sustainable development 20 years on from the ... - José Eli da Veiga

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2. Agricultural subsidies
Most agricultural subsidies in industrialized countries are price-support programmes and payments related to
output levels or the use of certain inputs. All subsidies of this type generate incentives for the overproduction
of various crops, pushing down their international prices and making it more difficult for farmers in
developing countries to compete. For that reason, the World Trade Organization (WTO) considers them trade
distorting, and their reduction is currently being negotiated in the framework of the Doha Round (see section
4). The total assistance granted by developed countries to the agriculture sector, including protection through
tariffs, quotas and other barriers declined from 1.2% of GDP in <strong>20</strong>00 to 0.9% of GDP in <strong>20</strong>09. Nonetheless,
this assistance remains at high levels, worth over US$ 350 billion per year since <strong>20</strong>04, and in <strong>20</strong>09
represented three times the total amount of <strong>development</strong> assistance provided by those same countries.
Apart from their impact on agricultural trade, subsidies linked to prices, output levels and input
use have been classified by the OECD as having the greatest negative impact on the environment, among
the different types of agricultural subsidy (OECD, <strong>20</strong>02). Such impacts can occur through various
channels, including: incentives for greater use of fertilizers and pesticides, with consequent damage to
soils and water; the incorporation of land that could be used for conservation purposes into cultivation
areas, and reductions in biodiversity stemming from subsidies to plant certain crops rather than others that
do not receive subsidies.
A reduction of distorting agricultural subsidies in industrialized countries would create a more
level playing field for developing-country producers, and reduce incentives for overproduction in the
industrialized countries themselves, with consequent environmental benefits for them. It is harder to
predict the environmental effect of such reductions in developing countries. The net impact on the
environment will be different in each country, depending on the individual impacts of the expansion of
certain crops and the contraction of others, in response to new price signals generated by a reduction of
subsidies in industrialized countries. In this context, it becomes extremely important for developing
countries to implement national agricultural sustainability programmes, irrespective of the outcome of the
current negotiations in the WTO (La Vina and others, <strong>20</strong>06).
3. Aid for trade
Latin American and Caribbean countries still face significant internal constraints that prevent them from
participating more competitively in international trade flows. These include the following: lack of
information on trade opportunities; excessive export/import formalities; inadequate financing for SMEs
and infrastructure problems. It is therefore very important for the region to fully exploit the opportunities
provided by aid for trade, such as those of the Aid for Trade Initiative launched during the Ministerial
Conference of WTO in Hong Kong (Special Administrative Region of China) in December <strong>20</strong>05.
(OECD/WTO, <strong>20</strong>10). Nonetheless, the region receives a small proportion of aid-for-trade flows: roughly
7%, which nevertheless accounts for slightly more than a fifth of the ODA flowing into Latin America
and the Caribbean during the second half of the <strong>20</strong>00s.
The countries of the region could increase their share of aid-for-trade flows by defining priorities,
and identifying and presenting relevant projects that enable them to obtain new resource flows, in
accordance with the principles of additionality, sustainability and aid effectiveness. In addition, priority
should be given to securing funds for projects that involve several countries and include a clear tradefacilitation
component. A greater flow of funds to the region could not only help improve its international
participation but also contribute to its <strong>sustainable</strong> <strong>development</strong> by incorporating specific actions.