March 08, 2007

Doha Round Status Report

The Doha negotiations were reinitiated last month, after being suspended last July.  The Government Accountability Office (GAO) has released a status report:  Congress Faces Key Decisions as Efforts to Reach Doha Agreement Intensify (GAO, March 2007, GAO-07-379).

The GAO sought to answer three questions in this 65 page report:

(1) the overall status of the Doha Round negotiations now and the progress that had been made prior to and since the breakdown of the talks, (2) the substantive divisions among key WTO members that led to an environment of deadlock and the eventual suspension of the negotiations, and (3) the possible economic and other ramifications if the round is not concluded satisfactorily.

At this point:

Continue reading "Doha Round Status Report" »

March 04, 2007

Canada's corn complaint

Canadian corn farmers think the U.S. unfairly subsidizes its corn farmers.  In early January, Canada requested consultations with the United States on this issue under the WTO's dispute settlement process.  The request has implications for the Doha Round, and the upcoming U.S. farm bill.

Jeanne Grimmett goes over the details of the WTO dispute settlement process: Dispute Settlement in the World Trade Organization: An Overview (CRS, January 29, 2007).

Randy Schnepf lays out the background to and issues in the Canadian corn case in the Congressional Reserach Service (CRS) report: U.S.-Canada WTO Corn Trade Dispute  (January 31, 2007).

February 25, 2007

FarmPolicy.com

The blog  FarmPolicy.com will be useful if you are interested in the Doha Round, the upcoming Farm Bill, or other agriculture and trade-related issues:

Continue reading "FarmPolicy.com" »

February 01, 2007

Doha Partners Underwhelmed by Administration Farm Bill Proposals

The Bush Administration released its proposals for the 2007 Farm Bill today: Bush Farm Proposal May Snag On Congressional Roadblocks (Greg Hitt, Wall Street Journal, Feb 1):

Continue reading "Doha Partners Underwhelmed by Administration Farm Bill Proposals" »

January 23, 2007

Congress and "zeroing"

John Miller reports in Wednesday's Wall Street Journal that efforts to wake up the Doha Round are likely to be a non-starter: Doha Revival Talks Are Set, But Accord Is Unlikely (January 24):

Global trade negotiators hope to restart the Doha round of world trade talks at the World Economic Forum in Davos, Switzerland, this week, but a return to the bargaining table will likely be more symbol than substance.

The key players -- the U.S. and the European Union -- remain unwilling to cut farm subsidies enough to satisfy emerging economies like Brazil and India....

Mr. Mandelson proposes a 54% cut in agriculture import tariffs. France, Europe's largest agriculture producer, wants to cut tariffs by just 39% -- and isn't budging. Without France there is no deal: Mr. Mandelson needs support from all 27 EU members in order to reach a global trade deal.

Dan Ikenson of Cato's Center for Trade Policy Studies won't be too worried if the Doha princess sleeps for years to come.  Trade is Much Bigger Than the Doha Round (CATO at Liberty, January 22)

Continue reading "Congress and "zeroing"" »

January 21, 2007

Waking the Sleeping Doha Beauty

The Financial Times reports that it just may happen:  US and EU near agriculture trade deal (Eoin Callan and Alan Beattie, Jan 21).  Lots of parties need to be brought on board:

The EU:

The deal that has been taking shape behind closed doors includes a proposal by Brussels to cut barriers to foreign agricultural products by an average of at least 54 per cent...

The US:

...a conditional offer by the US to lower the ceiling on its domestic farm subsidies to close to $17bn (€13.1bn, £8.6bn).

The previous U.S. offer, a cap at $22.5 billion (about a 50% cap decrease) was larger than the $19.7 billion actually spent in 2005.  So this new proposal would actually limit U.S. subsidies.

The French:

Both sides are also aware that the provisional EU offer on tariff cuts could lapse under the strain of opposition from Paris, which has demanded that the farm talks in Doha be put on the agenda of the meeting of EU agriculture ministers next Monday.

The U.S. Congress (who will have to give the Bush Administration an extension of its Trade Promotion Authority):

The Bush administration has also met key figures on Capitol Hill who will shape policy on agriculture and trade under the new Democratic leadership of Congress. But it is likely to take weeks to establish whether Congress would consider renewing President George W. Bush’s trade promotion authority – which expires in six months and is needed to complete a deal.

These approaches included an appeal to Collin Peterson, the influential chairman of the agriculture committee in the House of Representatives, to tone down his opposition to the renewal of trade promotion authority.

The congressman said after the meeting that he remained deeply critical of US trade policy but was not determined to wreck a Doha deal that included meaningful benefits for US farmers.

Brazil and India:

Any agreement is also contingent on reciprocal concessions by Brazil and India on lowering barriers to trade in industrial goods and services – which are still under negotiation... Brazil has been negotiating separately with the US and EU and dispatched a senior diplomat to Delhi over the weekend to try to broker a common position

For quick background, take a look at Sandra Polaski's paper, Breaking the Doha Deadlock. Congress Could Play a Pivotal Role. (Carnegie Institute, January 2007).  Polaski is Director of the Trade, Equity, and Development Project at the Carnegie Endowment for International Peace.  She argues that a U.S. "maximalist" negotiating position in the early summer of 2006 was the key reason for the suspension of negotiations.  The U.S. needs to accept lower limits on its agricultural subsidies, and give developing nations more scope for protecting weak agricultural sectors.  This she says, and I agree, would be good domestic, foreign, agricultural, and trade, policy for the U.S. 

For more background, I'd also suggest a post by Iana Dreyer on the new globalisation blog, Global Conditions: Doha Round - Just Do It (Jan 18).  I learned about the Polaski paper from Dreyer.  Dreyer also draws on stories from recent articles in the International Centre for Trade and Sustainable Development (ICTSD) newsletter, Bridges. 

December 27, 2006

It turns out that "major commodity programs are highly regressive in the US"

Hertel, Keeney, Ivanic and Winters look at Distributional effects of WTO agricultural reforms in rich and poor countries (World Bank Policy Research Working Paper 4060, Nov 2006), and find:

Rich countries' agricultural trade policies are the battleground on which the future of the WTO's troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, and one of their most common defenses is that they protect poor farmers. The authors' findings reject this claim.

The analysis uses detailed data on farm incomes to show that major commodity programs are highly regressive in the United States, and that the only serious losses under trade reform are among large, wealthy farmers in a few heavily protected subsectors. In contrast, analysis using household data from 15 developing countries indicates that reforming rich countries' agricultural trade policies would lift large numbers of developing country farm households out of poverty. In the majority of cases these gains are not outweighed by the poverty-increasing effects of higher food prices among other households.

