The Economist summarizes all the reasons that movement toward freer trade is unlikely under the Bush administration:
Economist.com ...Making progress will be an uphill task. In some areas, agriculture above all, developments this year have made agreement more elusive, not less. America’s farm bill, providing large extra subsidies to farmers, soured the atmosphere. Developing countries wonder how that squares with the aims of making it easier for poor-country farmers to compete in global markets and have proper access to the domestic markets of the rich countries. Only last month, the European Union appeared to rule out any reform of its massively expensive—and massivley distorting—Common Agricultural Policy (CAP) until at least 2006. Yet big changes to the CAP would seem to be a minimum requirement for the EU to deliver on promises made at Doha.
Without a deal on agriculture, Doha will fail. That, in stark terms, is the message both from Mr Vaile and from the developing world. The industrial countries, America and Europe in particular, were the driving force behind the new round. Most developing countries were much less convinced, especially because many of them felt they had had a raw deal from the previous Uruguay round. They had signed up on commitments such as intellectual property (known as the TRIPS agreement) which they later felt they had not understood properly at the time, and which they felt worked against their interests and for those of the rich nations. In return for their co-operation at Doha, the developing countries wanted intellectual property revisited—and they wanted a deal on agriculture. As yet, they have neither.
There has, however, been some movement on TRIPS, and Mr Vaile, at least, seems hopeful of making headway before the end of the year. The main issue is that of improving access to expensive patented medicines for AIDS, malaria and tuberculosis for countries that cannot afford them. The aim is to come up with some agreed way of letting such countries have access to these drugs at much-reduced prices. Without this, poor countries are threatening to break international patents. The drug companies, for their part, want to ensure that the cheaper drugs are not re-exported to the rich, full-price markets which the companies rely on to fund their research...
Agriculture is a different story, though. The farm lobby in industrial countries is powerful and politicians ignore it at their peril. Hence America’s generous farm bill and Europe’s—above all France’s—reluctance to embrace change. All is not lost yet, though. America’s farm bill was a setback and, coupled with tariffs on steel imports imposed this year, opened America up to charges of hypocrisy.... America has come up with a proposal on agriculture. Cheekily, perhaps, in view of its own farm bill, Washington has proposed the eventual abolition of all agricultural export subsidies and a limit on domestic farm subsidies of 5% of the value of total domestic production. So far, though, there has been silence from both Europe and Japan, both of which provide enormous subsidies to their farmers. It seems clear that both will come under considerable pressure at the Sydney meeting to set out their positions sooner rather than later....
The sooner Europe and Japan come up with their own proposals on agriculture, the easier they will find it to convince other WTO members that they are negotiating from a position of goodwill. Unless, of course, they aren’t.
Doubts about Doha
From The Economist Global Agenda
Trade ministers from around the world are gathering in Sydney as part of an effort to inject new momentum into the Doha round of multilateral trade negotiations. It is a daunting task
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IT’S time to knock heads together. That may not be quite the phraseology used by the Australian trade minister, Mark Vaile, but there is no doubt about his ambitious aims for the informal meeting of trade ministers that he is chairing in Sydney on November 14th-15th. Mr Vaile wants to inject some political momentum into the Doha round of multilateral trade negotiations, and to do so before it is too late.
The Sydney meeting comes almost exactly a year after the Doha round was launched under the auspices of the World Trade Organisation (WTO). That Doha got off the ground at all was against the odds, and it reflected in part a new spirit of international co-operation that prevailed after the terrorist attacks on America and the successful ousting of the Taliban government in Afghanistan. The need to integrate developing countries into the world economy had moved sharply up the political agenda of the world’s rich countries. Representatives of those poorer countries played their hand well at Doha and wrung important concessions from America and Europe, in return for agreeing to launch a new round.
Since then, however, the negotiations have stalled. Many of the promises made at Doha have yet to be fulfilled. Some developing countries, at least, are beginning to wonder if the rich nations will ever deliver on their commitments on agriculture, market access and intellectual property; even seasoned observers of trade talks—which are notorious for their reliance on last-minute diplomacy—have started to doubt that the Doha timetable is, any longer, a realistic one. The round is supposed to be completed by January 2005 and a lot of progress must be made by the time of the WTO ministerial meeting in Cancun, Mexico, next September.
