Detailed World Bank Report Takes on Subsidies, Tariffs

Organization says takes detailed look at industrialized nation subsidies, tariffs and says they undermine the rural poor in developing countries. Compiled by staff

Published on: Jan 17, 2005

A report published today by Business Report a detailed report from the World Bank shows how ag trade liberalization would reduce rural poverty in developing nations. The report suggests new farm dynamics and even names winners and losers based on program changes.

The report goes beyond criticizing industrialized nations for supporting crops. The report also points to India and China - both developing nations - that produce 63% of the world's peanuts but have kept higher price supports despite globalization of the crop.

The report's theme is not unfamiliar to those who follow world trade as negotiators have been working on a solution to the problem for years. In fact, it's a key sticking point in the Doha round of negotiations for the World Trade Organization.

The key change in this new report is the crop-by-crop specificity of the analysis and how pro-development approaches would be different from commodity to commodity. The aim of the report is to nudge forward the WTO negotiations, which collapsed in Cancun, Mexico in 2003.

Subsidies work to keep prices low in local markets, but they keep developing countries from competing even with their lower labor costs. Globalization could help boost those economies, but the World Bank points out that those local subsidies keep many imports from competing.