Agricultural reforms that appear feasible, even under an ambitious Doha Round, achieve only a fraction of the benefits for developing countries that full liberalization promises, but protect U.S. large farms from most of the rigors of adjustment. Finally, the analysis indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.

Continue reading "It turns out that "major commodity programs are highly regressive in the US"" »

December 26, 2006

How the President Got His Trade Promotion Authority

And why it was possible to launch the Doha round...

One of the most remarkable examples of the farm lobby's power came in 2001 and 2002, when the existing farm bill was written, expanding payments again over the opposition of the White House and key lawmakers. Reformers see it as a cautionary tale.

The architect of the legislation was Rep. Larry Combest, an aggie through and through, a West Texas Republican who came from three generations of cotton farmers and who took control of the House Agriculture Committee in 1999.

Others on Combest's committee included a cattle rancher and tobacco farmer from Tennessee, a Missouri corn and hog farmer, and a government-subsidized rice farmer from Arkansas. The ranking Democrat, Charles W. Stenholm of Texas, had an ownership interest in cotton farms that got more than $300,000 in subsidies between 2001 and 2005, USDA records show.

With help from a generous mandate from the House Budget Committee -- chaired by Jim Nussle (R-Iowa) -- Combest produced a new farm bill in 2001 authorizing an eye-popping $50 billion, 10-year increase in price supports and income supports for farmers. He boasted that the measure was "a major step away from Freedom to Farm."

For one thing, the bill restored a key pillar of the pre-1996 program: cash payments that compensate for low crop prices. Thousands of farms were eligible even if they never grew crops. Budget officials estimated that change alone would cost $37 billion over a decade.

The Bush White House disliked Combest's bill. Chief political adviser Karl Rove saw it as the antithesis of fiscal responsibility. "We're Republicans," aides remember Rove grumbling. The White House budget office issued a stinging critique, saying the bill was too costly and failed to help farmers most in need.

Combest also faced strong opposition from a disgruntled group of Eastern and Midwestern lawmakers, and from senators who wanted tighter limits on what a farm could collect each year.

But Combest had a strong hand. "He hijacked the process," said a former USDA official who spoke on the condition of anonymity because he still deals with Congress.

At a meeting in Rove's office soon after the Sept. 11, 2001, attacks, Combest delivered a warning, according to several people with knowledge of the session. Unless the administration backed off, Combest warned, he and his farm-bloc allies would sink a top priority of President Bush's: legislation giving the president a free hand to negotiate a global trade treaty strongly favored by big corporations. "You have to ease up," one participant remembers Combest saying.

Over the next several months, the administration laid off its public criticism of Combest's farm bill. Combest withdrew his opposition to trade-promotion authority, and it squeaked through the House by a single vote. He declined to comment for this article.

(Powerful Interests Ally to Restructure Agriculture Subsidies, Dan Morgan, Sarah Cohen and Gilbert M. Gaul, Washington Post, Dec 22).

Thanks to Jonathan Dingel and Daniel Drezner for the pointer.

August 03, 2006

How do you wake an enchanted princess?

Following the breakdown in negotiations on July 24, Pascal Lamy cast a spell, and put the Doha Round negotiations into an enchanted sleep: The "Sleeping Beauty" option (Ben Muse, July 24).

There's lots of talk now about how to wake them up.  The International Centre for Trade and Sustainable Development newsletter Bridges reports: Governments Exploring How To Restart Doha Round Talks (August 2)

Here's one scenario:

Following talks in Rio de Janeiro from 27-29 July, Schwab and Brazilian Foreign Minister Celso Amorim said that they were both committed to arriving at a far-reaching Doha Round agreement.

The US trade envoy, who will meet counterparts from around the world over the next few months, suggested that striking a deal in the next five to eight months remained possible. She said that she hoped to have a framework agreement ready by early 2007, which she could use to try to persuade Congress to extend the Bush administration's trade promotion authority. Due to expire at the end of June 2007, this mandate allows the administration to negotiate trade agreements and submit them to Congress for a take-it-or-leave-it vote. A short-term extension is thought to be more achievable than a wholescale renewal, particularly if an accord looks likely.

July 24, 2006

The Sleeping Beauty option

The Doha Round goes to sleep.  Perhaps to wake some day: Talks suspended. ‘Today there are only losers.’ (WTO, July 24).

How do you cast a sleeping spell on a trade negotiation:

Continue reading "The Sleeping Beauty option" »

July 18, 2006

What's at stake in the Doha cotton negotiations?

If the world got rid of its cotton tariffs, and export and production subsidies for cotton, it would be better off.  The Doha Round's "Cotton Initiative" could have a nice payoff.

Kym Anderson and Ernesto Valenzeula find that the world could be better off to the tune of about $280 million a year. (The World Trade Organization's Doha Cotton Initiative: A Tale of Two Issues, World Bank Policy Research Working Paper 3918, May 2006). 

Cotton exporters tend to gain, cotton importers tend to lose.  Several really poor countries in West Africa stand to gain a lot.

Continue reading "What's at stake in the Doha cotton negotiations?" »

July 17, 2006

A boost for the Doha Round

The G-8 has given the Doha Round a helpful boost. 

Alan Beattie, Neil Buckley and Daniel Dombey report: Emergency talks on Doha follow Lamy warning (Financial Times, July 17).

Continue reading "A boost for the Doha Round" »

July 16, 2006

Doha at the G-8

I don't think this: G-8 Leaders Give Lamy a Month for a New WTO Accord (Bloomberg, July 17):

Group of Eight leaders today called for a ``concerted effort'' to conclude five-year-old trade talks and gave World Trade Organization Director General Pascal Lamy another month to suggest a way to reach an agreement.

...will do as much good as this: Blair leads call for France to cut back farm subsidies (Larry Elliott, The Guardian, July 17):

Tony Blair was last night seeking to orchestrate concerted European pressure to prod a reluctant France into bigger cuts in farm protection as stalled global trade talks entered a make-or-break two weeks.

With the G8 due to hold discussions with five leading developing countries in St Petersburg today, Downing Street sources said the prime minister was "singing from the same song sheet" as the German chancellor, Angela Merkel, the Italian prime minister, Romano Prodi, and the EU commissioner, Jose Barroso.

Monday:

Heads of government from the world's eight leading industrial powers, in Russia will join their counterparts from Brazil, China, South Africa, Mexico and India tomorrow in an attempt to give momentum to the negotiations that started in Doha, Qatar in 2001. (Bloomberg story above)

July 03, 2006

The Doha Round: What happens now?

Apparently, at least for now, it's all up to Pascal Lamy.  The International Centre for Trade and Sustainable Development published a special edition of its newsletter, "Bridges," today. 

Here's their report on the plan for July:

Continue reading "The Doha Round: What happens now?" »

What happened in Geneva last week?

