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INTRODUCTION : Deadlock at Doha
Unformatted Document Text: Since the Doha Round talks began in 2001 WTO Director-General Pascal Lamy and other WTO officials have warned that failure to reach a new agreement on agricultural trade protection is likely to usher in a new wave of trade protectionism, undermine popular support for the Doha Round, and more importantly threaten the WTO's credibility, quite possibly leading its demise. This paper examines two interrelated questions. First is why states with a strong interest in agriculture have again failed to produce an AoA, thereby preventing the Doha round from moving forward. Second is the consequence of this stalemate for the viability of the WTO as an international organization and trade institution. After a brief history of multilateral trade negotiations up through the Doha Round, the paper uses an international political economy approach 3 to explore some of the many systemic and subsystemic factors and conditions that have produced a stalemate in the current negotiations. Based on the Waltner-Toews and Lang complex model 4 of the relationship of numerous dependent variables to one another in policy-making cases, this study concludes that the Doha Round negotiations are again deadlocked, not for lack of often cited “political will,” but due to a much more complicated set of political, economic, and social reasons. The first factor is a new triangular relationship between the US, EU, and the recently organized developing nation coalitions that are now in a much stronger negotiating position than they were in the previous Uruguay Round. Their interests and positions cannot be easily relegated to a single “one size fits all” trade deal. Subsystemically, a second factor is the dislocating effects of globalization and past free trade policies that make it increasingly difficult for most delegates to dis-embed agricultural trade proposals from other trade-related issues such as poverty and economic development, intellectual property rights, labour, energy and the environment, and food safety. As an interrelated set of problems these issue broaden the agricultural trade policy 3 An IPE approach usually includes the mercantilist (economic nationalist or Realist), economic liberal, and structuralist (Marxist) analysis. For a more detailed discussion of these approaches see David Balaam and Michael Veseth, Introduction to International Political Economy, 4 th edtn (Upper Saddle River, NJ: Pearson-Prentice-Hall, 2008), chapter 1. 4 See Waltner-Toews and Lang David “A New Conceptual Base for Food and Agricultural Policy,” Global Change & Human Health, 2, 2000, pp. 116-130. 3Unformatted Document Text: agenda and ultimately lessen the chances that these states will be able to reconcile these issues and move the Doha Round forward. Three other systemic factors and conditions lessen the chances of a new AoA. One is the growing criticism of neoliberal trade policies by a number of respected and influential trade experts and academics. This trend adds to the pressure on delegates from a variety of developing nations who fear burdening their societies with the political and social consequences of neoliberal trade policies. Trade officials must also accommodate the recent major shift in market conditions with agricultural commodity prices skyrocketing. This injects another element of uncertainty and unpredictability into the negotiations. Finally, the strength and influence of the new developing nation voting blocs or coalitions manifest an increasing shift in the international balance of wealth and power that favors developing nations. These trends and problems raise reasonable concerns about the WTO's strength and viability. The essay concludes that there is a good deal of evidence that the WTO is indeed losing credibility and most likely will not survive. In fact it is the neoliberal oriented trade policies and structures, pro globalization outlook, and complex agenda of the WTO itself that increasingly drive a wedge between the rich and poor within many of the developing (and developed) nations, weakening both public and elite support for the institution and its policies. The last section of the paper explores several ideas and proposals by some experts to overcome this situation and assesses the likelihood they can correct the institutional problems and weaknesses of the WTO. Despite the advice of some experts, in the immediate future, agriculture cannot and will not be taken off the negotiating table. If a new AoA is to be reached and global trade rules agreed to, WTO members will be forced to approve a host of special preferences and other quasi- protectionist measures for developing countries. In the more distant future however, economic liberal theory and the institutional structures and processes of the WTO must be significantly reconfigured (as opposed to merely reformed) in order to adjust to account for these subsystemic and systemic realities. Multilateral Trade Negotiations and the WTO A Brief History 4Unformatted Document Text: Multilateral trade negotiations were a product of allied negotiations after World War II in Bretton Woods, New Hampshire, that produced the International Monetary Fund (IMF), World Bank, and General Agreement on Tariffs and Trade (GATT). In 1947 the GATT went into effect as a watered down replacement of what would have been a more formal institution that was vetoed by the US Senate. As for all intents and purposes it was a “gentlemen's agreement” that operated on the principles of nondiscrimination and reciprocity. The GATT's main objectives were to reduce trade barriers and to promote cooperation between all members by via the principle that trade agreements between any member states would apply to all states. 