Who knows?

A few weeks ago I wrote this:

The unfairness of the Common Agricultural Policy is well demonstrated by this article on the plight of African farmers. It amazes me that while at the G8 summit there will be discussions about how best to give aid to Africa, one of the best ways to help the continent, eradicating farm subsidies in both the US and the EU, is not on the agenda.

It seems I was wrong and that farm subsidies were in fact discussed at the G8 summit. What was agreed, or more precisely what was set out in the accords that resulted from the G8, was a commitment to the removal of farm subsidies. This applies equally to the EU Common Agricultural Policy and to US farm subsidies. The actual details will be hammered out as part of the general World Trade Organisation negotiations taking place later this year in Hong Kong.

I've never been entirely clear how farm subsidies fit into the WTO structure, and I am none the wiser having studied the WTO for my masters course (although, to be fair the course could be described as a general introduction to the WTO, focusing as it did on the key economic/political aims of the WTO/GATT, central case-law on the main clauses of the GATT and the other main WTO multilateral agreements). They are clearly an anomaly that don't fit with the core (economic) aim of the WTO which is to reduce trade barriers and to promote the operation of comparative advantage. Free trade, it is said, will improve the general economic welfare of the planet (while not dealing with the distribution of that welfare - hence the controversy that surrounds it and the felt need to not just promote "free trade" but "fair trade").

In the face of a general reduction in trade barriers and tariff levels that has occurred since the GATT was signed in 1947, the farm subsidies of the EU and US become increasingly unjustifiable, even without considering their impact on African farmers. This means that the agreement reached at the G8 should be welcomed. It should be noted that to even get the G8 to agree to the general aim of the removal of all farm subsidies is quite remarkable considering Chirac has been such a staunch defender of the CAP in the recent EU "Rebate Wars". (See also here.) However, the agreement is nothing but a statement of intent and sets out no deadline for the abolition of subsidies. As I said, this will be left to the trade talks later this year, which raises the specter of developing countries having to give something in return. That is, after all, how "negotiations" tend to work.

Given the lack of a deadline and criticism that Tony Blair has faced in the EU in recent weeks for daring to suggest that the CAP is a bad idea, it is doubtful that any significant shift in EU policy has been brought any closer by the G8 accords. What the G8 has recognised, it would seem, is that simply giving more and more aid to Africa is not the way to solve the continent's troubles. What is needed is structural change in the world markets - the removal of distortions that unfairly prejudice developing countries. It is arguable that the acceptance of this that is implicit in the G8's "statement of intent" in relation to farm subsidies is of more fundamental importance than the $50bn that the leaders agreed to give to Africa before 2010.