Agricultural subsidies is still the hot topic for world trade negotiators If the WTO's Hong Kong ministerial conference ends in another walkout by developing nations this week, as it did two years ago in Cancun, chances are high that it will be because of disagreements over rich-world agricultural subsidies and import tariffs that are criticised for distorting world trade. Joseph Stiglitz, the Nobel prize-winning economist and former head of the World Bank, yesterday blamed American and European cowardice before powerful domestic interests for the impasse over agriculture which accounts for less than 10 per cent of global trade but provides work for 70 per cent of people in the developing world. 'The basic concept of a global free-trade agreement is that the advantage it brings to an economy as a whole vastly outweigh any disadvantage to special interests that may exist within that economy,' Mr Stiglitz said. 'It is up to trade ministers and governments to communicate that point more effectively.' According to Mr Stiglitz, in the US 25,000 'very wealthy corporate farms' share US$3 billion to US$4 billion in cotton subsidies which have a direct adverse impact on 10 million cotton farmers in sub-Saharan Africa. 'The damage that we do [in the US] is enormous - it is far greater than the amount of foreign aid we give out,' he said. 'We're not even making up for the damage through our foreign assistance programmes' Mr Stiglitz says this damage is only one example of a history of 'bad faith' shown towards the developing world by rich countries during the world trade negotiations, including during the Uruguay round when developing nations were promised the inclusion of agriculture and textiles into future trade talks in exchange for an agreement then on intellectual property and services. 'This was clearly an unbalanced agenda not based on economic principles and was clearly disadvantageous to developing countries,' Mr Stiglitz said. While awareness of the imbalances of global trade has improved, he believes very little appears to have changed in rich countries' approach to the problem - the Doha 'development round' notwithstanding. Mr Stiglitz cited the US decision to double its agricultural tariffs in 2001 - the year the Doha round was launched - as an indication of the vindictive stance adopted by developed countries that extends even as far as tariff structures. 'The structure of tariffs imposed on imports from developing countries is used to stop development in poor countries,' he said. One example he cites is the removal of tariffs on fresh tomato imports, only to be replaced with a 25 per cent tariff on a tin of tomatoes: 'It is the natural thing in developing countries to grow from agriculture to agricultural processing but import tariffs are set up to prevent that process.' Over the longer term, Mr Stiglitz argued rich countries should also realise they too would gain if the developing world becomes more prosperous, not least because trade would spur growth in the developing world and help wean them off foreign aid - giving them 'a hand up rather than a handout'. 'One of the worst outcomes of the Hong Kong talks would be if members reached a bad agreement and then people turned around and said: 'We've done the development round - now we can get back to business as usual,'' Mr Stiglitz said. 'In fact what the WTO needs is a further development round, in effect a [real] development round.' 'What the WTO needs is a further development round' Joseph Stiglitz Nobel prize-winning economist