The WTO Trade Ministers meeting in Bali, Indonesia last December directed the WTO Director-General Roberto Azevedo to prepare by this coming December a clearly defined program of work to conclude the long-delayed Doha Round of trade policy negotiations. In early April Azevedo asked members to look beyond the 2008 draft texts and reinforced that point recently. He said that passage of trade facilitation language and others policies in Bali has restored the credibility of the WTO as being capable of making multilateral decisions.
The director-general has asked the chairs of the three negotiating groups, agriculture, non-agriculture market access (NAMA) and services, to conduct new consultations and called on members to engage with each other one-on-one. Many developing countries are hesitant to move beyond the 2008 agriculture text because it protects their existing programs. According to reports by Inside U.S. Trade, they support a concept called ‘sequencing’ where negotiators would first settle on the ‘ambition’ in agriculture and use that to determine what is achievable in NAMA and services. Many WTO members and Azevedo support working on the three core areas in parallel.
U.S. Trade Representative (USTR) Michael Froman recently gave the U.S. view on restarting the talks at an informal meeting in Paris of WTO ministers and other representatives of about 50 member countries. He said the first priority was to implement trade facilitation language and other agreements approved in Bali. There are rumors that some developing countries are considering delaying implementation to gain leverage in the agricultural negotiations. He said there should be no backsliding, and developed countries were prepared to provide assistance to developing ones that need it.
Froman said he can envision a range of levels of ambition, and whatever level is set, balance is the key. He said, “Whatever the ambition level, it must run parallel in agriculture, NAMA, and services.” Those who want a big agreement may be disheartened by the apparent indifference to the level of ambition, but it is certainly true that an imbalanced agreement would not be accepted in the U.S.
The USTR said as an agricultural exporting and importing country the U.S. had ”no problem with agriculture setting the pace of the negotiations…provided that the discussion of agriculture addresses all of the relevant issues.” That last phrase gets to issues that are usually not mentioned. The relevant issues today are not the same as 13 years ago.
Market access is an issue as relevant today as 13 years ago. Froman noted “tariff barriers have significant distortive effects on global agricultural trade.” U.S. tariffs are low relative to much of the rest of the world. Froman also said this has become more important for developing countries because of the amount of agricultural trade between them. He added export competition issues including state trading enterprises that have been discussed in the Trans-Pacific Partnership free trade agreement talks.
Froman then raised a vital issue – domestic agricultural subsidies that distort trade. He said, “We cannot ignore the fact that the nature of who subsidizes has transformed dramatically in the 13 years since the Doha Round was established. The largest emerging economies now subsidize their farmers at levels as high as or higher than the United States and Europe.” The advanced developing countries thought that they were getting a pass on agricultural subsidies. That may have been true in 2001, but is not true in 2014. Froman made that clear.
He followed those comments with another important issue – the failure of some WTO members to update other members about the level of their subsidy programs. Froman said, “So right now we are flying blind, and that’s not a good way to begin a serious negotiation.” Earlier this year he had asked for updated information and analysis and is still waiting for a response.
This has been a growing issue in recent years in the U.S. and presumedly also in other developed agricultural exporters. India last provided information on subsidies in 2003, even though they were provided some relief last December at the Bali meeting. China last reported in 2008 and Brazil in 2009. The U.S. last reported in 2010 and the EU in 2009.
In his concluding comments, Froman said, “In the area of domestic subsidies, a discussion that ignores emerging economies is not politically or economically serious, and it cannot be the basis for the kind of progress we also want to see in areas like NAMA and services.” The lack of reports on subsidies to the WTO has not stopped analysts from the U.S. and other developed countries from making estimates of agricultural subsidies in advanced developing countries. Some of the methods and assumption used can be questioned, but there is little doubt that subsidies are up substantially. These analyses have led to political pressure in developed countries to reconsider the draft texts from six years ago.
Director-General Azevedo said recently, “I believe that trade has played a central role in lifting millions of people out of poverty in recent years. What’s at stake now is ensuring that trade can continue to do so in the future in the most effective way possible. So trade must be a part of this discussion.” Before that discussion can go very far, there has to be some redefinition of the terms of the debate consistent with the realities of the 21st century. That will make for a more healthy debate and improve the chances for an outcome that will lift millions more out of poverty.
Restarting the Doha talks require political decisions, not technical ones on minor details. WTO member Trade Ministers need to gather in small groups to get a sense of where others want to go. Next week’s Asia-Pacific Economic Cooperation (APEC) forum in China provides an early opportunity to check signals. The G-20 trade meeting in July in Australia will provide another. The issues again place developed countries in disagreement with advanced developing countries.