While attention is focused on this week’s meeting of the Asia-Pacific Economic Cooperation (APEC) forum in Pusan, South Korea, the main event is the World Trade Organization (WTO) meeting to be held next month in Hong Kong. That ministerial meeting is critical to the success of the current round of global trade negotiations. Unfortunately, the talks have stalemated, and the culprit appears to be the European Union — France in particular. A breakdown would be a dangerous setback to the prospects of many of the world’s poorest citizens. Resistance to agriculture market liberalization must be overcome.
The Doha Round of trade negotiations, launched four years ago, was premised on the agreement that it would focus on opportunities for developing economies. That meant, for all practical purposes, increasing access to agriculture markets in the world’s richest countries. A recent World Bank study estimated that trade liberalization would add nearly $300 billion annually to the global economy by 2015, with two-thirds of those gains coming from reducing barriers to trade in agriculture.
Progress in this area has been slow; while industrialized nations have pushed relentlessly for increased access for their goods and services in developing country markets, they have been reluctant to extend similar opportunities to farm goods from the developing world, products that are often those countries’ most valuable exports. The reason, as Japanese well know, is that agricultural lobbies are often extremely powerful in national capitals. Politicians liberalize at their peril.
As those old constraints quickly asserted themselves, the agreement to focus on agriculture quickly unraveled. A ministerial meeting at Cancun, Mexico, two years ago broke up amid acrimonious disputes over the idea of liberalizing developing country agricultural markets. There were hopes that the development of a broad framework agreement last year would help rejuvenate the negotiations; optimists spoke of an interim deal at the Hong Kong ministerial next month. Unfortunately, old political pressures appear to have reasserted themselves.
Trade negotiations earlier this month in Europe were supposed to put more meat on the bones of that framework, but they too broke up without progress. In fact, after the meetings, most negotiators conceded that there would be no deal in Hong Kong and that expectations should be scaled back considerably.
The blame for the breakdown has been laid at the feet of the EU. Mr. Peter Mandelson, the EU trade commissioner, is in a tough position. He understands the need to push for agricultural reform, but he is only a commissioner, and is bound by the positions of EU member states. In this case, France adamantly opposes dismantling the protection afforded its farmers.
France is not the only developed country that cossets its farmers. Japanese protections are legendary, and the rationale Tokyo uses — food security and protecting the culture of farmers — echoes those deployed by Paris. The United States also extends considerable assistance to its farmers, but Washington has been forthcoming with offers to open its markets. Last month, U.S. negotiators proposed tariff cuts of 55 to 90 percent over five years and a 60 percent cut in some farm subsidy programs.
Mr. Mandelson has tried to strike a deal, but he is being closely watched by other negotiators as well as European governments nervous about the offers he has put on the table. His initial offer was rebuffed by other Doha negotiators as insufficient. An attempt to sweeten it was then undermined by the claims of French officials, including President Jacques Chirac, that it exceeded the mandate given to EU negotiators and was unacceptable. That deadlock produced the warnings that the talks might break down and that, at a minimum, expectations had to be scaled back.
The benefits from free trade — an additional $300 billion in global wealth, much of it to the world’s poorest citizens — would seem ample motivation for a deal. But liberalization is under attack — not only in the WTO, but also in Latin America, where earlier this month the Summit of the Americas appeared to reject a free-trade area, and in developed countries like the U.S., where politicians strike at Chinese trade practices and are rethinking their country’s historic role in promoting reform.
Japan has benefited most from trade liberalization. Thus, it is best poised to make the case for continuing reform. Taking a leading role in the stalled trade talks would help make the case for the role that Tokyo aspires to on the global stage. Yet, Japanese negotiators have been largely silent during the current dispute, letting the EU take the heat. That position makes sense politically, but it does no justice to the nation’s aspirations. Nor does it promote the global prosperity that ultimately serves Japan’s own national interests.
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