised today concerning the impact of the liberalization of agriculture on development brings to mind three remarks that have been, for the last year and a half, indicative of the personal commitment of the Minister.
1- First we need to put and end to the naive optimism according to which the liberalization of agriculture would systematically benefit poor countries.
All too often, these ideas serve to hide the interests of large exporting countries like Brazil or Australia.
This preemptory assertion has been based for a long time on economic studies carried out by, for example, the World Bank or the OECD. This situation has changed and this is largely due to all our efforts. The latest economic studies have reduced their estimates of the possible gains that can be expected from the WTO negotiations. This is because the previous studies, as Mrs. Lagarde has pointed out during different meetings at the World Bank, neglected several fundamental points: the erosion of preferential tariffs, the incapacity of the poorest countries to take advantage of increased liberalization, and the burden of increased price fluctuations on the food security of the poor countries.
Today we have returned to a more just and balanced vision of the situation. It is also clear that the liberalization of trade cannot be truly beneficial unless it is accompanied by adequate policies in terms of infrastructures, education, social safety nets, etc.
2- My second remark is that we need to identify more clearly the conditions that will enable developing countries to benefit from free trade.
As you all know, the Doha Development Round of the WTO negotiations was suspended last July, notably because of the intransigence of the United States. Frankly, it is still hard to say if the talks will resume in the months to come. In any case, France will do its utmost to see that the development objectives of this round are preserved.
We have to admit, if we want to be heard and be coherent in our development policies, that there is still a problem with agriculture: agricultural subsidies, customs duties and other trade barriers can distort agricultural trade.
But in this area the European Union has made tremendous efforts that are not always well-known:
> - in 2003 it reformed the Common Agricultural Policy in such a way that it does not distort trade by dissociating subsidies for production;
> - it has progressively opened its markets to agricultural products coming from the poorest countries more than any other developed country: 95% of current exports from the ACP states enter the EU without being subject to duties or quotas;
> - it is ready, within the framework of the current WTO negotiations and if its partners do the same, to commit to the abolition of its subsidies for agricultural exports by the year 2013.
We must, time and again, hammer home these truths in order to suppress the same old refrains. And encourage others to act: the United States and Japan must now change their agricultural policies so that they are less distorsive; the large developing countries must now open their markets to products from the poorest countries.
We must also recognize that the liberalization of industrial products and services and the promotion of trade will contribute as much, if not more, to development than the liberalization of agriculture alone.
The liberalization of agriculture must be progressive and take into account the specific constraints of food security for the poorest countries. It is particularly important to make progress on “special products” necessary for rural development and subsistence farming, which must be the object of more protection, and on conservation measures.
Finally, these countries must receive development aid. Mrs. Lagarde was in Luxembourg last Monday at a meeting where the EU misters for foreign trade and development confirmed their goal to raise aid for European commerce to 2 billion euros by 2010.
3- My third remark is that agriculture is also a challenge for developing countries. In 2004 President Bush declared: “it is in our national interest, in the interest of our national security, that we have a strong agriculture. American farmers are part of the values of our nation”. We could make this statement our own.
Some believe that agriculture plays a minor role in our industrial and service economies. This is obviously a mistake as can be witnessed by our agricultural exports (12% of our total exports!)
The truth is that agriculture must play a major role in all countries if we are going to put an end to the scourge of famine in the world. In 2006 there are more than 854 million people in the world who are undernourished. According to the forecasts of the FAO, the needs in terms of food for the developing countries will dramatically increase with population growth while urbanization and scarce water supplies will affect yields.
These world agricultural and food needs will be commercial opportunities for our agricultures. But they will also constitute a development challenge: we must maintain production capacities in order to contribute to world agricultural security.
Finally, no one will be able to avoid the question of energy security, the other great challenge of the 21st century. Agriculture, with biofuels and biochemistry, will be expected to grow. In all the countries around the world that have developed biofuel channels, specific public policies in terms of taxation, research and development, but also customs duties, have been set up.
It is up to us to start thinking today about the agricultural policies of the future. These policies must help us respond to the different challenges I have tried to outline: avoid distorting world trade, contribute to the food and energy security of poor countries, and invent the necessary mechanisms to control the volatility of agricultural prices.
Without a doubt, WOAgri will contribute a great deal to this process.