What happened in Geneva last week?  Here are some useful summaries.

This Crowell and Mohring "Doha Developments Update" for June 23 has a lot of detail on the preparations, and often optimistic speculation, just before the meeting.

Martin Khor looked at a possible scenario for the Geneva meeting, just before: "Sequencing the Ministerial" and Scenarios of the Stages it has to Clear (Third World Network, June 28.  I found this very helpful.

This morning, the Third World Network has several other reports on the progress of the ministerial:

These reports have far more concrete detail than most news stories.

The International Centre for Trade and Sustainable Development has a special issue of "Bridges" out this morning, with an overview of events.  The entire text is below the fold.

Continue reading "What happened in Geneva last week?" »

The most entertaining headline on a recent WTO story...

is "Time Running Out for Jargon-Riddled WTO," on a funny story by Bradley Klapper (AP via chron.com, June 27)."    For the best weblog post title about the WTO see Daniel Drezner's post on Klapper's story.

Continue reading "The most entertaining headline on a recent WTO story..." »

July 02, 2006

Seriously decoupled subsidies

At least some U.S. farm subsidies are decoupled from production decisions.

Dan Morgan, Gilbert M. Gaul and Sarah Cohen report in this morning's Washington Post: Farm Program Pays $1.3 Billion to People Who Don't Farm:

Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.

Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.

Matthews is not alone. Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post.
...

Continue reading "Seriously decoupled subsidies" »

Sunday: What next for Doha?

Where do the Doha Round negotiations go now, following yesterday's collapse of the meeting of WTO member trade ministers in Geneva?

Peter Mandelson, the E.U. Trade Commissioner, doesn't think we've reached the end of the Doha Round, yet (WTO talks neither "success or disaster" - Mandelson, Rueters via NDTV Profit.com, July 2):

Continue reading "Sunday: What next for Doha?" »

July 01, 2006

Saturday: The Party is Over

The host went all out, but the guests had nothing to talk about, and everybody went home early.

Paul Blustein sums it up for Sunday's Washington Post: Trade Ministers Give Up on Compromise.  Geneva Conference Collapses Over Agricultural Tariffs and Subsidies. (July 2):

Continue reading "Saturday: The Party is Over" »

June 30, 2006

Friday in Geneva

As this sample of headlines suggests, there wasn't much progress today:

Negotiators and trade ministers have been unable to break into the iron triangle of subsidy, ag tariff, and industrial goods tariff concessions.

The E.U. Trade Commissioner, Peter Mandelson, made some interesting comments about the "EU 'landing ground'" at an informal Trade Negotiating Committee (TNC) meeting this morning: Mandelson sets out EU “landing ground” for farm/manufacturing deal (June 30) - according to the abstract:

In it he sets out what the EU believes constitutes a realistic “landing zone” for the Doha negotiation on farm tariff cuts, trade-distorting farm subsidies and industrial tariff cuts.  He urges all sides to show further flexibility. Insisting that the EU will try to get as close as possible to the G20 proposal for farm tariff cuts, he says that the same level of ambition must also apply for US domestic trade-distorting farm subsidy cuts which must come down – not as far as to the $12 billion ceiling demanded by developing countries but “considerably”. Mandelson argues that a “real cuts for real cuts” scenario demands that such an agreement is completed by the G20 advanced developing countries offering
a formula for industrial tariff cuts with a coefficient of “15, not 20”.

For context, let me start by quoting WTO Director-General Pascal Lamy's comment on his perspective about the key to an agreement:

"If I was looking for a magic number . . . I would probably look around 20." He said this would mean the US adopting a $20bn ceiling for farm subsidies, developing countries cutting industrial tariffs to no more than 20 per cent and adoption of the G20's suggestion on farm tariffs.

The G20 proposal was an average cut of 54%, so Mandelson appears to be saying that, given conessions by its negotiating partners, the EU could move from its current offer of 39%, towards (but not to) 54%. 

This industrial tariff coefficient refers to the coefficient in a simple Swiss formula, which relates the original tariff to the new tariff.  The formula is:

New tariff = (C*"Old tariff") / (C+"old tariff"), where C is this coefficient of 15 or 20.  The larger the coefficient, the smaller the tariff reductions.

Internal conflicts are making it complicated to interpret the EU negotiating posture.  The Kantor story (Global trade talks stalled and on verge of collapsing.) in the list above, is very good, and provides details on the EU's difficulties:

Continue reading "Friday in Geneva" »

Thursday in Geneva

This was the first day of the latest Doha Round meeting of the WTO trade ministers.  Today was meant to be a day for informal contacts between ministers and delegations, a day for coalition groupings to meet and discuss their plans.

A lot of discussion in recent days has focused on the so-called "triangular" approach to an agreement.  This involves (1) a reduction in U.S. agricultural subsidies, (2) a reduction in E.U. tariffs, and (3) a reduction in developing country industrial tariffs. 

On the 28th, WTO Director-General Pascal Lamy characterized this:

"If I was looking for a magic number . . . I would probably look around 20." He said this would mean the US adopting a $20bn ceiling for farm subsidies, developing countries cutting industrial tariffs to no more than 20 per cent and adoption of the G20's suggestion on farm tariffs.

The G20 agricultural tariff proposal is a 54% average reduction:

The US has proposed a 67 per cent average cut in farm tariffs, well above the EU's original 39 per cent offer and the 54 per cent suggested by the Group of 20 emerging market nations, including India. But two groups of nations with heavily protected farmers - the rich G10, including Japan and Switzerland, and the poorer G33, including India and Indonesia - have demanded exemptions for a range of products.

(Head of WTO outlines terms for possible Doha accord , Alan Beattie, Frances Williams and,Delphine Strauss, Financial Times, June 28)

A G6 meeting today between the key participants, the U.S., E.U., Japan, Australia, Brazil and India, doesn't appear to have been productive.  As reported in The Age (Deadlock continues in global trade talks , June 30):

Continue reading "Thursday in Geneva" »

June 29, 2006

The Doha Ministerial today

In yesterday's (June 28) Trade Negotiations Committee briefing, WTO Director-General Pascal Lamy indicated that Thursday "is left open for members to consult among themselves as many of their ministers and other delegates arrive in Geneva."  (Lamy outlines schedule for ‘moment-of-truth’ meetings , WTO, June 28)

The most detailed information I have on what might happen today, and why it may be important, is from this Martin Khor story Sequencing the WTO "Ministerial" and Scenarios of the Stages it has to Clear (Third World Network, June 27):

Continue reading "The Doha Ministerial today" »

June 28, 2006

Lamy's plan

Pascal Lamy, the WTO Director-General,  described a preliminary schedule for this week's Doha Round negotiations today at an informal meeting of the WTO's Doha Round Trade Negotiations Committee (this is the committee established to oversee the Doha Round negotiations for the WTO).

