Deal to slash farm subsidies 'would end poverty for millions'

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Hopes were building last night that ministers from the world's richest and poorest countries will strike a deal on trade that could drag millions of people out of poverty.

The 147 members of the World Trade Organisation (WTO) have until midnight tonight to agree a basis for negotiating a deal to slash farm subsidies and import tariffs.

But experts warned that a repeat of the high-profile breakdown of last year's talks would consign some of the world's poorest countries to years of poverty. The main obstacle is a deal on agriculture in which the rich countries agree to eliminate subsidies allowing their farmers to dump cheap produce on markets of poor countries dependent on farming for survival.

There was a breakthrough last night as WTO negotiators put the finishing touches to a draft agreement based on a text from five of the world's leading trading nations. Five core members - the US, European Union, Australia, Brazil and India - ended hours of hard bargaining by agreeing principles on cuts in farm aid by industrial nations that could open the way to a deal. Negotiators at the WTO's headquarters in Geneva said there was a positive mood for the final day of the four-day meeting of the general council.

Christopher Roberts, the UK director general of trade under the prime ministers Margaret Thatcher, John Major and Tony Blair, said: "I think there's enough of a genuine wish across all the main groups to get a deal. If agriculture falls into place the rest will follow subject to political problems faced by the smaller countries that don't have armies of trade experts."

Mr Roberts, now trade adviser to the law firm Covington & Burling, said failure would keep prices of goods artificially for European consumers as well as hurting African farmers.

The world's richest countries spend $370bn (£200bn) a year on farm subsidies although 96 per cent of the world's farmers, or 1.3 billion people, live in developing countries. About 900 million people in rural, poor areas live on less than $1 a day, Oxfam says.

On top of their subsidies, Western countries also impose tariffs, particularly on manufactured goods from the developing world, that can run as high as 350 per cent, in effect barring them from selling high value-added goods rather than just commodities.

Estimates by the World Bank show slashing subsidies and tariffs would pump an extra $520bn into the global economy by 2015 and lift 144 million people out poverty. Despite opposition from France, the European Commission is offering to eliminate all export farm subsidies. Britain has gone further, demanding the EU set a 2010 deadline for their abolition.

Yesterday Patricia Hewitt, the Secretary of State for Trade and Industry, who flew into Geneva into represent the UK, criticised France for opposing the move. "We have to reform the world trading system so it is free and fair," she said. "As far as Europe, that means pulling down the appalling agricultural subsidies that distort trade with the rest of the world much of which depends on farming."

She said the UK would "have an argument" with France over its criticism of the EU initiative and she criticised the United States for a "resurgence of protectionism", adding: "All of us need to keep our eye on the larger prize, which is pulling millions of people out of poverty."

Aftab Alam Khan, the head of ActionAid's food rights campaign, said: "We fear the concerns of the poor countries will not be addressed, particularly the issue of security of food in developing countries that was supposed to have been addressed. On the other hand, the demands of the rich countries might get a good position."

He said the EU and US were pushing for the same text on industrial tariffs that broke the Cancun talks. "There will be some agreement but I think there will be vague language."

But Eduardo Perez Motta, Mexico's ambassador to the WTO, said failure to approve the outline before the deadline would have long-term repercussions because poorer economies would miss an opportunity to grow. "We have to think about the implications of rejecting what might not be a perfect text," he said. "It would take years to restart. This is supposed to be the mid-point of the round, but if we don't have an agreement, it could be the end."

Oxfam said an agreement would only be the result of overdue pressure being exerted on the some of the poorest countries in the world to meet a deadline. Amy Barry, a spokeswoman for Oxfam in Geneva, said the 118 countries outside the five blocs that drafted the farm text would not see the wording until this morning.

"This round [of talks] has been hijacked by the rich countries with their own interests at heart and there is very great concern that the idea of development is being taken out the so-called Doha development round," she said. The negotiations started more than two years ago, in the wake of the 11 September terrorist attacks.

HARDSHIP BY NUMBERS

* 900 million people in poor, rural areas live on under $1 a day, according to Oxfam.

* About 96 per cent of the world's farmers, or 1.3 billion people, live in developing countries.

* The world's richest countries spend $370bn a year on farm subsidies.

* They impose tariffs as high as 350 per cent on imports.

* Slashing tariffs would pump an extra $520bn into the global economy by 2015.

* It would lift 144 million people out of poverty according to the World Bank.

* The US pays $3bn in subsidies to its cotton farmers every year - more than the output of Burkino Faso, where two million people depend on the crop for survival.

Ghana: where crops lie rotting

The tomato growers of Ghana know only too well the effects of farm subsidies. Charles Avaala, from the village of Pwalugu in Ghana's Upper East district, is struggling to attract buyers from Accra and Kumasi. He said: "At the moment, selling our tomatoes is a game of chance. It's heartbreaking to stand here and watch the fruit go rotten."

According to the charity Christian Aid, Ghana is overwhelmed by imports of subsidised Italian tomato products. In contrast to Ghana, where tomato farmers receive no support, the EU provides annual subsidies for tomato processing in southern Europe averaging £250m. Ghana has become Africa's largest importer of tomato concentrate from the EU, with imports of more than 100,000 tons per year.

In Pwalugu, the local cannery, which was built in 1968, shut in 1989 and chances of its reopening appear slim while the subsidies are in place. It once employed 60 permanent staff and 100 temporary workers when operating at its full capacity of 100 tons of tomatoes per day. Its former commercial manager, George Jato, said: "All the fields around the factory were full of vines. We were producing tomato paste, juice, whole tinned tomatoes and, when tomatoes were not fruiting, we produced vegetables."

Mr Jato claims the factory was profitable. "It's places like these that build up the economy. But at the moment so much of the tomato paste that people buy is from Italy. I've written letters to the government, but I get no reply. I have worked here for 34 years, but I have no voice in the matter."

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