Must press for final success in trade negotiations
February 1, 2007
by Morton I. Sosland Editor-in-Chief
The moment is at hand when the global grain industry ought to be mustering its full influence to persuade the leaders of governments, particularly in Brussels and in Washington, to take the steps necessary to assure successful completion of the current round of global trade negotiations. True, this is a subject aired all too often in the past. Up to now it has been in pursuit of the unrealized hope that this negotiating round, named the Doha Development Agenda, could somehow be completed before the June 30 expiration of the U.S. president’s fast-track negotiating authority. The latter goal, which would allow only an up or down vote by the American Congress to approve any new trade accord, seems unlikely to succeed. This is because negotiations have proved more difficult than anyone anticipated when the round began six years ago. Yet, as Pascal Lamy, director-general of the World Trade Organization (WTO), has noted, a genuine interest toward completion is revealed by a heightened rhythm of negotiations. This has prompted Lamy and other observers to declare that success may be within reach.
Even the growing numbers of optimists realize that collapse or failure in completing the Doha round is also a real possibility. All it would take is for the Bush administration to give up on its commitment to press for necessary compromises or the Democrat-controlled Congress to seize upon this issue as a way of embarrassing the president. French insistence on no further E.U. tariff cuts would also block an accord. The latter would happen in the U.S. in the event the new Democratic leadership decides antiglobalization politicking belongs high on its agenda. Regardless of how it evolves, failure would be horrible, producing a bleak prospect for a world eagerly anticipating the benefits of a trade accord.
Hardly any industry is more closely tied to a prosperous global economy than is grain and grain-based foods. This industry has prospered as the result of global sourcing and global marketing, and suffers when trade is restrained. Indeed, the strength stemming from this overarching global perspective is at the core of what makes the grain industry, in both the developed and developing world, a fundamental force for raising not just the quality of the food supply, but for lifting the quality of life.
When officials of the WTO press for progress in these negotiations, they frequently emphasize the simple thesis that led to the WTO and its predecessor General Agreement on Tariffs and Trade (GATT) being formed — that market opening is good. In turn, they point out that the multilateral trading system, with 150 member countries adhering to rules governing trade, increases economic efficiency while reducing corruption and bad government. The evidence of this positive role mainly lies in how trade has grown faster than gross domestic production. According to the WTO, world exports of goods and services currently account for one-third of gross domestic product, up from 13.5% in 1970.
It was the earlier GATT negotiation that first brought agriculture into trade talks. The happy result was doing away with the export subsidies that had distorted competition for so long. Doha is meant to reduce domestic supports that also stand in the way of opening trade. The U.S. is being asked to slash its support payments to producers, which would theoretically be matched by the E.U. cutting its agricultural tariffs, which serve essentially the same wrong ends of spurring domestic production. The aim is not to eliminate income safety nets for farmers, but to end supports linked to production. This is the distinction that stimulated important revisions in the U.S.’s agricultural policy in the 1980s, and it is to the world’s advantage to have this same criteria applied in a hard-won global trade agreement.