The WTO web site has a press release,  and links to the text of his remarks and audio from the press conference that followed the meeting: Lamy outlines schedule for ‘moment-of-truth’ meetings (WTO website, June 28).

Here's the plan:

Continue reading "Lamy's plan" »

June 27, 2006

This week's Doha Round ministerial meeting

In a couple of days WTO trade ministers will gather to see if they can get the Doha Round trade negotiations moving.   

This week's object is to reach an agreement on sets of general principles or "modalities" for agricultural reform and industrial tariff reform.  The remainder of the year would then be barely enough time to fill in the details.

Two items the past week describe the mechanics of a meeting like this:

Continue reading "This week's Doha Round ministerial meeting" »

June 24, 2006

A 50-50 chance for Doha

The Australian Trade Minister, Mark Vaile, thinks the Doha Round has a 50-50 chance: Bush move gives Doha new life.  (Tim Colebatch and Orietta Guerrera, The Age, June 24):

The Bush Administration's recent efforts have been helpful, but:

Continue reading "A 50-50 chance for Doha" »

June 23, 2006

What does the Doha Round have to offer?

The European Commission offers links to five studies of potential benefits from the Doha Round: Doha Round: Some Recent Economic Studies.

Links incude Anderson and Martin (World Bank); Polaski (Carnegie institute); Hertel and Keeney (Purdue University); CEPII (Paris leading institute in international economics); Copenhagen Economics; IFPRI (Washington based institute), Swedish National Board of Trade; Australian Productivity Commission, along with brief commentary.

June 22, 2006

Bhagwati & Ikenson

Jonathan Dingel went to yesterday's Cato Institute trade policy forum with Jagdish Bhagwati and Daniel Ikenson.  He reports over at Trade Diversion: Bhagwati & Ikenson on unilateral liberalization

Among other things, he provides an interesting insight into Bhagwati's perceptions of the difference between the approaches of former USTR Portman,  and our new USTR Schwab. 

June 21, 2006

One more time...

Another Doha "do or die" meeting of WTO member trade ministers next week (Are Doha doldrums doomed to deepen? , David Loyn, BBC News, June 19).  This may really be it, one way or the other.

Continue reading "One more time..." »

June 19, 2006

Bush weighs in on Doha Round

Last Thursday, President Bush weighed in on the importance of moving the Doha Round negotiations along - and appeared to indicate a willingness to make compromises if they were needed for a significant agreement.

Continue reading "Bush weighs in on Doha Round" »

June 15, 2006

Experts Pessimistic About Doha Round

Trade professionals aren't optimistic about the success of the Doha Round.

Andrew Stoler of the Institute for International Business, Economics & Law at the University of Adelaide surveyed 100 trade professionals "negotiators, policy-makers and experts from both developed and developing countries located in Geneva and key capital cities around the world..." in late May and early June:

Continue reading "Experts Pessimistic About Doha Round" »

June 04, 2006

Lamy's Doha plan

Pascal Lamy has a plan to get a Doha agreement.  Here (as reported recently in Bridges) it is:

Continue reading "Lamy's Doha plan" »

May 24, 2006

The costs of extending the current farm bill

The debate over the next U.S. farm bill is beginning.  This will have important implications for trade.  Improved access by U.S. farmers to foreign markets may depend on our  ability to rein in subsidies in this bill.

The Cato Institute' Center for Trade Policy Studies is gearing up for the debate.  One of their first steps has been to take on economist Sallie James as a new trade analyst.  James will be responsible for analyzing the costs of current U.S. subsidies, both to U.S. citizens and to persons in other countries.   She's got the qualifications:

Continue reading "The costs of extending the current farm bill" »

May 19, 2006

A break in Doha Round negotiations?

Allan Beattie and Tobias Buck report that the E.U. may be signalling a willingness to make a further concession on agriculture:  EU signals bigger cuts in farm tariffs in Doha round (Financial Times, May 19)

The European Union on Friday signalled its readiness to offer bigger cuts in farm tariffs in the tortuous Doha round of trade talks, but continued to insist that such a move must be met by concessions elsewhere.

Continue reading "A break in Doha Round negotiations?" »

May 05, 2006

"Doha Light"?

Gregg Hitt speculated about potential futures for U.S. trade strategy, and the Doha Round, earlier this week ("Mapping Detours in Trade Talks.  Doha Stalemate May Force U.S. to Narrow Goals, Seek Bilateral Deals"  WSJ, May 3).  Possible options included:

  • Spending more time on bilateral free trade agreements with other countries
  • Focus more on pursuing U.S. interests through the WTO dispute settlement mechanisms (to build support for the WTO in the U.S.)
  • Rethink Doha.  Here he cites former U.S. Undersecretary of Commerce for International Affairs Grant Aldonas, who argues that, while this is billed as a "development round" it has proceeded with a traditional focus on "a range of tariff lines and subsidies."  Maybe we ought to work as if this really were a development round.  Hitt paraphrases Aldonas to indicate that such talks, "could be designed to stimulate cross-border trade in areas such as communications and health care, 'where trade could grapple' with the real needs of the developing world."
  • Doha light - accept that we are not going to get an ambitious agreement, salvage what we can, and end the negotiations.  The problem he sees here, is that Congress might fail to ratify an unambitious agreement, that doesn't get the U.S. anything significant.

This last concern about a minimalist agreement received emphasis in a letter yesterday from a pro-Doha industry coalition, ABCDoha. The members of this group say they won't support a low-ambition agreement: Business coalition warns of failed WTO round (Reuters, May 4).  The key paragraph from the text of the letter:

To be clear, ABCDoha considers a minimalist deal to be a failure. We will urge U.S. and non-U.S. negotiators to reject proposals for a "Doha light" deal that would produce only modest liberalization and reforms. In our eyes, such an outcome would constitute a wasted opportunity. A final package that misses the mark would draw little support from agriculture, business or consumer interests, making it likely to fail in Congress.

What about a "Sleeping Beauty" option - Doha goes to sleep, but does not die, until a future U.S. Congress provides a new administration renewed negotiating authority?

April 23, 2006

April Doha mini-ministerial canceled

Frances Williams reports that the April 30 deadline for reaching an agreement on Doha Round negotiating modalities will be missed: WTO admits defeat on Doha deadline (Financial Times, April 23):

Continue reading "April Doha mini-ministerial canceled" »

April 04, 2006

Is that it for Doha?

An impasse in negotiations, a weakening American President (who will be a lame duck when an agreement would come before Congress), an opposition that's seen the potential benefit of the protection card (a key element in the Dubai Ports World), and that can be expected to make gains in the 2006 mid-term elections.  None of this augurs well for a successful Doha Round.