5 The GATT also reflected at least two neomercantilist-realist goals. The first was to institute a series of policies that helped prevent a return to the years of Great Depression and high tariffs that many felt in part created the conditions that lead to WWII. Trade agreements also served to help pro democratic-capitalist states pursue the US goal of containing the Soviet Union by closing the trade system to it, its allies, and otherwise communist sympathizing states. The tendency to use trade as an instrument of foreign policy to coerce other nations has consistently been a part of the US's and many other countries' foreign economic policy and continues today. Examples abound such as the routine use of trade sanctions against Cuba, Iraq, and Iran. The Uruguay Round The eighth GATT round--the Uruguay Round--got underway in Punta del Este, Uruguay in 1986 under pressure from the Reagan administration to open up markets for US industrial products and agricultural commodities in Europe, Japan, and developing nations that were beginning to show signs of impressive economic growth. 6 In an atmosphere of growing interdependence, economic competition, and support for economic liberal ideas and policies, many states agreed to a new round of negotiations in order to deflect the pressure of domestic industries and groups who called for trade 5 For a more detailed history of GATT and WTO trade negotiations see Razeen Sally, “The WTO in Perspective” in Brian Hocking and Steve McGuire, Trade Policy (London: Routledge, 2004) pp. 105-119. 6 Much of this discussion of the Uruguay Round is excerpted from David Balaam, “Agricultural Trade Policy” in Ibid., pp. 165-178. See also See Joseph Stiglitz and Andrew Charlton, Fair Trade For All: How Trade Can Promote Development (Oxford: Oxford UnivUnformatted Document Text: protection or to help those industries who would use trade liberalization to improve their own trade competitiveness. Up until the Uruguay Round, agriculture had been one of the most protected items in the world. Domestic agricultural protection and trade policies were always exempted from GATT rules under Article XXIV and intentionally left off the negotiating table in multilateral trade rounds. Officials judged it to be socially and politically too contentious because it threatened some states food security and required adjustment issues that would have prevented progress in other areas where trade agreements were possible. Because tariff levels on manufactured goods were already low, along with other new issues such as Trade Related Intellectual Property Rights (TRIPs) and Trade Related Investment Measures) TRIMs negotiators finally agreed to go after protectionist support for the world's major agricultural producers and importers. As the talks went on agriculture generated a good deal of controversy and tensions between the US, the EU, Japan, and a number of developing nations, all with strong interests in agricultural production and trade policy. Before then developing nations were not that involved in the GATT and preferred to work through the United Nations Conference on Trade and Development. GATT rules incorporated Special & Differential (S&D) Treatment exceptions for their infant industries and balance of payments provisions. The developed states assumed that developing nations would benefit from these GATT provisions. In the 1980s economic liberal policies of the IMF and World Bank promoted outward-oriented economic growth models and pro free trade policies. As East Asian nations grew and trade had a greater impact on their national policies, these states increased their interest in access to developed country markets for their textiles and for stronger rules they hoped would shield them from protectionist measures of other nations. Some of these states together with India and Brazil helped open the Uruguay Round in 1986. During the Uruguay Round the US, EU, Japan, and the Cairns Group (composed of Australia and 17 other pro-free-trade countries) found themselves trying to sort out a quagmire of trade and non-trade related issues such as phasing out all export subsidies, significantly cutting import tariffs, and reducing a host of domestic support measures. As beset President Reagan's personal style of negotiation, at first his negotiators suggested ersity Press, 2005). 5an end to all export subsidies everywhere. But many US farm groups, congress-people, and agribusinesses put up a fight that resulted in the US, the EU and developing nations agreeing to gradually eliminate their domestic farm programs and agricultural trade support measures. By the end of the Reagan administration the US had adopted a two- pronged negotiating strategy whereby on the one hand it championed economic liberal ideas about the benefits of free trade while at the same time it periodically adopted protectionist measures it claimed to “fight fire with fire,” or in effect to pressure other nations into abandoning their protectionist measures if they wanted to see US levels of protection decline. Likewise EU efforts to significantly reduce their agricultural subsidies faced strong resistance from European community farmers and threatened to unravel the EU's Common Agricultural Policy (CAP)—a community-wide farm program that reflected the combined interests of its then 15 members. It took the EU five years to bring the CAP in line with GATT reform proposals. France was most critical of efforts to decrease agricultural support and was bought off in the final negotiations with a side agreement that left much farm support in tact. During the negotiations Japan went from being a strong supporter of decreasing protection to a more lukewarm position as the talks went on. Officials of its Liberal Democratic Party (LDP) were reluctant to significantly decrease protection of Japanese farmers given strong farm support of the LDP's dominant position in the Japanese party system. During negotiations some agricultural producing, exporting, and importing developing countries formed the Group of 21 (which is now the G20). They increasingly played a bigger role in GATT working groups, learned the ropes, and began forming some weak coalitions. A number of them were keen on the deal offered them by the developed countries to open their markets to the developing nation agricultural commodities and textiles in return for them reducing their industrial and agricultural tariffs. Of the G20 India and Brazil joined in some “Green Room” (closed door) negotiations and formal negotiations. These states gradually became more committed to instituting trade rules—and eventually accepted the “Grand Bargain” proposal of the US and EU that would provide developing nations with more access to the markets of developed countries.
