AFF Sentinel Vol.5#33
Word six weeks ago that the ag issues
stalling the Doha round had been resolved and only non-ag issues remained was surprising.
But the odds were still long.
So recent news that very high-level talks
in Geneva had stalled and the round had collapsed has been greeted
with everything from mourning and burial to placid responses that resurrection
has been happening for seven years and could again.
Essentially, China and India had agreed to lower
their tariffs on industrial goods in exchange for billions of dollars in
EU and U.S. agricultural tariff and subsidy cuts, according to the Wall
Street Journal ("Global Trade Talks Fail As New Giants Flex
Muscle," John Miller, 07/30/08). But, after all that tremendous progress,
China and India then insisted on a safeguard clause permitting tariff
increases on key crops like sugar, cotton and rice if there were sudden
import volume surges. The U.S. had suggested a trigger point of a 40
percent increase while China and India wanted ten percent. At an
impasse, the talks collapsed.
U.S. Trade Representative Susan Schwab refused to
declare the Doha round dead, citing "enormous progress" and
"what the U.S. has put on the table remains on the table." Of course,
a Democratic administration could change that.
It's critical that Bush Administration U.S. trade
negotiators have meanwhile not been idle. They've completed bilateral
trade agreements with South Korea, Columbia, Peru and Panama.
Unfortunately, the Democrat-led Congress has absolutely refused to even
consider any trade agreements save Peru.
What's at stake? Investor's Business Daily ("Has
Free-Trade Era Died With Doha?" 07/31/08) notes that 2007 U.S. trade
amounted to roughly $4 trillion, up from $1.19 trillion in 1990. Total
trade - exports plus imports - accounted for nearly 29 percent of GDP (2007).
Over the last decade, 20 percent of our growth has come from exports.
The world's businessmen have not been idle either.
During seven years of Doha dithering, global trade flows have increased 70
percent, to $14 trillion, according to Cato Institute trade expert
Daniel Ikenson, in a Wall Street Journal editorial, "Greasing the
World Economy Without Doha." The International Monetary Fund noted the
overall global economy expanded by 30 percent to $54.4
trillion.
Ikenson said "trade facilitation" -
"streamlining the administrative and physical procedures involved in
actually moving goods across borders" -- have recently been contributing
heavily to global trade growth. If countries continue cutting red tape, growth
can continue, even without a Doha boost.
Ikenson said leading global economists claim
bureaucratic red tape, shoddy logistics and communications hobble
any improvements that could come from lowered tariffs. As a positive
example, the World Bank cited the implementation of online customs declarations
by India that reduced delays by seven days.
U.S. agriculture interests were not agreed on
the Doha round. Wall Street's Miller noted that sugar, dairy and cotton
growers opposed Doha because they feared losing substantial subsidies
and tariff protection. Corn and ethanol lobbies opposed cuts
in tariffs on imported biofuels included in the round. Mainstream livestock organizations
wanted increased market access in developing countries that Doha
included. The recent Korean market opening is estimated to be worth $30/head,
for example.
Veteran observers noted this round of WTO
negotiations has been more complicated because more countries than
ever participated. Some fear the Doha round was possibly the last chance for
a sweeping global agreement. Smaller or regional agreements involving a limited
number of countries may now be all that's attainable.
Ironically, it is the countries with the largest
masses of poor people who need the lift an improving world
economy would provide - China and India -- that blocked the
agreement.
The problem with a Doha failure is that major
agricultural commodity subsidy cuts like the ones the U.S. and EU offered are only
made in response to major access deals in the developing world,
something only a global trade deal offers. Developed countries are not
going to drastically cut all commodity subsidies for a small deal
with few countries.
Some folks look at seven years of Doha
negotiations and conclude it will never happen. Others are encouraged that
the 30 major countries hammered out complex, major issues never before resolved
and got within one backsliding issue of a sweeping agreement.
The bottom line: we need every agreement
the U.S. can hammer out with any country. Major trading partners like Canada,
Mexico, South Korea and Japan must be carefully attended
to. Because gains from a major, global agreement can still not be counted on.
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