Editorial

U.S. Agricultural Subsidies Show Need for Independent Trade Policy

The announcement that the United States will increase agricultural subsidies by 70 percent, or US$73.5 billion over the next 10 years, is one more indication that the Bush administration is abandoning neo-liberalism in favour of a policy of protectionism and trade wars. It represents a devastating blow to the World Trade Organization and the Doha Agreement of less than a year ago in which the U.S. pledged to reduce agricultural subsidies.

Agricultural subsidies have long been a sticking point in international trade negotiations, with both the U.S. and the European Union (EU) complaining about the subsidies and tariff barriers of other countries, but refusing to abandon their own. The U.S. and EU have the highest levels of agricultural subsidies in the world, as well as protectionist tariffs to keep competing agricultural products out of their markets.

Agricultural tariffs in the U.S. and EU have little to do with supporting the incomes of their farmers and a lot to do with the domination of Asia, Africa and Latin America. Prior to the Second World War, the European powers imported huge quantities of cheap agricultural commodities from the colonies to feed their populations. Cheap food translated into cheap wages for European workers. In the United States and Canada, which had vast expanses of farmland, a system amounting to internal colonization was instituted, with the rural populations subsidizing the urban populations with food prices often below the cost of production.

However, in the post-war period this relationship began to change. Advances in agricultural technology resulted in the production of enormous surpluses of foodstuffs in Europe and North America and the relative decline of the colonies as sources of food. This, in turn, led to a crisis in the agricultural economies of Asia, Africa and Latin America. Not only did they face the shrinking of their main export markets, but the disruption of their local economies led to an increasing dependance on food imports, especially grain, from the West. The Green Revolution of the 1960s led to even greater levels of dependancy, as farmers were forced to switch from food production to production of raw materials for export.

At round after round of international trade talks during the past 30 years, the developing countries have been demanding reductions in the levels of export subsidies in Europe and the United States, as well as reductions in their levels of tariff barriers to imports. The export subsidies result in the dumping of agricultural commodities at prices which the developing countries cannot match, while the tariffs block their products from the huge markets in Europe and North America. However, despite repeated promises and agreements, neither the U.S. nor EU have complied. Instead, they have maintained or increased their subsidies, further devastating the agricultural economies of the developing countries. This modern combination of export subsidies and tariffs goes far beyond simple protectionism; in the hands of the Americans and Europeans it has become a key instrument in the subjugation of the rest of the world.

In effect, agricultural subsidies have become a weapon in the hands of the capitalist powers to intensify the exploitation and expropriation of the developing nations. Many countries are rapidly being driven into bankruptcy, as they have been forced to import both food and manufactured goods, while many of their products are blocked from entering the capitalist markets. The U.S. and European powers have taken advantage of this situation to impose onerous restructuring programs on these countries through the International Monetary Fund (IMF) and the World Bank, programs that force the privatization of public assets at firesale prices, that increase the local prices for food and increase taxes to pay back the debt.

Even a developed country, such as Canada, faces ruin as a result of the predatory trade practices of the U.S. and EU. We are witnessing the destructive nature of the U.S. tariff on Canadian softwood lumber, which, in less than two months, has already eliminated 50,000 Canadian jobs and cost our economy billions of dollars. The drastic increase in U.S. agricultural subsidies are bound to have a similar effect on an already-depressed Canadian agricultural sector. It is almost certain that the U.S. subsidies will soon be followed by tariff barriers against Canadian exports to the U.S. of durum wheat, barley and other agricultural products. At the very least, the continual threat of such protectionist measures will be used to ensure ongoing political subservience to the U.S. by the Canadian government.

The examples of the U.S. agricultural subsidies and tariffs on softwood lumber demonstrate the inherit folly of basing an entire economy on trade with an imperialist superpower like the United States. During the 1960s Canada was able to offset some of the economic pressure from the U.S. by developing export markets in the Soviet Union, China and various developing countries. The only long-term solution to the trade crisis now facing Canada is to drastically reduce its dependancy on trade with the U.S. and to cultivate trade relations with other countries, especially the developing countries, on the basis of equality and mutual benefit. Any other course of action will see Canada rapidly reduced to the level of a developing country, itself.