It is my argument that the current stalemate in the Doha Round trade talks reflects many different immediate reasons why the WTO members have not been able or even wanted to arrive at an agreement on a variety of agricultural trade issues. Much like in the Uruguay Round, failure to reach an agreement on agricultural issues prevent moving forward on other issues and concluding the talks. However, the current deadlock also reflects a variety of political-economic developments that began in the Uruguay Round and that are now being played out in the Doha Round. These trends include the solidification of a growing coalition of developing and developed country interests that support continued agricultural protection of one form or another. Another trend is a noticeable increase in criticism of globalization and economic liberal trade polices by academics and state officials alike whose neoliberal trade theories and policies have guided most of the WTO members until now. These trends make it difficult for WTO members to break the current stalemate and arrive at an agreement that is both politically satisfying to WTO members, but that also does not continue to undermine the authority and importance of the WTO
Sandra Polaski welcomed participants to the Carnegie Endowment and noted that the seminar was designed to broaden the range of discussion of agricultural trade by including experts, negotiators and direct stakeholders, such as farmer organizations from developing countries. Mr. Rouille D'Orfeuil noted that the recent breakdown of the Doha Round of WTO negotiations has created an opportunity for negotiators and stakeholders to step back and reassess the priorities and direction of the talks. Mr. Rouille D'Orfeuil reminded everyone that trade liberalization inevitably creates winners and losers; without appropriate policies to assuage negative shocks to the losers, a Doha agreement could actually worsen rural poverty and inequality. Mr. Rouille D'Orfeuil also applauded Ms. Polaski's contributions to the trade debate, particularly her innovative approach to modeling unemployment and underemployment in rural labor markets in developing countries.
Ø better understand the current provisions of the Agreement on Agriculture, including the implementation of commitments;
Ø become more familiar with the process, as well as with the requirements and formats for notifications to the Committee on Agriculture;
Ø enhance their knowledge of the key issues in the Doha Round agriculture negotiations; and,
Ø improve their capacity to analyse different proposals made in these negotiations.
ASSESSING THE IMPACT OF AGRICULTURAL TRADE LIBERALIZATION
The goal of the program's first panel was to review the findings of Carnegie's recent study with regard to the agricultural sector and compare it with other leading models. The panel was chaired by Antoine Bouet and panelists included Ms. Polaski, Mr. Jean-Marc Boussard and Mr. Dominique Van der Mensbrugghe. Mr. Bouet began the session by pointing out that models have been converging in finding increasingly smaller, but still positive gains from trade liberalization. Slides illustrating Mr. Bouet's point can be viewed by clicking here.
Ms. Polaski concurred that the gains from a Doha deal are likely to be small. These small stakes can help explain the lack of urgency shown by negotiators: reaching an agreement that would yield only modest economic gains could still impose adjustment costs in losing sectors. The Carnegie model's predictions of modest gains are consistent with results from the leading World Bank and CEPII models. Most gains that accrue to developing countries can be traced to manufacturing liberalization, which is consistent with findings from other models when comparable scenarios are simulated.
This finding challenges the conventional wisdom that agricultural liberalization would allow poor countries to reduce poverty and promote growth through agricultural exports. Ms. Polaski enumerated three reasons why agricultural liberalization could actually harm many developing countries. First, many poor countries are net food importers. Eliminating agricultural subsidies would reduce production and increase the price of agricultural goods to the detriment of net food importers. Second, many rich countries apply lower tariffs to exports from developing countries. Reducing overall tariff levels would narrow the margins of these preferences. Finally, due to the small scale of agricultural production in most developing countries, the prospects for competing on global markets are poor. However lower tariffs could lead to cheaper imports of competing products, leading to a reduction of farmers' incomes. The Carnegie model showed that developing countries could shield certain crops essential to farmers' incomes without significantly diminishing the benefits to other countries of agricultural liberalization. Most market gains for farmers in wealthy countries will come from exports to other wealthy countries.
Ms. Polaski concluded that for the benefits of liberalization to be realized, more must be done to accommodate the defensive needs of developing countries. Specifically, she recommended allowing exemptions for key special products, sequencing liberalization such that poor countries are granted access to rich country markets before being required to open their markets and extending duty free-quota free treatment to exports from least developed countries (LDCs) and other preferences to countries just above the LDC threshold.
Mr. Boussard challenged the assumptions that underlie the Carnegie and other econometric models of international trade. He pointed out that risk and uncertainty characterize agricultural markets, with particularly negative effects in developing countries where the poor cannot borrow or insure themselves against such risks. This impedes capital accumulation that is necessary for farmers to become more productive. As a result, he stated, the models are too optimistic. Furthermore, he argued that models such as Carnegie's are ill-equipped to model the effect of stabilizing government interventions, such as supply or price management, which he described as necessary in agricultural markets.
