Mandelson rounds on 'fake' US food aid (15/12/2005)

1.Mandelson rounds on 'fake' US food aid
2.Oxfam - 'Food Aid or Hidden Dumping?'

The EU is doing great stuff at the WTO denouncing the USA's 'fake food aid' and dumping programme. Shame it has to come from the lips of Peter Mandelson but at least he seems to be saying exactly the same as the development agencies. See item 2 - an excerpt from Oxfam's paper, 'Food Aid or Hidden Dumping'.

Even the current head of the WTO, Pascal Lamy, has spoken out on this issue. During the Zambian food aid crisis over the US's dunping of GM grain, Lamy, then the EU's Trade Commissioner, in a letter to the Wall Street Journal, accused the US of using its foreign aid programme as a means to "dispose of its genetically modified crop surpluses. The simple solution is for the US to behave as a real aid donor," he said. http://ngin.tripod.com/220103e.htm

Lamy also hit out in an interview with Newsweek: "Zambia is a sovereign country and makes its own decisions. Zambians do not need to be heroic to assert their sovereignty... GM-free supplies are available in surplus in southern Africa. Europe's policy is to provide food aid procured in the region, rather than as a means of disposing of domestic stocks."

1.Mandelson rounds on 'fake' US food aid
By Philip Thornton [shortened]
The Independent, 14 December 2005

The opening day of the high-profile trade summit in Hong Kong got off to a disastrous start yesterday. A bitter war of words broke out between Europe, the US and the United Nations, and demonstrators wrought havoc inside and outside the convention centre.

Peter Mandelson, the EU's trade chief, triggered a row when he branded the US food aid programme, which delivers American produce to needy countries, as "fake" aid designed to help US farmers rather than the world's poor.

He rejected demands by his US counterpart that it was up to Europe to break the deadlock in the stalled World Trade Organisation negotiations. "He does not have an export subsidy fund so it is very generous of him to make that commitment," Mr Mandelson told delegates from developing countries. "He does have a large amount of fake food aid so if he were to give a commitment to deal with his fake food aid that would a more interesting proposal."

He went on: "The large, structured US programme of 'in kind' food aid is designed in reality to give support to US agricultural producers. It distorts trade and depresses local production.

"Statistics show that this aid is directly related to the price shifts for the commodities concerned on the US market."

2.Oxfam's 'Food Aid or Hidden Dumping'

This paper shows that current practices, especially those of the USA, create substantial adverse side-effects in trade that damage the livelihoods of poor farmers and stymie their economic opportunities to develop.

• Damage to local production in recipient countries: in 2002/2003 food aid donors over-reacted to a projected 600,000 metric tonne food deficit in Malawi, causing a severe decline in cereal prices and hurting local producers.

• Displacement of exports: in 2000, Guyanese rice exports to Jamaica were displaced by US food aid which suddenly doubled following a bumper crop in the USA. ·

• Food aid is used to dispose of surpluses: in-kind food aid peaked in 1999-2000 when there were large surpluses and low prices for cereals. This depressed prices for poor farmers around the world.

• Food aid is sometimes used to capture new markets: US legislation for Title I food aid programs states that priority is given to export of US agricultural commodities to those developing countries which have demonstrated the potential to become commercial markets. This is a major, and unfair, subsidy to exporters of the donor country.

• In-kind food aid is used instead of cash: 90 per cent of all food aid is provided in commodities rather than cash. This can destroy or damage local markets that poor farmers depend on.

• Monetization of in-kind food aid: increasing volumes of food aid provided for development projects is sold straight onto local markets to generate cash. This displaces local farmers’ produce and slashes their income by reducing prices.

As the world's largest donor of food aid, the USA has a special responsibility to ensure the quality of its food aid program and to minimize any trade distortions. The USA is the only donor making major use of concessional sales (rather than grants) for food aid; it is the only food aid donor to distribute a large proportion of its food aid bilaterally; and it requires virtually all food aid contributions to be in the form of US commodities.

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