One of the positive features of the current Doha Development Round of trade negotiations under the WTO is that 147 countries are part of the process. This is up from 123 countries in the Uruguay round that was implemented in 1995. The original GATT agreement (General Agreement on Tariffs & Trade) signed in 1947 involved 23 countries. Countries of all sizes and stages of development have seen the value of participating in trade rules as part of the WTO. With such a diverse group of countries, a struggle is occurring over how to define what the negotiations are really about. U.S. farmers and ranchers have a large stake in seeing that barriers to trade are reduced so that developing country economies expand and demand for food from paying customers increases.
In past trade talks the overall goals were greater market access and a reduction in trade distorting activities by governments. This process had the usual fits and starts associated with making adjustments to market realities. Older, more established industries, like steel, were more protected than newer industries that were too young to have organized lobbying efforts. Some activities, like rice production in Japan, were so politically untouchable that governments made many concessions in other areas to avoid making painful political decisions. Solid economic growth in countries that pursued more open trade policies has validated that a more open trading system is the proper goal of negotiations.
By definition, a “development round” should center on reducing tariffs and non-tariff trade barriers in developing countries for both production inputs and consumer goods. Reducing trade barriers is good for economic growth, and delaying market opening requirements simply perpetuates economic stagnation in economically poor countries. Since the stalemate in negotiations that occurred in September 2003 in Cancun, Mexico, some developing countries have talked much about how developed countries need to further lower import barriers and reduce export subsidies, but have defended their existing barriers to trade for both industrial and consumer goods, including food. The debate sounds much like the arguments of 20-30 years ago about the developed countries being the cause of the economic problems in the developing countries without the developing countries accepting the need to change their basic economic policies, including trade policies.
The current negotiations are further complicated by the uncertain definition of developing countries. Countries are allowed to self designate themselves as developing countries. Under the framework for negotiations that was agreed to in late July of this year, developing countries get “Special and Differentials Treatment” and will have to make fewer commitments to market opening and longer implementation times. Also, a highly advanced developing country like Brazil would get the same preferential treatment as a much poorer country.
The International Food and Agricultural Trade Policy Council (IPC) has suggested that developing countries be divided into three groups. Those with incomes of less that $900 per capita would be called least developed. Countries with incomes of $901 to $3035 per capita would be called lower middle income countries. Upper middle income countries would be those with incomes of $3,036 to $9,385 per capita.
To move the Doha round toward truly being a development round, two paradigm shifts have to occur. First, both developed and developing countries need to be committed to substantial and rapid lowering of trade barriers – both tariff and non-tariff barriers. Lower trade barriers are not just a luxury that can only be afforded by rich countries, but a fundamental economic policy for helping all less developed countries become more developed. That change would also discourage countries from trying to game the system by claiming to be a developing country.
Second, the truly least developed countries need help to develop the economic infrastructure and public policies that would allow them to enact and carryout sound economic policies. While that is outside the scope of the WTO, better infrastructure and policies are critical for poorer countries to more fully participating in international trade. WTO negotiators have to face the fact that restricting free trade does not promote growth in low income countries. Developing countries could better spend their limited resources understanding how to compete in markets where trade barriers are being reduced rather than arguing that developed countries are the problem.
The Doha talks must not get sidetracked with excuse making that pits policies for developed and developing countries at cross purposes. If the negotiations are viewed by people in developed countries as just a one-sided giving process, there will be scant supported in developed countries. That would be a loss for all countries and a loss for U.S. farmers and ranchers.