ROUND PROPOSALS ON AGRICULTURE
The program's second panel explored some of the proposals on the table in the Doha Round for mitigating the negative impact of agricultural liberalization. Sherman Katz chaired a panel consisting of Jason Hafemeister, Jean-Marc Trarieux, Alexandra Strickner, Anne Wagner, and Anil Singh.
Mr. Hafemeister began his remarks by stating that the foundation of the US negotiating stance is a desire for an open and competitive system for world agricultural trade. After describing progress on the issues of export subsidies and trade distorting domestic subsidies he asserted that the Doha round collapsed due to a failure to secure market access improvements. He characterized the G-20 and G-33 tariff cut offers as insufficient and insisted that tariff cuts must reduce applied, not just bound rates. Mr. Hafemeister conceded that in a few cases liberalization might force farmers in poor countries to compete with cheap imports of agricultural goods that are central to their incomes. However, rather than exempt those goods from import competition by designating them as special products, he suggested that imposing small quotas for those goods would shelter domestic producers while still allowing foreign producers to compete for a small slice of market share. According to Mr. Hafemeister, large percentages of US agricultural exports to key developing countries fall under just a few tariff lines, making any proposal that reduces market access for even a handful of those tariff lines unacceptable to US negotiators.
Mr. Trarieux opened his presentation on the European perspective on Doha with assurances that the EU regrets the suspension of the talks and has not given up on the round. According to Mr. Trarieux, the EU is taking steps to reduce agricultural production and withdraw from participation in world export markets. He explained how these policy changes, which include subsidy and tariff reductions, would create opportunities for developing countries to expand their agricultural exports.
After a brief description of the special product and special safeguard mechanisms, Ms. Strickner devoted the bulk of her presentation to evaluating the likely efficiency of these proposals. She questioned the viability of the existing safeguard mechanism, pointing out that detecting an import surge and activating such a mechanism would require data and institutional infrastructures beyond the capacities of many developing countries. She also highlighted the centrality of the long term decline in agricultural prices to the problems facing farmers in poor countries. Though elimination of subsidies might boost agricultural prices by reducing global production in the short run, there is no guarantee that oversupply will not reemerge. Ms. Strickner described increased policy flexibility for developing countries as necessary. She mentioned that the African group at the WTO had proposed a re-examination of commodity agreements as a way to manage prices over the long term.
Mr. Trarieux posed a number of questions to Mr. Hafemeister probing the differences between the US and EU stances on special and differential treatment for LDCs. Specifically, Mr. Trarieux asked why the US decided to scale back its Duty Free-Quota Free proposal to cover only 97% instead of 100% of imports from LDCs. Mr. Hafemeister responded that the US market is already very friendly to foreign imports, noting the size of the US trade deficit. Mr. Katz suggested that it would be difficult for the US to convince trading partners to forego the special product or safeguard mechanisms while still maintaining its own barriers to LDC exports. Ms. Strickner pointed out the parallels between the US argument that the special product rule would allow developing countries to shield large parts of their markets in practice, and the developing country argument that extending DFQF treatment to only 97% of LDC exports would severely curtail the benefits of the program.
Ms. Wagner rejected the special product and safeguard mechanisms under discussion as failing to protect adequate sovereign policy space for developing countries. She argued that an export-based model for development leads developing countries to overlook issues of rural development, food security and poverty. Only by creating space for government regulation and intervention in markets can these issues be addressed, according to Ms. Wagner. She also refuted Mr. Hafemeister's argument that exempting a handful of tariff lines under the special product rule would protect wide swaths of the agricultural market. Milk and milk products, for example, span 37 different tariff lines. Mr. Hafemeister had argued that with just 5 exempted tariff lines market access would be dramatically limited.
A series of questions directed at Mr. Hafemeister from Mr. Singh and audience members focused on the interactions between US subsidies and the reluctance of developing countries to lower tariffs. The latter took the position that developing countries cannot offer increased market access as long as US agricultural exports receive such large subsidies. Mr. Hafemeister countered that only improvements to market access in developing countries would make reductions to US subsidies politically palatable. Mr. Singh opened his remarks by expressing concern that current trade negotiations prioritize the interests of multinational corporations over those of peasants and farmers. The dramatic growth in the operations of these corporations, according to Mr. Singh, has left poor farmers with few opportunities beyond exploitative contracting arrangements with the same corporations. Mr. Singh closed by arguing that agricultural goods should be exempted from trade negotiations to ensure security and stability for poor farmers.
Audience comments included a proposal to consider innovative ways of managing global agricultural supply; a rebuke of the position that countries' food security should be subject to commercial negotiations; and a reminder that trade should be thought of as a tool for promoting development, not an end in itself.
INDIA'S VIEW ABOUT DEAD LOCK OF DOHA : West should break DOHA deadlock
India has asked the developed world to modify their stand on market access to the developing countries to make progress on the DOHA Round.