Both Daniel Drezner (Bill Thomas reads Doha its obituary , April 4) and Joel Trachtman (Doha Despair?, International Economic Law and Policy Blog - April 4) report today that the Chair of the House Ways and Means Committee is calling Doha a dead end, and encouraging the administration to focus on bilateral free trade agreements (FTAs) while he still has fast-track negotiating authority.

February 21, 2006

It doesn't look good for Doha

It doesn't look good for the Doha Round, say Gary Hufbauer and Jeffrey Schott: The Doha Round after Hong Kong  (Institute for International Economics, February 2006).

Not much progress was made in Hong Kong, and not much more is likely in 2006 (remember, because of a time constraint on the U.S. President's negotiating authority, the deadline for a completed agreement is basically the end of 2006)

Continue reading "It doesn't look good for Doha" »

January 29, 2006

Doha at Davos

Dan Drezner links to, and quotes from, Financial Times and Bloomberg stories on the informal meeting of trade ministers during the Davos World Economic Forum: Those trade ministers mean business!!

January 24, 2006

This could take quite a while

The Doha Round negotiations are beginning to jerk forward again with informal trade minister meetings at the Davos World Economic Forum.  Are we likely to see progress this year?

Simon Evenett  (of the University of St. Gallen) doesn't see the Doha Round ending until 2009 if things don't come together shortly: The WTO Ministerial Conference In Hong Kong: What Next?.

There are reasons to worry about the prospect of a deal in 2006:

Continue reading "This could take quite a while" »

January 23, 2006

How can the U.S. move the Doha Round forward?

The Doha Round is moving forward slowly.  That might not be so bad, but time is running out.  The Hong Kong meeting of member nation ministers didn't accomplish much.

Claude Barfield surveys the views of some knowledgeable observers ("The Doha Round: Bang or Whimper?") and comes down on the pessimistic, "whimper," side.

Agricultural interests in the E.U. are a key stumbling block to progress.  Large developing countries are also reluctant to make the industrial and services concessions that might give the E.U. a pretext to compromise.   

Two short papers look at political steps the U.S. could take to put pressure on the large developing countries, and/or the E.U., to move the negotiations forward.

Continue reading "How can the U.S. move the Doha Round forward?" »

December 12, 2005

Following The Hong Kong Ministerial

The WTO's Hong Kong meeting of trade ministers begins tomorrow.  The ministers will be trying to make progress on the Doha Round of trade negotiations.

Here are some helpful sources of information:

Continue reading "Following The Hong Kong Ministerial" »

December 11, 2005

Dipak Patel and Doha

Less developed countries (LDCs) don't have a lot of resources to use in trade negotiations, like those involved in the Doha Round.

Alan Beattie brings this home in his story Dipak and the Goliaths (Financial Times, Dec 9 - access not restricted).  He personalizes issues by telling them incidentally to the story of Dipak Patel, the Zambian trade minister.

Physical and human infrastructure is limited:

Continue reading "Dipak Patel and Doha" »

December 02, 2005

Effects of liberalizing agricultural trade

The Congressional Budget Office (CBO) has just released a handy survey of economic research on The Effects of Liberalizing World Agricultural Trade: A Survey  (Dec 2005, the author is Bruce Arnold).

Note this right off:

Countries typically adopt trade-distorting agricultural policies—tariffs, tariff-rate quotas, production-distorting subsidies, and export subsidies—to benefit their domestic agricultural producers. In doing so, however, they often impose costs on their consumers (who must pay more for agricultural products subject to tariffs and tariff-rate quotas), domestic taxpayers (who must pay for any subsidies), and competing foreign producers (who lose sales). The costs to domestic consumers and taxpayers alone are usually greater in dollar terms than the benefits to domestic producers. Therefore, eliminating those policies is generally beneficial.

Continue reading "Effects of liberalizing agricultural trade" »

November 29, 2005

Looking for Doha Support

Mobilizing the stars

Rock star Bono's African development NGO,  DATA , views trade as a potentially valuable development tool, and is lobbying for a productive Doha Round.

Last week, the Washington Post carried a story by Sebastian Mallaby on DATA-sponsored briefings to prepare Brad Pitt for a Doha advocacy role:  Trade and Aid: Stars Are Aligned  (Nov 21):

Continue reading "Looking for Doha Support" »

November 26, 2005

Draft Ministerial Declaration for Hong Kong

The first draft of a declaration for the Doha Round Hong Kong meeting of WTO member trade ministers was released today: DOHA WORK PROGRAMME. Preparations for the Sixth Session of the Ministerial Conference. Draft Ministerial Text  (Nov 26).

Continue reading "Draft Ministerial Declaration for Hong Kong" »

November 17, 2005

Why is this so difficult?

A Doha Round trade agreement should make most people better off.  It can play a role in reducing poverty in developing nations.  Why are the negotiations so difficult?  Why is this so painful?

In March, Aaditya Mattoo and Arvind Subramanian argued that the negotiations would only produce a modest result:  Why Prospects for Trade Talks are not Bright (Finance & Development, March 2005).

Mattoo and Subramanian noted that the pressure for past multilateral trade agreements has come from business interests in developed countries.

Many businesses may benefit enough to find that working for an agreement is a good investment (Global trade advocacy offers huge commercial returns,  Peter Gallagher, July 20, 2005).  People who might also benefit as individual consumers or workers, either may not see the connection between liberal trade rules and benefits, or may not benefit enough themselves to find an investment in this issue worthwhile.  Thus the importance of business leadership, although Mattoo and Subramanian don't get into this.

They do note, however, that this time business interests have been relatively disengaged.  And, Mattoo and Subramanian argue, why not:  Many developing countries have been reducing trade barriers unilaterally, often at the urging of the World Bank and IMF.  This reduces the incentive of businesses in developed countries to negotiate.  They can also get much of what they want through regional trade agreements.  Moreover, multilateral agreements take a long time to reach - bilateral or regional agreements may be quicker. 

Moreover, areas in which developing countries have special interest - agriculture, textiles, labor mobility, and services - are very sensitive for developed countries.

Continue reading "Why is this so difficult?" »

November 08, 2005

A Doha Development Skeptic

Our word is our weapon is a development blog by Jim of North London.  Jim posts occasionally on the development dimension of the Doha Round.

Jim is skeptical that the Doha Round will benefit the world's poor: CGD Blog and thoughts on the Doha round :

Continue reading "A Doha Development Skeptic" »

Tuesday in Geneva

More than 20 trade ministers from WTO members meet at 2 PM this afternoon in Geneva for talks meant to  advance the Doha round negotiations.

Monday evening, representatives of the US, EU, Brazil, India, and Japan, met in the Indian embassy for six hours of negotiations.  The New Economist reported early Tuesday morning that, although the talks were productive, ultimately things didn't come together: WTO trade talk hopes fade .

