via a special arrangement with Informa Economics, Inc.
A likely new direction ahead for trade
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As I thought for a while, the Doha drama
ended up a comedy of errors, as trade protagonists from the U.S., India
and China could not settle entrenched differences and instead will leave
Geneva with a mandate to change the process and perhaps the underlying
The key disagreement centered on measures to protect farmers
in developing countries from surging imports -- China and India
demanded a "safeguard" clause that would allow them to raise
tariffs on key crops such as cotton, sugar and rice if there were a
sudden surge in imports. The two sides could not agree, however, on
where to set the threshold for any import surge that would trigger the
WTO Director-General Pascal Lamy said
he would "wait for the dust to settle" before
deciding how to proceed. He also said that ministers agreed that the advances
made during the nine days of talks should be "preserved or captured"
in some form. "That suggests they haven't thrown in the towel"
on the Doha talks, he argued.
But a more realistic viewpoint came from European Trade Commissioner
Peter Mandelson, who noted little hope of bringing the Doha
talks back to life anytime soon. "In all honesty, I don't think
there's any realistic chance of modalities being agreed this year or
in the foreseeable future," Mandelson said, referring to the term
for the “breakthrough agreements” in agriculture and non-agricultural
market access (NAMA) which ministers tried in vain to conclude at their
Brazil waited too long in the process
to play the leadership role, but its foreign minister,
Celso Amorim, said he believed success was still possible, although he
acknowledged it would take "quite a while to get back into the game."
Amorim added, “It is unbelievable that these complex
talks failed over one issue. I remember the Italian writer
[Italo Svevo] who wrote 'I remember everything, but understand nothing.'
That is how I feel as I leave here today."
Importantly, Brazil would have accepted a 56 percent cut in its
U.S. Trade Representative Susan Schwab
said, "On Friday night we were so close to getting this done.
We remain committed to the Doha Round; this is not the time to talk about
a round collapsing.”
India's new clout in trade talks. Indian
trade and commerce minister Kamal Nath said, "It's unfortunate that
in a development round, we couldn't agree to an issue of livelihood and
Nath added, "This is a round where we're supposed to be getting,
The EU's trade chief said another casualty
was the ability of WTO members to rein in U.S. spending on farm subsidies,
which was recently boosted by the adoption of the nearly
$290 billion, five-year Farm Bill.
The U.S. made an offer to cap its overall trade-distorting
support at $14.5 billion a year -- down from its current WTO-permitted
cap of $48 billion a year -- but made it conditional on an acceptable
outcome on reducing agricultural and industrial tariffs.
But in a new version of a food fight,
the talks eventually foundered over the issue of the special safeguard
for developing countries, and in particular the conditions
for imposing tariff hikes.
Schwab said, "It's ironic that while there's a global food
crisis, these talks came down to how much and how fast countries should
have a right to raise their tariffs.”
The killing issue was the inability of the U.S. and
India to agree on the point at which developing countries could temporarily
raise duties on farm imports above their existing "bound"
(i.e. maximum WTO-permitted) rates during the 1986-1993 Uruguay Round
of trade talks.
China broke its usual silence in global
trade talks when it argued it should be allowed to raise
tariffs on sugar, cotton and rice if imports should increase.
"Having protected its own interests, the United States is
asking a price as high as heaven," Chinese Commerce Minister Chen
Deming retorted Monday, according to Xinhua news agency.
USDA Undersecretary Mark Keenum defended
the U.S. stand, saying that U.S. flexibility on farm subsidies
was not matched by flexibility from India on reducing tariff barriers
to its agricultural market.
"Unfortunately, we were not able to get the market access
we came for in return for what we put on the table on domestic support,"
Keenum said. "We made a very good faith effort."
Just not good enough.
Comments: Trade negotiations
surely will not end, but the focus now will be on bilateral and regional
As for the failed Doha Round, one thing is clear: the emergence
of China, India and Brazil as trade powerhouses, with far different
goals and issues than the prior trade chieftains – the U.S. and
the EU – are used to dealing with. New players in some of those
countries are needed to reach new trade accords.
U.S. farmers and their lawmakers had mostly
opposed Doha, even though President George Bush wanted
a successful outcome as one of his presidential legacy items. The sugar,
dairy and cotton lobbies feared losing subsidies and tariff protection,
while corn and ethanol proponents fought reductions in tariffs on imported
biofuels that clearly would have accompanied a final accord. Among those
pushing the agreement were U.S. manufacturers with a big caveat of a must-have
boost in market access overseas.
Farmers in other countries also rejoiced regarding the Doha
breakdown. ``We're breathing a sigh of relief for now,'' said
Hiroyuki Kominami, a spokesman for the local farmers' association on
Japan's northern island of Hokkaido. “Ever since the liberalization
talks began in 2001, we've felt like we were being slowly choked to
death.'' The president of a leading French farmers' union, meanwhile,
hailed the outcome of the talks. "It's reason that won out,"
Jean-Michel Lemetayer of the FNSEA union said.
As for Doha's future, Schwab
predicted that "In the future, we could have a global trade round,
but we'd probably have a building block process, agreeing on issues one
by one, instead of waiting until you've agreed on everything.”
As for the Doha Round negotiators, they simply failed. It's that
simple regarding a not-so-simple matter.
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