"Progress could be achieved rapidly by placing development firmly back on the agenda, tempering the demands for additional market access into the developing countries by the development mandate, rather than the mercantilist expectations of the rich developed countries," Commerce and Industry Minister Anand Sharma said here last night.
Addressing WTO Ministerial here, Sharma cautioned that in the process of bridging gaps, the broad understandings of the past eight years should not be reversed. He, however, said the major focus of the engagement on DOHA talks for the last three months had been on just peripheral issues at the cost of main areas of negotiations.
Trade ministers of almost all the 153 WTO member-states are meeting here for three days, which started yesterday, to discuss reforms of the WTO functioning and review the global economy recovering from
DOHA Round is likely to dominate the 7th WTO ministerial opening here today, though hardcore negotiations for a deal are not on the agenda.
DOHA Round of WTO talks was earlier stalled after difference over subsidies given by developed world to their farmers and their insistence on opening the global farm trade.
Sharma observed that globalisation could only retain its legitimacy if it works for all, especially the poorest.
While addressing the ministerial meeting of South Asian Association for Regional Cooperation (Saarc) in Geneva, he expressed satisfaction at the resilience shown by the Saarc member-countries during the economic crisis and their concern over the protectionist measures adopted by some of the developed nations.
Also, Saarc ministers called on all WTO members to refrain from taking any protectionist measures or raising trade barriers.
Sharma also also attended the first trilateral meeting of India, South African Customs Union (SACU) and MERCOSUR (a customs union of Argentina, Brazil, India Paraguay and Uruguay). The ministers of these regions emphasised that growing cooperation among India, SACU and MERCOSUR would contribute to enhance relations among them in the developing world.
Meanwhile, Sharma also met his Chinese counterpart Chen Deming and discussed about the conclusion of the DOHA Round by 2010 and both sides observed substantial progress was necessary before another ministerial meeting would be considered. They also decided to meet in Beijing in January for the Indo-China Joint Economic Commission.
In quotes: The Doha deadlock
WTO chief Pascal Lamy
WTO chief Pascal Lamy says talks are in suspension
The World Trade Organization decided to suspend the long-running Doha Round of world trade talks in Geneva on Monday.
The move came after the failure of fresh efforts to bridge a rift between the US and Europe over farm subsidies and tariffs.
Since then, the WTO has been at pains to deny that the talks have definitively collapsed, while the main participants have traded insults.
WTO DIRECTOR GENERAL PASCAL LAMY
"[The suspension] is a bit like in basketball, a time-out during which the teams talk to their trainers before coming back on to the court.
"I hope that all the different players realise the gravity of the situation and have changed their position and tactics when they come back out to play.
"We're in a serious situation and people need to reflect on that. It would be even more serious if they didn't come back to the negotiating table.
"The rules are not just. If the negotiations fail, they will stay unjust. If we want that to change, we must resume negotiations."
EU TRADE COMMISSIONER PETER MANDELSON
"The US was unwilling to accept, or indeed to acknowledge, the flexibility being shown by others in the room and as a result felt unable to show any flexibility on the issue of farm subsidies.
"What they're saying is that for every dollar that they strip out of their trade-distorting farm subsidies, they want to be given a dollar's worth of market access in developing country markets. That is not acceptable to developing countries and it's a principle that I, on Europe's behalf, certainly couldn't sign up to either.
"The United States have been asking too much from others in exchange for doing too little themselves.
EU trade chief Peter Mandelson in Geneva
Mr Mandelson blames the US for the breakdown
"This is not my definition of leadership.
"Doha will remain a central priority of European trade policy. We will work to bring it back to life.
"As a starting point, we should extract from the rubble of the negotiation a significant development package."
US TRADE REPRESENTATIVE SUSAN SCHWAB
"[Monday's] statement by the EU alleging that the US failed to show flexibility and attempting to divert the blame for the stalemate is false and misleading. The countries that have tended to be finger-pointing at this point are the ones that are reluctant to act in terms of market access.
"We are deeply disappointed that the EU failed to exhibit similar restraint and hope this will not jeopardise the few chances we have left to save the Doha Round.
The EU's comments are "false and misleading", the US charges
"'Doha Lite' has never been an option for the United States; it is still not an option. There was no package on the table... that we could have recommended to the President or to the United States Congress.
"We took seriously the admonition of the leaders of the G8 Summit in St Petersburg, but unfortunately the promises of flexibility and market access coming from St Petersburg did not materialise in Geneva.
Unless we figure out how to move forward from here, we will have missed a unique opportunity to help developing countries and to spur economic growth."
BRAZILIAN FOREIGN MINISTER CELSO AMORIM
"There is no substitute for the WTO. There is no substitute for the multilateral trading system. For developing countries in particular, the WTO is irreplaceable.
"I do not exclude that in four, five or six months we can't start putting things in place. But it is a big risk. We all know it took 11 September to get the Doha Development Agenda going."
