Global support fails to produce easy win for Doha

by Morton Sosland
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No issue is of greater importance to the future well-being of the global grain and grain processing industry than the successful conclusion of the Doha Round negotiations being conducted under auspices of the World Trade Organization. Failure of the round, which suddenly does not seem impossible, would write finis to more than five years spent in trying to secure an accord aimed at, among many goals, opening global markets to grain and products. These negotiations cover one of the wildest swings ever witnessed in global grain trade, one in which demand has fallen and risen at a speed and in a dimension unparalleled in this industry’s long history. That failure might come just as the importance of unencumbered trade has been made evident by year’s amazing price swings seems catastrophic.

The specifics of what is at stake are well known. In the wake of the Uruguay Round, which wrote rules governing agricultural trade for the first time, the Doha Round could best be viewed as solidifying that progress. Doha is meant to write finis to agricultural export subsidies and to effect a dramatic reduction in domestic crop supports. The progress achieved by the Uruguay Round, if modified to the degree now under consideration, would translate into fundamental restructuring of trade in grain. Seldom have trade proposals been as balanced as what has been attained in recent talks.

Much of the progress toward acceding to demands for opening trade and reducing supports has been facilitated by the past year’s strength in grain prices. One has only to look at how far the United States (U.S.) had gone in its willingness to negotiate "amber box" limits on domestic supports. America has agreed to a cap between $13 billion and $16.4 billion, compared with the annual limit of $19.1 billion in the Uruguay Round. Accepting the lower cap was facilitated by current "amber box" support expenditures being at only $11 billion. Considering that at the start of 2007, U.S. negotiators refused even to consider a $17 billion ceiling, the impact of markets is striking.

Because of the U.S.’ newfound flexibility and a similarly positive stance by the European Union (E.U.), blame for negotiating failure is placed on developing nations, particularly India and Brazil. Both have refused to come anywhere near to matching the trade liberalization accepted by the U.S. and the E.U. They assert that their agricultural sectors are more susceptible to expanded imports and that the developed nations still want to restrict their exporting opportunities. Brazil particularly is critical of U.S. limits on sugar and ethanol.

Not only have trade patterns changed hugely in the course of the Doha Round negotiations, but attitudes among peoples have been transformed. According to the Pew Global Attitudes Project, a worldwide public opinion survey, economic globalization — the main product of successful trade negotiations — is embraced as positive by

a majority of the publics around the world. But the survey also found an evolving view of globalization "that is nuanced, ambivalent and sometimes inherently contradictory." The latter was evidenced by the waning support on the part of Americans and Europeans, which contrasts dramatically with nearly universal approval of global trade among the people of China and India. It found that support for free markets has increased notably in recent years in Latin America and Eastern Europe, where people have enjoyed increased personal incomes and strong total economies. The surveyed publics in all 47 countries accept the benefits of increasing global commerce and free market economies Pew noted, adding that most believe international trade is a net benefit.

Support like that, it would seem, should mean that final adoption of improved trade rules would be eagerly accepted, and the global grain and grain processing industry could anticipate a great new era in which markets could function to the advantage of all participants. Alas, politics have intervened, as evidenced by the declining backing of Republicans in the U.S., once the strongest proponents of opening trade. All of this reaffirms that continuing strong industry advocacy is essential if trade progress is to be achieved in 2008.