Early Tuesday afternoon Richard Waddington and William Schomberg reported that trade ministers were now beginning to think about scaling back on the goals for Hong Kong: Trade ministers may have to delay WTO push  (Reuters, Nov 8).

Continue reading "Tuesday in Geneva" »

November 07, 2005

Brazil and the Doha Round

This week's Economist has a special report on Brazil's agricultural potential: Brazilian agriculture. The harnessing of nature's bounty. (Economist, Nov 5, subscription required)

Brazil has enormous agricultural potential; a successful Doha Round may help to unlock it:

Continue reading "Brazil and the Doha Round" »

November 04, 2005

Proposed Farm Subsidy Extension to 2011

Elizabeth Becker reports that the Senate retained a measure (in budget legislation) to extend at least some subsidy provisions of the 2002 farm bill beyond their current expiration date in 2007, until 2011: U.S. Senate showdown on farm subsidies is threat to trade talks (International Herald Tribune, Nov 3):

But on Thursday, the Senate raised no objections to extending those subsidies by four years, to 2011. The White House had wanted the Senate to let stand the expiration date of 2007, when Congress is scheduled to rewrite the entire farm program. Now, critics contend, it will be harder to convince U.S. trading partners that the farm lobby is willing to give up some of its approximately $19 billion in annual subsidies.

Continue reading "Proposed Farm Subsidy Extension to 2011" »

November 03, 2005

Where are the East Asians?

The East Asians have a lot to gain from trade negotiations, so why aren't they playing a greater leadership role in the Doha round of negotiations, asks Guy de Jonquières Doha failure harms Asia most. (Financial Times, Oct 31, subscription required).

Continue reading "Where are the East Asians?" »

FarmPolicy.com

Farm issues are central to the current Doha Round negotiations.  In the United States, budget debates, and early debates over the upcoming 2007 farm bill, have important implications for the negotiations.

The web site and free daily email newsletter, FarmPolicy.com by Keith Good is a helpful resource, with a useful survey of media coverage of farm issues. 

Today's newsletter surveys media coverage of yesterday's House Agriculture Committee hearings on the Doha Round, other media coverage of the Round, coverage of French objections to the EU's negotiating proposals, and domestic EU farm subsidy politics.

November 02, 2005

U.S. ag subsidy extension

French farmers aren't the only ones trying to place constraints on the scope of a Doha agricultural agreement.

Elizabeth Becker reports that:

U.S. lawmakers are scheduled to vote Thursday on whether to extend the huge commodity subsidies for American farmers to 2011 from 2007, adding a new complication to the already complex negotiations for a global trade agreement.

A damper on WTO talks? (International Herald Tribune, Nov 3)

Continue reading "U.S. ag subsidy extension" »

November 01, 2005

The World Won't End...

The world won't end if there is a weak result from the Doha Round, or even if there is a failure to complete the round.

But the world will be a better place if we do.  Economics columnist Martin Wolf takes up the theme: If trade liberalisation fails (Financial Times, Nov 1, subscription required).  In addition to explaining what we stand to lose, he has some advice on how to conduct the negotiations:

Continue reading "The World Won't End..." »

October 31, 2005

What's in it for Brazil?

What's does the Doha Round agricultural negotiation have to offer a large emerging economy like Brazil's:

Continue reading "What's in it for Brazil?" »

October 28, 2005

New EU proposals

The EU made its new agricultural proposals today.

This press release from EU Agricultural Commissioner Mariann Fischer Boel provides details: EU tables new offer in Doha World Trade talks; calls for immediate movement on services and industrial goods.

The EU proposes:

Continue reading "New EU proposals" »

October 27, 2005

New EU proposals tomorrow

EU leaders, meeting at a summit in the UK, announced that a revised set of negotiating proposals will be presented on Friday: EU confirms to make new WTO offer on farm trade tomorrow (AFX News, Oct 27, via Forbes).

Continue reading "New EU proposals tomorrow" »

October 26, 2005

There are a lot more episodes in this serial

The Doha Round has gone through more perils than Pauline

Peter Gallagher puts the current cliff-hanger into perspective, and points out that there are more to come: High drama and low politics .

Gallagher points out that a sense of crisis "helps governments press beyond established positions."  The negotiations aren't over when the current crisis is resolved.  Don't expect the agricultural package to be completed when the EU submits its new agricultural proposals (probablyThursday this week).  A lot of issues will remain; expect a lot more crises.  The agricultural package may not come together until next April-June. 

Continue reading "There are a lot more episodes in this serial" »

October 25, 2005

EU gives Mandelson go-ahead, again

The EU's chief trade negotiator, Peter Mandelson, has been given authority to make new agricultural proposals: Mandelson Wins Backing to Make New WTO Farm Offer   (Jennifer Freedman , Bloomberg, Oct 25).

``This offer would be a conditional offer which would enable other WTO members to make further moves in relation to agriculture, industrial goods and services,'' Mandelson's spokesman, Peter Power, said in a statement today. ``It was agreed that the EU offer should be substantive and credible and within the mandate'' of the bloc's agriculture policy.

As I understand it from earlier stories, a new offer could be put forward on Thursday, in time for a scheduled Friday teleconference between negotiators from five key countries (EU, the United States, India, Australia and Brazil).

October 24, 2005

Doha on the "knife's edge"

Not a lot of surface Doha Round action today (Monday), but Sophie Walker surveys the day's rumors: EU farm struggle casts doubt on WTO Hong Kong meet (Reuters.UK, Oct 24). 

Two points from this:

Continue reading "Doha on the "knife's edge"" »

October 23, 2005

Doha: the desperate hours

The stalemate in the Doha Round agricultural negotiations continues:

Continue reading "Doha: the desperate hours" »

October 20, 2005

Doha stalemate

A meeting of E.U. foreign ministers on Tuesday, called by France to review the Doha Round negotiations, apparently gave E.U. negotiator Peter Mandelson approval to push forward with the agricultural negotiations. 

However, a strong reaction by France since then appears to have thrown things off the tracks...

Continue reading "Doha stalemate" »

October 19, 2005

France still objects to further E.U. farm concessions

Last week France requested a meeting of the E.U. foreign ministers, hoping they would limit E.U. trade negotiator Peter Mandelson's ability to make agricultural concessions.

This week the ministers met, but didn't impose the constraints on Mandelson's negotiating stance that France had hoped for.

Today the French have indicated that despite the ministers' decision, they can't accept any more agricultural concessions.  Richard Waddington and William Schomberg report:

Continue reading "France still objects to further E.U. farm concessions" »

October 15, 2005

You can't tell the Doha Round players without a program

Jacques Chai Chomthongdi describes the different agricultural negotiating blocs, and what each wants, for the Focus on the Global South: The "G-Guide" Groupings in the WTO Agricultural Negotiations."

