Developing countries risk causing a “spiral of protectionism” and aggravating food shortages when they try to combat soaring food prices by blocking their own exports, Europe’s trade chief said on Thursday.
Several developing countries have introduced measures such as export duties to keep more of their agricultural production in national markets and cool strong food price inflation. “By chasing an illusion of food security these policies throttle domestic production, choke off supplies to others and risk leading to a spiral of protectionism and dwindling production,” European Union Trade Commissioner Peter Mandelson said. The rise in prices of basic staples has been linked to growing demand from countries such as China and the growing use of crops to provide fuel.
Kazakhstan this week suspended wheat exports until September and Russia and Ukraine have limited exports of wheat and barley. Argentina has extended the closure of its wheat exports. Mandelson, speaking at a trade seminar in the European Parliament, said governments in developing countries faced political pressure to tackle food price growth. “But as a general rule export taxes, quotas or bans do not make economic or development sense. In the case of basic agricultural commodities, they make even less sense,” he said. Mandelson also questioned the long-term logic of rich countries subsidizing their farm production and exports.
France -- the biggest single beneficiary of the EU’s €44 billion ($70 billion) a year paid in farm subsidies – and other European countries accuse Mandelson of making too many farm concessions to secure a new World Trade Organization deal. French President Nicolas Sarkozy in March suggested spurring domestic production and making Europe less dependent on imports. Mandelson said settling the WTO’s long-delayed Doha round of negotiations for a global trade deal -- launched in 2001 – was the best long-term option for helping developing countries as it would open up markets and reduce rich-country farm subsidies.
Ministers are expected to meet at the WTO in Geneva in a month’s time for a potentially last-gasp attempt at a Doha deal before changes in the US administration and at the European Commission next year set the process back yet further. (Reuters)