INDIAN TRADE MINISTER KAMAL NATH
"The round is not dead. I would say that it is definitely between intensive care and the crematorium.
"The US brought nothing to the table. They stuck to their old position.
"Where India is concerned, we have entered into bilateral trade agreements. We will pursue our bilateral trade agreements.
"We are looking at, we are examining, economic co-operation agreements with the European Union. We are looking at co-operation agreements with Japan."
AFTAB ALAM KHAN, ACTIONAID INTERNATIONAL
"The US refusal to move has been a fatal blow for these talks, while the self-interest displayed by the EU and US during these negotiations puts the blame for this collapse squarely at their doors. But this need not be a disaster for the world's poor - there is now an historic opportunity for much-needed reform of the WTO.
"We must now look to the future for global trade, which remains a central element in the fight against poverty. There must now be root-and-branch reform of the WTO if it is to be a force for good in the world, rather than a forum for the rich to exploit the poor."
Ministers fail to break Doha deal deadlock
GENEVA: Ministers yesterday failed to end a stalemate on measures to reach a global trade liberalisation pact ahead of next year's deadline, with some developing countries moving to seal their own tariff-slashing deal.
A group of 22 developing nations produced a deal to reduce tariffs among themselves by at least a fifth on 70 per cent of products traded.
The accord was worked out on the sidelines of a WTO ministerial meeting, with developing countries saying it showed they are not the cause of the Doha Round deadlock.
"I think it shows that developing countries have the will and capability to reach an agreement. It's not a problem on our side," stressed Argentinian Foreign Minister Jorge Taiana, who chaired the group of countries that included emerging giants India and Brazil.
While the three-day ministerial meeting was not meant to be a negotiating session on the long-running Doha Round of trade liberalisation talks, it was aimed at taking stock on progress and seeking ideas to advance the round.
However, beyond renewed pledges of commitment to completing the process, few new proposals emerged.
Even a plan by the Group of 20 developing countries for a spring ministerial meeting next year to give a final push to negotiations was met with a lukewarm response from the US.
"There is a little bit of a rush to say we've got to have this meeting by this date because we've set something, rather than focusing on really putting the time and the attention into the sustained bilateral negotiations that can yield real meaningful market access," said Ron Kirk, US Trade Representative.
"We'd rather spend our time on that," he added.
The Doha Round began in 2001 with a focus on dismantling obstacles to trade for poor nations by striking an accord that will cut agriculture subsidies and tariffs on industrial goods. Deadlines to conclude the talks have been missed several times.
Discussions have been dogged by disagreements over issues including how much the US and the European Union should reduce aid to their farmers and the extent to which developing countries such as India, China and South Africa should lower tariffs.
"The UK is disappointed that WTO members have not yet been able to take the final steps to agree an outline (Doha) deal," British Trade Minister Gareth Thomas said.
"If we don't make progress soon, we will miss our 2010 target and that would be a great loss for the global economy and the world's poorest," he said.
OTHER POLICY INSTRUMENTS FOR A CHANGING WORLD OF AGRICULTURAL TRADE
The final panel of the program dealt with alternative policies aimed at supporting agricultural producers, ranging from capacity and infrastructure development to national regulatory mechanisms. The panel included Henri Rouille D'Orfeuil, Daniel Lederman, Germano Batista, Marcel Groleau, Kathy Ozer, Vore Seck, K.S. Gopal and Arlene Alpha; the session was chaired by Cheryl Morden. Ms. Morden framed the final session as offering an opportunity to look beyond the Doha Round and think more generally about how to expand trade opportunities for small farmers.
Mr. Rouille D'Orfeuil's presentation focused on strategies for rethinking the global agricultural trade architecture to better serve the 3 billion people in the world that depend on farming for their livelihood. He emphasized that any trade regime that marginalizes half the world's population will eventually jeopardize stability and growth across the world. Mr. Rouille D'Orfeuil identified two questionable assumptions upon which the current system has been built: markets are self-regulating and increasing trade drives increased development. Instead of this market-based framework, Mr. Rouille D'Orfeuil proposed a multilateral trading system that would prioritize the sovereignty of countries and price stability in agricultural markets. The presentation was accompanied by a slideshow, which can be viewed here.
Mr. Lederman offered four new ideas to promote welfare in developing countries. First, he posited that government resources should be invested in sectors based on the sectors' contributions to national welfare, broadly defined to include measures of equality and sustainability in addition to income. Sectors that efficiently leverage public resources to promote national welfare should enjoy more support from the government. Second, he argued that traditional national income accounting systematically underestimates the agricultural sector's true contribution because it overlooks the linkages between agriculture and other components of national welfare. For example, growth in the agricultural sector has a disproportionately large impact on reducing poverty and improving rural security and stability. Also, because agricultural goods constitute such a large percentage of developing country exports, a competitive agricultural sector helps relax balance of payments constraints on development. Third, he explained that whereas the provision of public goods can remedy market failures in rural areas dependent on agriculture, subsidies to the private sector can actually reduce efficiency because they reduce firm's incentives to invest. Finally, Mr. Lederman pointed out that despite the empirical evidence supporting greater investments in transportation infrastructure, education and rural health clinics, political realities tend to favor the efforts of private firms to secure subsidies for themselves. Developing countries must pursue policies that enhance the ability of their citizens to monitor political decisions by improving transparency and access to information.