Chomthongdi uses a lot of jargon without explaining it.  Here's a glossary: The Terms of Trade and Other Wonders.  Deardorff's Glossary of International Economics.  Here's another glossary from the USDA Economic Research Service: wto: glossaries .  The WTO web page on the agricultural negotiations has some useful background as well:  The current negotiations .

October 12, 2005

No breakthrough for now

An informal meeting of key trade ministers has broken up without resolving the agriculture impasse.  U.S. and E.U. proposals were not enough to break the deadlock, in good part because, as Peter Gallagher points out here, they remained pretty vague: Proposals for farm trade reforms surface .

Richard Waddington describes the meetings here:

Continue reading "No breakthrough for now" »

October 11, 2005

Domestic US politics and a Doha agricultural agreement

As noted yesterday (Progress on Agriculture at the WTO ) the Bush Administration has made some new negotiating proposals on agriculture.  The European Union has since suggested some alternative ideas: EU offers counter-bid on farm trade

The legislation underpinning the President's negotiating authority expires on July 1, 2007.   The Governmental Accountability Office (GAO) estimated a few months ago that, to meet the deadline, the actual Doha negotiations would have to be completed by December 2006, or under certain circumstances, the end of March 2007:

If Congress renews TPA in mid-2005, the Doha Round agreement would be eligible for approval under TPA provided it was signed by the President by June 30, 2007. However, the President must fulfill a number of procedural requirements and meet certain time frames established by TPA . Thus, the WTO Doha negotiations would need to conclude by the end of December 2006 to meet TPA’s statutory requirements. If the Doha Round agreement required no changes to trade remedy laws, the effective deadline could change to the end of March 2007.   ( Time is short, and the water is rising ) 

Gregg Hitt and Scott Miller report on agricultural negotiations in today's Wall Street Journal ("Trade Teams Offer Farm-Subsidy Scenarios").  The Journal story notes that the Administration's political position is slipping as time passes:

Continue reading "Domestic US politics and a Doha agricultural agreement" »

October 10, 2005

Progress on Agriculture at the WTO

The Bush Administraion is expressing a willingness to compromise on agriculture subsidies at the WTO Doha Round negotiations. 

Agriculture Secretary Mike Johanns indicated this last week at a lunch with agricultural industry representatives: US ready for WTO Ag talks  (Truth About Trade & Technology, Oct 7):

Continue reading "Progress on Agriculture at the WTO" »

September 26, 2005

From here to Hong Kong

Pascal Lamy took over as Director-General (DG)of the WTO on September 1

The Hong Kong meeting of WTO member nation trade ministers starts on December 13.  This is a key meeting for the ongoing "Doha Round" of trade negotiations.  There won't be much chance to recover from a weak performance there.

Lamy's laid out his ideas about what needs to happen between now and Hong Kong in three recent speeches:

Continue reading "From here to Hong Kong" »

September 02, 2005

Pascal Lamy is on the job

Lamy_wto_1Pascal Lamy took over as Director-General of the WTO yesterday.  His team of four Deputy Directors-General comes to work at the start of October.

Everyone thinks he's capable.  Some have high hopes for what he might be capable of, others (Waldo Bello - see preceeding post) fear that.  It's important to remember that the WTO Director-General is a weak institutional position.  The member states are jealous of their decision-making responsibilities.  Lamy will be dependent on moral suasion.

Here's his short statement on taking office:

Continue reading "Pascal Lamy is on the job" »

They think alike, and yet they don't

Neither Peter Gallagher nor Walden Bello think the Doha Round talks are doomed.  Both share the same political analysis.  But while one looks forward to the outcome, for the other, it's a nightmare.  Gallagher: Optimists on WTO: now there are two of us.

August 30, 2005

Fifteen Weeks to Go

Fifteen weeks until the opening of the Sixth Ministerial Conference of the World Trade Organization (WTO) in Hong Kong (Dec 13)...

Continue reading "Fifteen Weeks to Go" »

August 26, 2005

What happens if the Doha Round fails?

What happens if the Doha Round fails?   It could happen.  David Eldon, the Chairman of the Pacific Basin Economic Council, took a look into one possible future in a Financial Times column this week:  Perils of a trade round’s collapse.

Continue reading "What happens if the Doha Round fails?" »

US ready to deal on ag subsidies?

Is the U.S. ready to deal on agricultural production subsidies in the Doha Round?

Continue reading "US ready to deal on ag subsidies?" »

Doha Agricultural Negotiations

The biggest gains from Doha Round agricultural negotiations are in tariff reform - an area where the U.S. doesn't have much to offer:

Continue reading "Doha Agricultural Negotiations" »

July 25, 2005

What's at stake in the Doha Round?

Recent World Bank modeling suggests that an agreement which completely eliminates agricultural tariffs and subsidies, and manufacturing tariffs, by 2010, would generate something like $290 billion a year (2001 dollars)  in additional income for the world from 2015 on. World income would increase by about 0.7% a year.

The results are outlined in "Market and Welfare Implications of Doha Reform Scenarios" by Kym Anderson, Will Martin, and Dominique van der Mensbrugghe - Chapter 12 in Agricultural Trade Reform and the Doha Development Agenda, edited by Kym Anderson and Will Martin.

About 70% of this ($202 billion) would go to high-income countries and about 30% ($86 billion) to developing countries.   This sounds like  the  high-income countries have far more to gain from trade  liberalization than the developing countries, but remember that high-income country economies are much larger.

Developing countries actually benefit relatively more. Incomes for high income countries grow by about 0.6%, but developing country incomes increase by about 0.8% (while incomes for Korea, Taiwan, Hong Kong, and Singapore grow a lot in the model results, in this breakout they are treated as high-income countries).

No one expects the Doha Round to completely eliminate trade barriers.  WTO member nations will settle for something less.  Anderson et al. look at a set of less ambitious outcomes, which generate benefits running from a low end of $13 billion up to a high end of $119 billion.

One relatively plausible scenario: (1) cuts in agricultural tariffs (greater for high-income than for developing countries), (2) elimination of export subsidies, (3) cuts in agricultural subsidies in four high-income countries (counting the EU as a country)  (4) no change in protection for services, (5) no trade facilition measures, (6) cuts in industrial tariffs (again, greater for high-income than developing countries).  This "Scenario 7" generates additional world income of $96 billion a year.

About $80 billion of the Scenario 7 benefits go to high-income countries, and $16 billion to developing countries.  High-income country income increases by a quarter percent, developing country income increases by 0.16%.

