`EU farm reform has little impact on RI farm exports'
`EU farm reform has little impact on RI farm exports'
M. Taufiqurrahman
The Jakarta Post
Jakarta
The latest reform measures of the European Union (EU) for the
agriculture sector, which include subsidy cuts for farmers, will
have little impact in boosting Indonesia's farm exports to the
European market, an analyst has said.
Agriculture expert Bustanul Arifin, of the Institute for
Development of Economics and Finance (INDEF), said that instead
of subsidies, what constituted the greatest obstacle for
Indonesia and the developing countries in general was barriers to
entry.
"There is hardly any reason for Indonesia to cheer the
decision, because what stands as the biggest challenge is both
tariff and nontariff barriers for products from Indonesia," he
told The Jakarta Post over the weekend.
He described the policy merely as part of efforts by the EU
toward meeting World Trade Organization (WTO) rulings, not in
order to open its market for agriculture products from developing
countries. He added that the reform drive was triggered by
internal economic problems suffered by European countries, which
could no longer bear the huge cost of the subsidy program.
Last week, after going through a series of heated
negotiations, the EU agreed to cut a link between subsidies given
to farmers and their ability to produce. The subsidy program was
known as the Common Agricultural Policy (CAP).
The very expensive, 45-year CAP has been blamed for abundant
surpluses, which were later dumped on the world market.
The policy costs around 43 billion euros (US$ 50 billion) per
year -- about half the total budget of the EU. CAP is largely
unpopular around the world as it subsidizes European farmers to
an extent that they can undercut farmers from poor countries, who
also face trade barriers that exclude them from potentially
lucrative European markets.
The reform's chief architect, European Farm Commissioner Franz
Fischler, said that the move marked the beginning of a new era
when EU said goodbye to a policy that used to distort trade.
EU ambassador/head of delegation for Indonesia, Brunei
Darussalam and East Timor Sabato Della Monica acknowledged that
the reform would bring no significant impact to Indonesia because
EU's largest trading partner from the camp of the developing
countries happened to be countries from Latin America.
Earlier, an economist with the EU Embassy in Indonesia said
that the new agriculture reform would produce little incentive
for farmers in Europe to produce more crops.
"This means that supply in the world market will drop, and the
price will therefore rise," he told the Post.
Bustanul said the reform represented part of EU's strategy to
bring its major trading partner to the table at the next WTO
round of talks in Cancun, Mexico, this September.