The Doha Round. Rest in Peace

It only took two days for representatives to the Geneva “make-or-break” meeting at the end of July, intended to save the Doha Round, to realize the state of deadlock which exists with respect to agricultural subsidies and unfettered trade access.

The US concession advanced by Special Trade Representative, Amb. Susan Schwab for a 60% drop in direct supports and subsidies to US farmers (principally sugar and cotton) in exchange for free trade in agricultural products with the EU was rejected. The meeting of the G6 major producers of agricultural products (USA, the EU, Australia, Brazil, Japan and India) convened by Pascal Lamy the WTO General Director, foundered on July 24th, sounding the death knell of the 2001 Doha Trade Round.

Developing nations were joined by the FAO in condemning the collapse of negotiations as they will loose potential tariff-free markets for their agricultural products as promised in Doha. Continuation of the impasse will perpetuate poverty and delay advancement in many single-crop economies in Asia and Africa. The promise of “Aid for Trade” was dashed by the dictum that “nothing is agreed unless everything is agreed”

From a narrower political perspective any trade agreement will require rapid resolution of the conflicts among the G6, which is regarded by the remaining 143 member nations of the WTO as responsible for the collapse. The mandate currently empowering the US President to conclude a trade agreement expires in November of this year and will not be extended. Congress is faced with conflicting demands to reduce expenditure given the high cost of oil, recovery from hurricanes Rita and Katrina, disaster relief and other issues including immigration reform and tax policy. The present sentiment in Congress is that “no deal is better than a bad deal (for the USA)” further delaying meaningful unilateral concessions.

Lack of progress over the past five years in achieving an equitable trade agreement is to the detriment of both industrialized and developing nations. Any agreement of far reaching effect will require seismic realignment of agricultural production and support in both the USA and the EU with rationalization of farm ownership, selection of products and levels of output. What is needed is less a comprehensive agreement which would be too disruptive to the G6 but a staged evolution towards the desired goal of equity in trade. If one wishes to consume an elephant it is best to approach the task bite by bite.


By: Simon Shane