The presentation of Mr. Batista dealt with the specific case of Brazil's experience with agricultural liberalization. Agricultural corporations have played an increasingly influential role in shaping the course of agricultural development in the country, employing large portions of the farming population and consolidating control over production. However, successful models of family farming do exist in Brazil. Mr. Batista argued that government policy should focus on building commercialization channels for these family farmers.
In response to a comment that unreasonably low agricultural prices trap farmers in poverty, Mr. Lederman argued that the greater challenge to farmers is posed by the volatility of agricultural prices. The constraints of biology and the growing and harvesting cycles make it difficult to adjust the supply of agriculture in response to changes in demand; the result is higher price volatility. Mr. Lederman agreed that more price stability would be desirable but returned to his earlier point that government expenditures on public goods increase welfare more efficiently than expenditures on private subsidies such as price support subsidies.
Mr. Groleau and Ms. Ozer's presentations introduced the perspectives of farmers' organizations to the discussion. Mr. Groleau described the supply management system that governs the Canadian milk industry. In this system, farmers work with the government to match production levels with demand levels. Mr. Groleau pointed out that rather than creating a market distortion, this type of intervention actually enhances efficiency by avoiding overproduction. Ms. Ozer stated that dairy farmers in the US need a supply management system similar to Canada's. The concentration of industry power in the hands of a few large agriculture firms has created problems in the developed world as well as the developing world, according to Ms. Ozer. Small family farms in the US, unable to match the efficiency of more capital-intensive operations, have seen incomes fall due to the persistent decline in agricultural prices.
Ms. Seck, Mr. Gopal and Ms. Alpha discussed the state of agriculture in the developing world from their points of view as leaders of national NGO platforms. Ms. Seck highlighted some of the specific problems facing African farmers. These include foreign tariffs that incentivize production of low-value added goods, erosion of preferences, and the spread of farming techniques that place growing stress on land and other factors of production. She proposed that incorporating more participatory mechanisms into trade policy negotiations could help to address of these problems. Mr. Gopal suggested that those who study trade policy and negotiations keep in mind the aggression with which businesses pursue profit maximization. He questioned whether economic analyses of these issues sufficiently grasp this dynamic. Ms. Alpha called on small farmers to do a better job of organizing, communicating and raising their collective voices to engage policy makers on these questions.
In her closing remarks Ms. Polaski reminded the audience that the global environment has changed considerably since the Doha round was launched in 2001. The stated development objectives of the talks have given way to traditional mercantilist bargaining. Foreign aid to rural development is at the lowest level in thirty years. As a result, we risk exacerbating rather than reducing global poverty.
Looking ahead, Ms. Polaski flagged the need for better analysis to understand the heterogeneity that exists across countries. She also suggested that higher levels of both national and international assistance to agricultural development are needed. Pragmatic new ideas for agricultural policy are required based on the unique challenges and market failures in the sector and its concentration of poverty. In his closing remarks, Mr. Rouille D'Orfeuil encouraged attendants to continue to reach out across national and regional borders to pool knowledge and resources in the effort to help poor farmers in developing countries
US POLITICS - ABOUT DEAD LOCK OF DOHA
At the end of the day, an important remaining question is one that circles back to the US - how serious is Washington about these negotiations? Can the Doha negotiations be reconciled with the 2007 US Farm Bill? Whilst those in Washington are best placed to make this assessment, two points are worth bearing in mind:
1) Firstly, the disciplines on domestic supports currently being negotiated at the WTO are extremely weak - to the extent they are ineffective in terms of really disciplining US domestic supports, hence it is likely that Washington will have leeway to implement their 2007 Farm Bill (See Kwa “WTO's July 2007 Agriculture Negotiations - Potsdam Multilateralised? ”, 3 August 2007, ). The exact contours of the Bill are still to be determined. However, US Agriculture Secretary Mike Johanns is striving to push for higher amounts of direct payments to be endorsed in the Bill i.e. higher amounts of Green Box payments that will not be disciplined in the WTO. (See Transcript of Remarks by Agriculture Secretary Mike Johanns to the Tennessee Farm Bureau Federation Regarding the 2007 Farm Bill and Beef Trade - Nashville, Tennessee, Aug 9 2007,
2) Secondly, the projections are that the Amber Box type payments (loan deficiency payments and counter cyclical payments that are revenue and priced based) are unlikely to kick in, at least for the life of the 2007 Farm Bill due to high commodity prices. According to Secretary Johanns, “Projections that everybody is using would indicate it looks to us that you may not get a loan deficiency payment or a counter cyclical payment over the life of the next farm bill… It looks to me like you're going to be above the target price on the commodities” (ibid Johanns, 2007). There is therefore no risk that the US will go beyond its WTO bound OTDS.The catch is whether or not the US wants to permanently bind its Amber Box and other “trade distorting supports” in the WTO. There is a good chance that with increased production in biofuels and high commodity prices, they may also not be a problem beyond the 2007 Farm Bill. Besides, increased supports can also be provided in the form of direct payments (Green Box), as Secretary Johanns is strongly advocating. Agreeing to Doha (in terms of what is currently on the table) could be more of a public relations disaster for American politicians facing very defensive farm lobbies, rather than a real threat to US farm programmes.
