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The British Chancellor of the Exchequer Brown and Chancellor of Trade and Industry Patricia Hewitt recently called the developed nations of the EU to take the lead in pulling down the trade barriers for a further opening of the markets. They say the whole world is paying a big price for developed countries' trade protectionism.
The Ministry of Finance and Ministry of Trade and Industry released a report named "Trade and global economy: Functions of international trade in reform and growth of productivity and economic reforms". The report says the developed country's trade barrier is making the world economy losing US$ 500 billion annually. The report especially points out the waste caused by the European policy of agriculture. Every year, the EU spends 50 billion euros as subsidy for agricultural produces. At the same time, the agricultural policy puts up barriers that ward the developing countries off from entering the international trade system.
More and more people in western developed countries begin to realize that the agriculture subsidy policy of the well-off countries has done harm to both themselves and the developing countries. During the WTO negotiation held in Mexico last year, the request of the developing countries for developed countries to cancel the agriculture subsidy became a crucial point of contention. Recently, the EU Trade Commissioner Pacal Lamy suggested for the first time that all issues regarding EU's export subsidy should be brought onto the table for negotiation, for which Brown and Hewitt expressed their support.
In today's international trade, it sees the highest trade barriers in the agricultural produces and labor-intensive products. However, developing countries are most competitive in these sectors. Should the developed countries tear down the trade barriers, the developing countries will benefit US$ 240 billion annually, an amount 3 times as high as the aid they received from the developed countries.
The British government argued for the following three reasons. First, the economic globalization has made the world trade dependent more on one another as the competition intensifies. So the developed countries have to take their long-term benefit into consideration, because keeping on damaging the poor countries means doing harm to the export market of the rich countries. In 1953, the world trade volume was just US$ 54 billion. The number shot to US$ 6,000 billion in 2002. The developing country's export volume has taken up 30 percent in the world trade. Secondly, the EU countries are suffering from heavy tax burden. The heavier tax burdens are in rife among the EU countries. Large amount of agriculture subsidy undoubtedly worsens the tax burden. But such subsidies cannot save the agriculture; instead it raises the price of agricultural produces and distorts the world market. Thirdly, it has things to do with the EU enlargement. All EU countries enjoy the same agriculture subsidy policy, which once boosted the agricultural growth in relatively backward countries such as Ireland, Spain and Greece. But if the same policy is applied in the ten new EU members, the 15 old EU countries will not be able to bear the heavy burden. So the EU must adjust its policy for agriculture.
However, it's easier said than done. Whether the UK's "good intention" for the developing countries can be implemented is not a matter so simple to be handled.
(People's Daily May 27, 2004)
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