August 1, 2004 · Tim Wu
For the developing world, farm subsidies are slow-motion weapons of mass destruction. Yesterday’s WTO agreement is the first multilateral deal in a decade that pledges reductions. If it holds, much could change — but it could also mean new pressures for adherence to international IP laws.
In 1994 developing countries made a deal at the WTO. In exchange for TRIPS (the Trade Related Intellectual Property Agreement), they were supposed to get major reductions in agricultural and textile subsidies.
It was a bad deal. The world got TRIPS, but it didn’t get much of the agricultural reform that was promised. Europe, the United States, and Japan have mostly moved backward on agriculture since 1994. The average European cow lives on $2.50 a day subsidy when 3 billion people live under $2 a day. The average Japanese cow, meanwhile, lives on a healthy $7.50 a day, rather like a college student.
But yesterday’s deal is a new hope. It agrees most prominently to reductions in cotton subsidies. We in the U.S. pay out $4 billion a year to 25,000 cotton farmers who then produce $3 billion a year in cotton. That’s $160,000 per farmer — we’d save alot of money by just opening a federal amusment park that employs everyone in the cotton industry.
But the question remains: this time, will the U.S., Europe and Japan have the political will to make the reductions we have agreed to?
Here’s the actual agreement, heavy in trade lingo.