Farmers demand for a fair deal
When the Doha round of global trade talks collapsed on July 24,
suddenly and acrimoniously, after five long years, furious Trade
Ministers seemed to agree about only one thing - they were throwing away
the best hope in decades of helping poor countries trade their way out
of poverty.
Just a week earlier, at the G8 summit in St. Petersburg, world
leaders had pledged to do whatever it took to strike a deal. But when
negotiators faced each other in Geneva it became clear the gulf between
them would not be bridged by a few warm words from George W. Bush or
Tony Blair. Despite the stated aim of the Doha round to redress some of
the worst iniquities in the global marketplace that disadvantage the
poor, no one seemed to have the stomach for a new wave of globalisation.
The potential gains are immense. A World Bank study last year found
that dismantling global trade barriers would generate a further $300
billion a year for the world economy, much of it in developing
countries.
Lowering trade barriers could have stimulated business between
developing countries, as well as throwing open markets in the rich
North. However, it is now clear that the U.S., driven by pressure from
its farmers and with mid-term congressional elections due in November,
was determined to persuade Europe and developing countries to make much
deeper cuts in agricultural tariffs than they were willing to offer.
"What I'm for is trade that opens up people's markets just like we
opened up ours," Mr. Bush said on Friday. "I believe in good trade
policy here's my definition of good trade policy: it's fair. That's all
we ask. See, we open up our markets, you open up yours."
Political significance
Agriculture makes up just two per cent of GDP in the richest
countries, but farmers have always had special political significance,
in Japan and Europe as much as in the U.S. At the same time, developing
countries with large rural populations, such as India, are nervous that
if they lower farm trade barriers the livelihoods of millions of
subsistence farmers will be damaged by an influx of cut-price farm goods
from cheaper producers.
For now, despite Mr. Bush's insistence that he still wants a deal,
protectionism has won. "Doha could be resuscitated, if there was the
will there to do it, but it could be three, four, five or six years,"
said Liz Stuart, trade policy analyst at Oxfam. John Gummer, the former
British Conservative Agriculture Minister, said poor countries were the
major losers. "The U.S. has behaved appallingly. It talks free trade,
but is completely unable to stand up to its farm lobby."
One immediate consequence is likely to be a rash of one-to-one deals
between developed countries and the trading partners they are keenest to
cultivate. These bilateral agreements, which many countries were already
pursuing alongside Doha, are controversial with campaigners, who warn
that less powerful countries can come under intense pressure to throw
open their markets. "Why I think it's so damaging is that what the U.S.
will do is go into a whole lot of bilateral agreements with poorer
countries which can't stand up to them," says Mr. Gummer.
At the World Trade Organisation, a sprawling one-member-one-vote
organisation, developing countries have banded together to negotiate;
bilateral deals make such solidarity impossible. Analysts also warn that
a web of complex, overlapping one-to-one deals could make global trade
inefficient and cut across more important regional agreements.
Moreover, the poorest countries, whose interests were meant to be at
the heart of Doha, can be ignored in bilaterals, as the U.S., EU and
others cherrypick their favourite markets for negotiations. "No one's
got any interest in doing a deal with a least-developed country," said
Ms. Stuart. "They're bypassed in all of this."
A potentially more explosive prospect is an outbreak of legal
hostilities against the protectionism of Europe and the U.S. In a recent
report, Oxfam identified $ 13 billion worth of farm subsidies, most of
them in America, that it believes could be legitimately challenged under
existing WTO rules.
Brazil, Thailand and others have won legal cases against U.S. cotton
subsidies, and EU support for sugar, dragging them into reluctant
reforms. (The U.S. produces $3 billion worth of cotton each year and
spends $4 billion subsidising it.) This combative approach could look
more attractive to developing countries if the prospect of a broader
lowering of tariff barriers disappears with the death of Doha, Brazil,
for example, with its lean agriculture sector, looked certain to be a
big winner from Doha.
Populist President Luiz Inacio Lula da Silva might decide a
high-profile legal battle against the U.S. is a vote-winner as he
approaches elections in October.
But hauling the world's trade giants through WTO arbitration would be
a dangerous gamble. American enthusiasm for multilateralism has looked
wobbly for some time and a slew of legal cases hitting farmers in
electorally important States could create a powerful backlash against
the WTO. With the U.S. economy widely expected to slow in the coming
months, a resurgence of protectionism could set back the cause of a
worldwide trade agreement by years.
Common Agricultural Policy
On the other side of the Atlantic, perhaps the most worrying
implication of the suspension of the talks is the question mark it
throws over reforms of Europe's 40 billion euros a year Common
Agricultural Policy (CAP). Mr. Blair and Germany's Angela Merkle have
formed a liberalising alliance, helping to isolate French President
Jacques Chirac and drag the EU toward an agreement that would pare back
the CAP to make it palatable to developing countries. Monday's
suspension undid much of that work.
Amid scant progress at the WTO summit in Hong Kong in December was a
2012 deadline for ending export subsidies, widely agreed to be the most
pernicious element of the EU and U.S. agriculture regimes. Britain and
its liberalising partners had hoped that ending these subsidies - which
are used to hold up prices and result in cut-price goods being dumped in
developing countries would begin the unravelling of the CAP. With the
talks on hold, the offer to end export subsidies is now off the table,
and CAP reformists have lost one of their most powerful weapons.
Downing Street sources insist Mr. Blair is set on radical reform of
the CAP at a review next year. But without a trade deal the task is much
harder. Lowering trade barriers to help the developing world is a very
different proposition to reducing support for farmers to save money or
redirect resources away from agriculture.
Not everyone has given up on Doha: Trade Ministers continue to eye
each other warily, while insisting they are ready to come back to the
table at any time. And the "no deal is better than a bad deal" camp,
which includes development campaigners such as ActionAid, say the end
result could be a radical rethink about the WTO and its raison d'etre.
But with staff in Geneva quietly rebooking the summer holidays they
had cancelled to see through the talks, it could be months - more likely
years - before anyone dares to repeat high-flown promises of a
"development round."
Guardian Newspapers Limited 2006.
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