No Serious Doha Development Round Talks Likely Pre-US Prez Elections

Written by Malcolm Subhan | Brussels, Oct 26: | Updated: Oct 27 2003, 05:30am hrs
The prospects for the freeing up of world trade in agricultural products are not good. This was made clear in a talk by an American specialist in agricultural policy, Charles Hanrahan, at a meeting organised by the American Embassy on Friday.

A member of the Congressional Research Service in Washington, Mr Hanrahan described himself as the expert who explains the intricacies of world trade in agriculture to the members of the US Congress - in short, a decision shaper, not a decision maker.

Mr Hanrahan noted that the Cancun meeting of WTO trade ministers collapsed even before the negotiations on agriculture got going. The meeting ended, therefore, without an agreement on a framework for continuing the negotiations on agricultural trade liberalisation in the Doha Development round.

The round itself will continue. US agricultural exporters and food producers favour multilateral negotiations in the WTO framework, Mr Hanrahan pointed out. The Bush Administration, in fact, could use the multilateral negotiations to reform American agricultural policy; but these negotiations will have no influence of domestic agricultural policy now.

The US government will now focus on its policy, first announced in 2000, of negotiating bilateral and regional trade agreements. Ironically, the negotiations for the ambitious Free Trade Agreement of the Americas (FTAA) are likely to encounter heavy going, as the two co-chairs are the United States and Brazil. The negotiations for a free-trade agreement with the countries of Central America are on course, however, according to Mr Hanrahan.

Brazil can be expected to remain faithful to the G-21, the group of some 21 developing countries that came together at Cancun, following the lead taken by China, India and Brazil. But some of the smaller Latin American countries have already defected from the G-21, given that the bulk of their agricultural trade is with the US.

The view within European Union (EU) circles here is that the G-21 will not survive, because of the very divergent trade interests of its key members. Brazil wants the total elimination of all restrictions on agricultural trade, whereas India wants to protect its domestic market.

It may, therefore, be in Indias interest to open a dialogue with the US, in the view of one Indian trade expert. American pressure had already forced New Delhi to bring down its very high tariffs on edible oils (up to 300 per cent) to just around 49 per cent. As Mr Hanrahan pointed out, the US subsidizes a relatively small number of agricultural products, as compared to the EU.

In any case, with the American political scene dominated by the presidential elections next year, no serious negotiations in the Doha Development Round can be expected before 2005, as Mr Hanrahan pointed out. He also noted that the fast track legislation, under which the US Congress must accept or reject any Doha Development round agreement in its totality, expires in mid-2007, but could be extended.

For Mr Hanrahan, the WTO members will take stock of the situation created by their failure in Cancun. They may also look at demands for reforming the WTO itself.

The options for reform include (1) abandoning the concept of a single undertaking, which is the goal of the Doha Development round; (2) limiting the agenda to purely trade issues, and (3) reinforcing the capacity of the smaller developing countries to play a full part in trade negotiations.

WTO members will have to take an important decision before the end of the year on the so-called peace clause. Under the Uruguay Round agreement, reached in 1994, it was understood that WTO countries would exercise restraint as regards US and EU farm subsidies, for example, until the end of this year.

A decision must be taken shortly on whether to renegotiate the peace clause or allow it to expire. For Mr Hanrahan, the clause will not be replaced. This could result in numerous challenges to the US and EU subsidies in the WTO, or an undertaking by the developing countries to exercise restraint, in return for greater concessions on subsidies.

The questions put to Mr Hanrahan from the floor pointed to two concerns among Europeans.

The first is whether countries such as China and Brazil, which are very competitive in agricultural trade, can qualify for developing country status, the second whether developing countries do not also subsidize their farmers.

Mr. Hanrahan noted that under the joint EU-US proposal, countries that are net exporters of agricultural products would not be entitled to the same level of concessions as other developing countries.

Mr. Hanrahan thought that while China reportedly subsidizes its corn exports, for example, poor developing countries cannot really subsidize their farmers. However, farmers were helped through activities such as road building, undertaken in the framework of development programmes.

Tongue-in-cheek, he suggested that agricultural policy in developed countries was held to be in defense of special interests, while in developing countries it was viewed in the context of development policy.