Doha's collapse bodes ill for global economy

by Morton Sosland
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No industry had more to gain from successful completion of the Doha Round of trade negotiations under the World Trade Organization (WTO) than the global food business, and most specifically the sector that trades in and processes grain. The reverse of this is also sadly true, that no industry stands to lose more as the result of the failure of these talks in the way of potential trade expansion and liberalization than this same industry. From the post-World War II start of pacts that have brought rules regarding trade under an international body, it is the food industry, reflecting its importance to every national economy and the immensity of its volume that has been the linchpin of negotiations. Yes, the results have not always been what all the parties might have wanted or even found acceptable, but, on balance, the capture of these rules, first under the General Agreement on Tariffs and Trade and more recently the WTO, has given great substance to global advances.

While every one of the positive changes in how production and marketing are supported by respective governments should not be credited to the multilateral negotiations that define each round, these agreements have stamped global acceptance in a truly effective manner. Writing finis to programs like acreage allotments and marketing quotas, high support prices for individual crops, huge government owned inventories, aggressive export subsidization and various bits of chicanery aimed at gaining unfair advantage in international trade provide a list of what the food and grain industry no longer must deal with, in large part due to the substance and power of prior trade agreements. Any familiarity with how these abandoned programs stood in the way not just of national but international progress should have prompted enthusiastic backing for concluding the now-failed Doha Round. Of all the disappointments in trade talks, none matches this sad result.

The few "so what’s?" voiced in response to the Doha Round collapse belie just how large the loss is. Pascal Lamy, the WTO director general, set this out when he said, "I had hoped to tell you that tariff peaks on industrial products of interest for developing countries had been slashed, that least developed countries would consolidate duty-free and quota-free access in the WTO, that export support in the form of subsidies, state trading enterprises, export credits or food aid had been removed." Once more, this is a list that includes changes that might not have been universally pleasing across the food or grain industry. Yet, like all such negotiations in the past, the advances would have outweighed the negatives, contributing significantly to expansion of global trade in agriculture and food, while spurring economic advances which themselves have been important contributors to rising demand for food.

Without passing judgment on the level of support that was forthcoming from the food or grain industries in the major developed countries, it is probable that the Doha Round’s emphasis on improving the lot of least-developed people might have prompted some lessening of advocacy. That possibility lurked behind the positions taken by trade negotiators of the United States (U.S.) and European Union. All too often, they reflected domestic political strategies that were different from what multilateral negotiations needed. Last year’s French presidential election and this year’s approaching U.S. election obviously have defined not just what was possible but perhaps prompted the failure that is at hand. Although the views expressed by American presidential candidates do not represent the trade-opening positions that have characterized the Bush and prior administrations, negotiations about trade seem to have a life of their own and even a supernatural power that favors revival, overcoming the most terrible of situations. Seven years of talks may have come to naught in the Doha Round. But all hope must not be abandoned, particularly within the business of grain and food that has so greatly benefited from past trade agreements.