If the Doha Round of WTO trade policy negotiations still have life it should become apparent the week of April 18 as both the agricultural negotiators and the NAMA (non-agricultural market access) negotiators hold meetings in Geneva, Switzerland.
In a recent speech in India WTO Director General Pascal Lamy summarized the key issue areas, “This triangle of issues corresponds to a triangle of members: the European Union needs to do more on agricultural tariffs; the United States need to do more on reducing agricultural subsidies and the G-20 group of countries, where India is a key member, needs to do more on industrial tariffs.” While this outline of issues has been known for months, Lamy has been increasingly blunt in recent weeks. All three sets of issues could be addressed when the negotiators meet.
Chief U.S. Agricultural Negotiator Richard Crowder outlined his thoughts on the WTO negotiations at an Informa Policy Conference in Washington, DC on April 12th. After the usual comments about agricultural market access in other countries, Ambassador Crowder then asked rhetorically, “What are others asking us to do?” His response was, in part, “Specifically they are concerned about box shifting – that we will have high levels of support across amber, blue and green and continue to maintain a system that insulates American producers from market signals. So they are looking for deeper cuts and for specific commitments on how we spend money to make sure it does not distort markets, be that commodity-specific caps or further decoupling of payments.” As with Lamy’s comments, others have said comments similar to Crowder’s, but not so pointedly and not as the top U.S. agricultural negotiator.
Other countries are unlikely to sign off on an overall WTO agreement unless they are assured that total U.S. spending on domestic support program are capped and that spending on the most trade distorting agricultural programs are significantly reduced. Additional commitments in the WTO negotiations may limit the ability of Congress to fashion the next farm bill. If the agricultural talks do progress, Ambassador Crowder will need to negotiate with agricultural interests in the U.S. while negotiating with other countries in Geneva.
The EU part of Lamy’s triangle does not appear to have plans to bring something new to the table. EU Trade Commissioner Peter Mandelson continues to repeat that the EU has presented a creditable and flexible plan and others need to respond to it. There has been no public indication that agricultural tariff issues are being seriously reconsidered.
In follow-up to press reports on his comments a couple of weeks ago about the WTO negotiations, the Chairman of the U.S. House of Representatives Ways and Means Committee Bill Thomas who has jurisdiction over trade policy in the House wrote in a letter to the Financial Times newspaper, “I believe that the US should stop enabling the EU in its efforts to drag down the global trade talks and instead focus on those trading partners who share our goals of creating meaningful economic opportunity.” While that statement was made in reference to bilateral free trade agreements, it also applies to the WTO negotiations.
If the EU simply does not have a vision in which it can compete in a world with more open trade, the U.S. and other countries should not allow the EU to bring down the entire WTO negotiations. The EU has already committed to eliminating all agricultural export subsidies. Since the EU accounts for 90 percent of all agricultural export subsidies those commitments are important. They have also made changes in their Common Agricultural Policy to shift away from price support programs and to direct payments not tied to current production and price. Their latest reforms in sugar policy now being implemented will substantially reduce distortions in that market. U.S. agricultural exports to the EU 25 were $6.8 billion in 2005 (10.8 percent of total U.S. agricultural exports), but the long-term market is not likely to grow because the EU population is expected to decline. The EU is an important part of the world economy and every effort should be made to keep them as full partners in world trade, but other countries should not allow the EU to retard economic growth by stopping a new trade agreement.
The third part of Lamy’s triangle, industrial tariffs in developing countries, will be critical in the NAMA talks. Brazil and India have been lead negotiators for the developing countries. Brazil has a presidential election this fall and is increasingly distracted by political scandals that have reached into the president’s cabinet. India is more interested in changes in trade rules for services than in industrial trade issues. If Brazil and Indian do not lead, some other country or countries must lead for the developing countries.
Mr. Lamy pointed out in his speech in India that 70 percent of the duties paid by developing countries are paid on goods from other developing countries. Those tariffs can be reduced without tariff changes by the EU or the U.S. Lamy also estimated that 60 percent of the work on a new agreement has already been done. Of course that is the easiest 60 percent, but it shows that progress has been possible.
The U.S. government has said from the start of the negotiations that domestic agricultural support programs are only on the table to the extent that market access for other countries in agricultural and non-agricultural products is also on the table. If the negotiations begin to move forward, U.S. negotiators will need to further balance the complex tradeoffs by providing a definitive limit on domestic agricultural support programs.