TNAG-1640-FCO40-2287-Economic-situation-in-Hong-Kong-1987 — Page 82

poor. But,

shion the effects of world prices on the urban

second, the already overwhelming arguments for reform of agriculture in the developed countries are strengthened by the effects present policies are having on the developing countries.

The case for agricultural reform is by now well understood. The present system entails spending large sums of money on storing and disposing of surplus food. This imposes a direct burden on the rest of the economy. But the burden does not stop there. Consumers have to pay much more in the shops than if they were able to buy freely. And many of the poorer farmers are scarcely benefiting at all from a system which was originally designed to maintain farm incomes.

་

I have made these points repeatedly in international meetings. They underly our wholehearted opposition to increasing the EC Budget until the excesses of the Common Agricultural Policy are brought under control. The analysis of the problem is increasingly widely accepted. The question is how to tackle it. Earlier this month, the United States, which also subsidises its agriculture to a massive extent, as indeed does Japan, launched a radical proposal for the elimination of all subsidies over a ten year period, and be considered at the next GATT meeting. This is certainly an area where we must not be afraid of radical solutions. And we need to keep firmly in mind the damage which the present system is doing not only to our own economies but also to the very poorest countries in the world.

this will

Of course, the need to make markets more, rather than less, free and to give the poorer countries continued access to developed countries' markets does not apply only to agriculture. It applies to trade of all kinds. That is why the Geneva talks in GATT need to be brought to a successful conclusion in other areas, such as services, too. But agriculture is of central and increasing importance in this context. We cannot preach free trade to the countries and practise something very

developing

different

ourselves.

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