At the end of April, the World Trade Organisation ruled that the approx. $3 billion / year subsidy that American cotton farmers get from their government is illegal. The EU also subsidizes its farmers heavily – both the EU and the USA spend a total of $1 million / day on agricultural subsidies. And the WTO is expected to rule against an EU subsidy to sugar farmers soon.
While it’s unlikely that either the EU or the USA will accept the decisions lying down – the talks in Cancun broke down last year because the richer countries refused to reduce farming subsidies – it would be much better in the long term, if they were to give in gracefully.
Subsidies distort trade and prevent the Third World countries from developing their economies though agriculture. At the same time consumers in the richer countries pay too much – not only for the subsidized goods that they buy, but also to reduce the price that the rest of the world pays for the exported surplus. If the Third World countries’ economies were able to develop though producing and exporting agricultural goods, resulting in more jobs, we would be encouraging an environment which was less likely to breed the levels of discontent that result in people being prepared to (suicide-) bomb the countries which they perceive as being the reason for their poor living conditions.
Of course, this is not the only driver for the terror attacks we have seen increasingly since the 1990’s. Nonetheless, a number of suicide bombers do come from communities where living conditions for many are poor, such as Palestine or Morocco, and we certainly aren’t doing ourselves a favour by encouraging large differentials in the standard of living around the world.
Update (2004-05-10):
The EU announced today (subject to the rest of the EU convincing France) that it intends to cut farming subsidies.
