11 September 2003, Cancún, Mexico -- FAO today called on Trade Ministers at the 5th Ministerial Conference of the World Trade Organization (WTO) to dismantle barriers to fair international trade, saying a level playing field for trade in agricultural products was vital for food security in developing countries.

In a statement prepared for the Conference, FAO urged industrialized countries to "substantially cut export subsidies," lower tariffs and reduce trade distorting domestic support in order to increase importation of agricultural products from developing countries.

In the statement FAO made 12 recommendations, including calls for:
  • tariff de-escalation;
  • effective measures to counter possible negative effects of trade reforms in the least developed and net food importing countries;
  • simplicity in international trade rules and
  • increased support to help developing countries become more competitive in trade.
"Food and agricultural trade is vital for food security, poverty alleviation and growth," FAO's Assistant Director-General Hartwig de Haen said in prepared comments, adding that food imports contribute to the supply of basic food stuffs in many of the world's poorest countries whilst agricultural exports were an important source of rural income and foreign exchange.

FAO estimates that some 840 million people are chronically undernourished, 800 million of them in developing countries.

More than 70 percent of the world's extremely poor and undernourished people live in rural areas and agriculture represents the main source of income for about 2.5 billion people in developing countries alone.

"If trade is to serve as an engine of economic growth and poverty alleviation, countries both in the North as well as the South need to broaden their production base on a fair competitive basis," de Haen said, "Comparative advantage can assure everyone a fair share of growing world income."

Free but fair

According to the principle of comparative advantage, a country gains from trade when it specializes in areas of production or processing where it is relatively more competitive.

FAO studies show that this principle is severely violated by a number of obstacles that work mostly against the interests of developing countries.

"The markets for temperate zone products and basic food commodities continue to be substantially distorted due to government subsidies and protection, particularly in rich countries. Export subsidies on products exported by developed countries continue," de Haen said.

Market distortions caused by subsidies, tariffs and technical barriers to trade, discourage farmers in developing countries from being competitive.

Poor farmers cannot compete in an international market place, if their goods are shut out of richer countries, while subsidized farm produce from rich countries is sold at or even below production cost in their own local markets.

Unsustainable subsidies

In the fisheries sector, according to FAO, subsidies in many countries contribute to over-fishing. An agreement on the reduction, or elimination of capacity-enhancing subsidies will result in more sustainable fisheries worldwide.

Reductions in import tariffs on fish and fishery products in developed countries will promote exports from developing countries, especially exports of processed fish products, which continue to be hampered by tariff escalation.

The share of the Least Developed Countries (LDCs) and Net Food Importing Developing Countries in global agricultural exports has declined and their share in global food imports has increased.

This creates increasing difficulties for some of these countries to pay for their food imports, according to FAO.

Many poorer countries that rely primarily on agriculture for their economic development will become increasingly dependent on aid, slip deeper into debt and face major food shortages, FAO warned, unless they improve their competitiveness in agricultural products both domestically and internationally through investment and fairer trade.

"Enormous untapped agricultural potential exists in developing countries to meet the twin challenges of hunger and poverty. What we need is a renewed focus on effective North-South cooperation so that available resources are used efficiently," de Haen said.

John Riddle
FAO Information Officer
(+52) 998 870 6165 (Cancún)