The Doha meeting turned out to be more successful than the previous, disastrous attempt to kick off a new trade round at the Seattle ministerial meeting in 2000—a gathering whose only achievement was to give a boost to the anti-globalisation protest movement. Mr Vaile believes Doha’s success was in part a result of better preparation, thanks to small informal meetings held in Singapore and Mexico; he wants the meeting in Sydney to perform a similar function. Making progress with representatives of all 184 members of the WTO would be impossible. So 25 trade ministers were invited to Sydney: all the most powerful members plus a range of important and influential developing countries from all parts of the world.
Making progress will be an uphill task. In some areas, agriculture above all, developments this year have made agreement more elusive, not less. America’s farm bill, providing large extra subsidies to farmers, soured the atmosphere. Developing countries wonder how that squares with the aims of making it easier for poor-country farmers to compete in global markets and have proper access to the domestic markets of the rich countries. Only last month, the European Union appeared to rule out any reform of its massively expensive—and massivley distorting—Common Agricultural Policy (CAP) until at least 2006. Yet big changes to the CAP would seem to be a minimum requirement for the EU to deliver on promises made at Doha.
Without a deal on agriculture, Doha will fail. That, in stark terms, is the message both from Mr Vaile and from the developing world. The industrial countries, America and Europe in particular, were the driving force behind the new round. Most developing countries were much less convinced, especially because many of them felt they had had a raw deal from the previous Uruguay round. They had signed up on commitments such as intellectual property (known as the TRIPS agreement) which they later felt they had not understood properly at the time, and which they felt worked against their interests and for those of the rich nations. In return for their co-operation at Doha, the developing countries wanted intellectual property revisited—and they wanted a deal on agriculture. As yet, they have neither.
There has, however, been some movement on TRIPS, and Mr Vaile, at least, seems hopeful of making headway before the end of the year. The main issue is that of improving access to expensive patented medicines for AIDS, malaria and tuberculosis for countries that cannot afford them. The aim is to come up with some agreed way of letting such countries have access to these drugs at much-reduced prices. Without this, poor countries are threatening to break international patents. The drug companies, for their part, want to ensure that the cheaper drugs are not re-exported to the rich, full-price markets which the companies rely on to fund their research.
 |   Without a deal on agriculture, Doha will fail |
Agriculture is a different story, though. The farm lobby in industrial countries is powerful and politicians ignore it at their peril. Hence America’s generous farm bill and Europe’s—above all France’s—reluctance to embrace change. All is not lost yet, though. America’s farm bill was a setback and, coupled with tariffs on steel imports imposed this year, opened America up to charges of hypocrisy. But President George Bush and his trade representative, Robert Zoellick, have made important headway in two areas. For a start, Mr Bush managed to get Congress to approve what is known as Trade Promotion Authority (TPA). This gives Mr Bush the freedom to negotiate international trade deals on behalf of America. Congress still has to approve or reject such deals, but TPA means it cannot unpick them line by line.
Secondly, America has come up with a proposal on agriculture. Cheekily, perhaps, in view of its own farm bill, Washington has proposed the eventual abolition of all agricultural export subsidies and a limit on domestic farm subsidies of 5% of the value of total domestic production. So far, though, there has been silence from both Europe and Japan, both of which provide enormous subsidies to their farmers. It seems clear that both will come under considerable pressure at the Sydney meeting to set out their positions sooner rather than later.
Trade diplomacy does often rely on brinkmanship. But the tight and rigid timetable for Doha was designed to avoid a repetition of the Uruguay round, which overran by three years and still involved eleventh-hour horse-trading. Many of the participants in the Doha process are tired of rich-country posturing. The sooner Europe and Japan come up with their own proposals on agriculture, the easier they will find it to convince other WTO members that they are negotiating from a position of goodwill. Unless, of course, they aren’t.
Posted by DeLong at November 13, 2002 09:38 AM | Trackback