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Washington: The surge in world food prices is accomplishing what seven years of trade talks haven't: knocking down import barriers.
The Doha round of global trade negotiations has been stalled since 2001 because developing nations have refused to lower import tariffs that protect their farmers and rich countries won't give up farm-price supports. Now, import duties are being slashed from Brazil to Burkina Faso in response to prices that the World Bank says have risen 83 per cent in the past three years; subsidies in the US and Europe are falling.
"Food prices have done for import liberalisation what Doha wouldn't have been able to achieve for a very long time,'' says Arvind Subramanian, a trade expert at the Peterson Institute for International Economics in Washington.
Since early 2007, when cereal prices began rising, developing nations have taken a raft of measures to increase imports.
India removed a 36 per cent import tariff on wheat flour, and Indonesia eliminated duties on wheat and soybeans. Peru jettisoned tariffs on wheat and corn. Turkey cut import taxes on wheat to eight per cent from 130 per cent and on barley to zero from 100 per cent. Mongolia scrapped its value-added tax on imported wheat and flour.
Burkina Faso suspended import taxes on four food staples in February after riots in the West African nation over price increases. And Brazil may remove its 10 per cent tax on wheat imports. In all, at least 24 nations have reduced duties and value-added taxes, according to an April 9 World Bank report.
In the US, farm subsidies are expected to fall below $8 billion this year, down from $13 billion in 2005, says David Orden, a senior research fellow at the International Food Policy Research Institute. European Union support of farmers fell by 10 billion euros ($15.7 billion) from 2004 to 2006, according to the Organisation for Economic Cooperation and Development in Paris.
"The prospect that food prices will remain relatively high in the future helps the US accept lower levels of subsidies,'' says Carlos Marcio Cozendey, economic department chief at Brazil's foreign affairs office in Brasilia.
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