Current Affairs

Current Affairs



Patterson says US farm subsidies detrimental
New incentives for local investors
BRYON BUCKLEY, Senior political reporter
The Observer
Friday, May 24, 2002



PATTERSON... incentives designed to minimise unwarranted market distortion

PRIME Minister P J Patterson told business leaders Wednesday that the restoration of farm subsidies by the United States (US) Congress was "detrimental" to the recovery of the global economy and "extremely harmful" to developing and least developed countries, many of whom, he said, relied on agricultural exports.

The Prime Minister, who was speaking at the monthly board meeting of the Jamaica Chamber of Commerce in Kingston, also announced his administration's decision to introduce new incentives for local investors and producers because World Trade Organisation (WTO) agreements were rendering current investment incentives "inappropriate".

Legislators in the US, in trying to find favour with farming communities ahead of Congressional elections due in November, recently approved the granting of significant subsidies to domestic farmers. This will result in the lowering of production costs to US farmers and thus enable them to sell their goods at prices lower than agricultural goods produced in developing countries like Jamaica.

But Patterson, fresh from a trade and economic conference between Caribbean Community (Caricom) states, Latin-American countries and European Union states in Spain, did not spare criticism of the US' action at the meeting with local private sector leaders.

"How can they ... say we are not free to provide any degree of help or subsidy for our farmers when they can introduce the most extensive and expensive system of subsidies that has ever been devised?"

He said it was unfair to require countries least able to undertake trade liberalisation and structural adjustment to pursue these policies when the strongest countries, including the US, refuse to do so.

"In fact the adjustment is intended to promote export growth," noted Patterson, who is spokesman on external negotiations for the Caribbean Community (Caricom). "But this will not be realised without improved market access in developing countries and that must include the United States."

According to Patterson, small developing economies and small producers and industries need to be granted special and differentiated treatment in trade agreements such as the emerging Free Trade Area of the Americas (FTAA), comprising 34 countries of North, South and Central America and the Caribbean.

He argued in favour of granting special incentives/assistance to small and vulnerable producers, which in his view did not constitute a distortion of the free market due to their "insignificant" market share.

"Government is using this opportunity to formulate an incentive package, which will take advantage of our unique characteristics and give Jamaica a 'first mover advantage' among our main competitors," Patterson told the business leaders gathered at the Terra Nova Hotel.

He stressed that the incentive package was necessary to prepare local firms and industries to compete in the emerging barrier-free global trading environment.

The proposed incentive package, which is currently being discussed with the private and productive sectors, is designed to "minimise unwarranted market distortion" and will be devoid of unnecessary bureaucracy, said the prime minister.

There will be two components to the incentive programme. A general package, which is a consolidation of current measures, will "entitle people to automatic qualification rather than discretionary ministerial decision", Patterson explained. While these incentives are intended to benefit a wide cross section of business interests, a special package will be accessible by only those firms who are engaged in the "priority development objectives of the country", he stressed.