INDIAN MAKES A GLOBEL MOVES WITH TRADE TALK MEET
India's efforts to breathe fresh life into stalled global trade talks with a meeting of key trade ministers this week is yet another attempt by New Delhi to stamp its authority on the global economic stage, analysts say.
It is also being viewed as an attempt by India to make serious efforts to break the deadlock after earlier talks failed over sharp disagreement between the United States, New Delhi and China on the terms of a “special safeguard mechanism” to shield poor farmers against a price-depressing surge in imports.
Cynics say the talks, called by commerce minister Anand Sharma, are an attempt to deflect blame for a possible collapse of the World Trade Organisation's Doha round, after years of being pilloried in the Western media over deadlocks.
But India's globalizing economy gives it a growing interest in seeing a deal, too.
“India now has a place in the global economy because of the size of its economy and its population and that fact cannot be ignored. It must have a say,” said D.H. Pai Panandikar, president of private economic think tank RPG Foundation.
Robust economic growth of around 7% against the backdrop of a global slowdown has enabled India to attract fresh attention and clout.
New Delhi made its voice heard on global trade and climate change at a G-8 summit in Italy in July, a sign of growing diplomatic muscle and a new push from Asia's third-largest economy to play a bigger role in global governance.
Backed by a trillion-dollar economy and impressive economic growth, India has been participating in several high-profile international forums such as the G-20 group of industrialized and developing nations and the Bric (Brazil, Russia, India and China) gathering of the world's biggest emerging markets.
Analysts say now it wants to cast its influence wider.
“Well there is ambition - we did have economic growth which made us feel that we have at least arrived in Asia,” said Sudha Pai, professor of political science at Jawaharlal Nehru University.
US President Barack Obama has said tackling global challenges “in the absence of major powers like China, India and Brazil seems to be wrongheaded.”
India has also been a leading negotiator for emerging nations in the struggling Doha round of talks and its effort to protect poor farmers has been one of the stumbling blocks to agreement.
Analysts say they see some change in attitude after a new government was sworn in with a wider-than-expected margin in May and Sharma was named as the new commerce minister.
“I think for the first time India is taking a somewhat proactive role and is now keen to see conclusion of the Doha round,” said T.K. Bhaumik, a trade commentator and economic adviser from the JK Organisation.
“India willing, some breakthrough is possible at this meeting,” Bhaumik said, referring to the meeting which includes the five biggest players in the Doha round - the United States, the EU, Brazil, India, China - as well as other key WTO members.
This week's gathering is the first major meeting of trade ministers on the Doha round since July 2008, when nine days of intense negotiations ended in failure.
“This meeting is a clear signal to the whole world that India is very keen to resume engagement in Doha negotiations and India is also keen on an early conclusion of the Doha round,” said Amit Mitra, secretary-general of the influential lobby group the Federation of Indian Chambers of Commerce and Industry.
Professor Dubey concluded that the issue of bilateral arrangements had been discussed a number of times. He was of the opinion that there was great merit in such arrangements. Bilaterals, however, should not involve only preferential trading arrangements but also elements of deeper integration like joint development of infrastructure, cooperation in standards, etc. Such a win-win situation, he believes, is fully economically justified.
Regarding the present state of affairs, he told the floor that it was being reported that a note had gone from the Ministry of Food and Agriculture to the Ministry of Commerce saying that India could never be self-sufficient in foodgrain production and that we should import food to the tune of 1.5-5 million tonnes annually. Keeping this in mind, the note said, India should completely change its stance in the trade negotiations. This note, if it had indeed been sent, said Dubey, spelt complete disaster for the Indian economy. He added that to tackle the problem of food shortages, entering into regional agreements would be much better than going to the WTO with a begging bowl.
Muchkund Dubey ended by saying that it was time India formed a new development agenda wherein there would be a convergence of S&DT and implementation issues. For there to be any headway in the negotiations, Professor Majumdar said, the existing cohesion among developing countries should always be maintained.