It was pretty likely that some deal would get struck at the World Trade Organization (WTO) ministerial meeting that was held last week in Hong Kong. It was inevitable that any such accord would be the product of arduous last-minute negotiations. And it was certain that trade ministers would applaud the accord as a chance to keep trade talks going, while farmers and activists would denounce it as a “betrayal.” The plain truth is the Doha Round of global trade talks is perilously close to collapse. The Hong Kong ministerial devised a formula that merely keeps talks going. Absent a revolutionary shift in thinking about access to agricultural markets, last week’s deal will only postpone the inevitable failure.
The Doha Development Round of trade talks was launched four years ago amid pledges to focus on the needs of the world’s poorest citizens. Previous trade negotiations had paid handsome dividends, but most of the rewards had gone to developed countries that profited most from market reform in and increased access for industrial goods and services. To correct that imbalance, negotiators agreed that these talks would concentrate on the concerns of developing nations.
In practical terms, that meant liberalization of agricultural markets in developed countries, where the most competitive exports of poorer nations would find ready customers. Yet, as Japanese know, agricultural interests are some of the most entrenched in national politics, making reform extremely difficult. That resistance has been the biggest obstacle to progress in the trade negotiations.
In the weeks prior to the talks, negotiators publicly positioned themselves in preparation for the battle, trying to cast their own position in the best possible light. The skirmishing continued in Hong Kong, but there government representatives were joined by activists and nongovernmental organizations that produced theater — and violence — in the streets outside the meeting.
Finally, after six days of talks, the negotiators produced the outline of a deal. It calls for the end of all agricultural export subsidies by 2013; the elimination of all cotton export subsidies by the end of 2006 and steps to help cotton-growing countries in West Africa; the elimination of tariffs and quotas in industrialized countries on virtually all import categories for goods from the world’s poorest 50 nations; billions of dollars in aid annually from Japan, the United States and the European Union to help developing countries increase exports and adjust to global competition; new rules to streamline future negotiations on manufactured goods and services; and agreement to end all subsidies that encourage overfishing.
The reaction was as predicted. Trade ministers accepted the deal as the best possible despite even the drastically scaled-back expectations that surrounded the negotiations. Advocacy groups for developing nations blasted the agreement as a betrayal; one said it “sentences small farmers, workers and communities across the developing world to desperate poverty.” EU farmers complained that the deal was “one-sided” while industry groups in developed countries countered that they got nothing from the negotiations.
When all parties complain, it is tempting to say that the compromises were balanced. But in this case, widespread dissatisfaction bodes ill for next steps. While there was broad agreement on the termination dates of various subsidies and quotas, the formulas for tariff cuts lack numbers. Negotiators have until April 30 to fill them in, and failure to reach agreement could undermine the agreements reached last week.
For Japan, the jury is still out on the agreement. Japan has high tariffs on many farm products — 778 percent on rice and 325 percent on sugar — and their fate rests on upcoming talks. Yet Japanese negotiators heaved a sigh of relief when no commitments were made on high tariffs, as they remain out of step in a process designed to increase market access.
Given the failure of previous talks — Seattle in 1999 and Cancun, Mexico, in 2003 — the ability to reach any agreement is an accomplishment in itself. But the tepid enthusiasm for genuine liberalization suggests the celebrations will be short-lived. With the authority of the U.S. president to sign any deal without congressional consideration due to expire at the end of April, the difficulty in getting any deal approved is set to magnify exponentially. European farmers will continue to fight for their subsidies, and French politicians will maintain their staunch defense of themselves. The same can be said for Japanese politicians and the agricultural sector that clamors for support.
Thus the self-interests of the developed countries ensure that the priorities of the world’s poorest citizens will remain a distant consideration and that the prospects for a successful conclusion to the Doha Round will continue to shrink.
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