But here's something interesting - under Scenario 7 developing countries commit to smaller tariff cuts than high income countries.  If developing countries, other than the least-developed, commit to the same reductions as the high-income countries, annual world benefits rise to $119 billion, and developing country benefits rise to $23 billion or a 22% income increase.

Anderson et al note that, under their complete liberalization scenario, the number of poor people in the world (persons living on less than $1/day) in 2015 would drop by about 32 million, or 5%.  Under Scenario 7, the number drops by 2.5 million.

These results apply to agricultural and industrial trade.  They do not include benefits from liberalization of services or from major new trade facilitation measures (steps to make engage developing countries in the global trading system through physical and institutional investments). 

"What's at stake: the relative importance of import barriers, export subsidies and domestic support by Thomas Hertel and Roman Keeney (Chapter 2 in Anderson et al.), suggests that additional benefits from these sources could be very large.  Hertel and Keeney are using a somewhat different model over a somewhat different time frame, so their numbers are not directly comparable to those in Anderson et al.  But Hertel and Keeney look at services and trade facilitation, which Anderson et al. do not.

The evidence in Hertel and Keeney suggests that the benefits from services liberalization may be almost as great again as those from agriculture and manufacturing liberalization, and those from trade facilitation may be greater.  The "lion's share" of services benefits goes to high income countries, the trade facilitation benefits are "much more heavily skewed towards developing countries than those from trade barrier reductions."

July 19, 2005

Fear God and dread naught

The Doha Round may appear to be on the brink of failure, again, but old campaigner Peter Gallagher, who's seen it all and done it all, says "Don't Panic": "Doha Round negotiations — trouble or travail?."

July 18, 2005

Do or die for Doha, again

The Doha Round of trade negotiations is in trouble again.

Alan Beattie reports in yesterday's Financial Times: "Waning expectations: agreement on trade remains remote as time trickles away Enthusiasm curbed by lack of external support" (July 18 - subscription required).

Member nations had hoped to have the outline of an agreement by the end of July.  They need it by then.  The WTO will shut down in August for vacation.  When things get going again in September, there will only be 12 weeks until the meeting of member nation trade ministers in Hong Kong.    The trade ministers won't have time for extensive negotiations in Hong Kong; most key elements need to be in place when they get there.  This is the last meeting of the trade ministers before President Bush's trade promotion authority runs out in 2007.

But nothing is done.  "Almost all parts of the negotiations - agriculture, industrial goods and services - are well behind schedule and some have reached impasse.  Only talks on the relatively minor area of "trade facilitation" - easing the way for trade through streamlining customs and border procedures and helping developing countries build up the infrastructure to trade - seems to be making progress."

Beattie doesn't get into the details, but these negotiations offer a lot for everyone, and quite a bit for the world's poor.  He does note that "The basic trade-off that would be at the heart of a successful conclusion to Doha is already clear: the rich nations - the EU, US, Japan and Canada - would reduce protection on agriculture in return for more access to the goods and services markets of the developing world, mainly big emerging market countries such as Brazil, India and China."  So why is progress so hard?  Beattie suggests several things:

  • Too many nations (148 WTO members) involved in the negotiations.
  • A disproportionate focus on agricultural producer and export subsidies, when the big money (93% of the potential agricultural benefits) is to be made from tariff reductions.
  • A reluctance by the EU member governments to make agricultural tariff concessions.
  • The developing world doesn't speak with one voice.  Brazil, India, and Mauritius have different interests and objectives.
  • A lack of interest by business - because of the round's focus on agricultural issues, because business in developed countries is relatively uninterested in developing country opportunities, and because business is distracted by bilateral and regional trade agreements.
  • Developing country reluctance (encouraged by many of the development NGOs) to reduce barriers to trade in manufactured goods, and in services.

Next week we get one more chance.  "A group of ministers and officials will gather in Geneva next week for one last big push before the summer break.  Since expectations have already carefully been lowered, any advance would count as a success..."

June 05, 2005

Time is short, and the water is rising.

The U.S. Government Accountability Office (GAO) has published another in a series of reports on the progress of the WTO's Doha Round of trade negotiations: "Global Trade Talks Back on Track, but Considerable Work Needed to Fulfill Ambitious Objectives"

The report has a helpful review of the story so far, surveys key issues, and discusses some of the potential obstacles to agreement.

Time is short, and the water is rising. The Trade Promotion Authority (TPA) legislation, under which the U.S. is pursuing the negotiations must be extended this year, and cannot be extended past July 2007.  Moreover, Congress has to start work on a new farm bill, and needs to know what the Doha Round agriculture provisions will be:

Continue reading "Time is short, and the water is rising." »

May 30, 2005

The French Referendum and the Doha Round

Peter Gallagher explores the links between this week's French referendum on the E.U. and the Doha Round negotiations: French referendum makes WTO reforms more difficult.

Geitner Simmons has a nice piece as well: " France votes 'non'".

Revised May 31.

May 24, 2005

Another bump in the road

Tim Groser has been New Zealand's Ambassador to the WTO, and the chair of the WTO committee within which the important agricultural negotiations are taking place.   

Now this long-time civil servant has decided to resign his position as Ambassador and enter politics, running against the current government.

The position as chair of the agricultural committee apparently doesn't  require an Ambassador, and is selected by the WTO membership, not the New Zealand government.  However, the New Zealand governing party was, not unnaturally, not happy about Groser's decision. 

It's reaction over has been to suggest that it would oppose Groser's continued employment with the agriculture committee.  Audrey Young reports for the New Zealand Herald: "Government wants diplomat out of job". (May 24)

The Government will tell the World Trade Organisation it has no confidence in former trade ambassador Tim Groser and does not want him to keep his job as chairman of the agriculture negotiations committee after he quit his diplomat's post to seek election as a National Party MP.

"In the end it's up to the WTO who it appoints to certain positions," Prime Minister Helen Clark told a post-Cabinet press conference.

"But whether the WTO would want to go down the track of employing someone who can't enjoy the confidence of a member state and has resigned as ambassador is something the WTO would need to consider."

Here is a similar story from the National Business Review: "PM signals complete exit for Groser" (May 24).

Later stories indicate that the New Zealand government intends to support Groser's tenure at the committee through July. Here Martin Kay reports: "PM backs down on National's WTO man " (May 25).

Tim Groser looks set to stay in Geneva to shepherd talks worth billions of dollars to New Zealand, after the Government backed away from calls to dump him.

In a letter to the World Trade Organisation's general council, New Zealand representative Tony Lynch says the Government accepts there is a case for Mr Groser to remain as chairman of agriculture negotiations while moves to end subsidies and tariffs approach their climax.

The letter offers to pay for Mr Groser to stay in Geneva till a crucial meeting on the Doha round in July.

At this point, Groser's departure would not be good for the agriculture negotiations.  These are extremely difficult because of the range and complexity of the issues, and the varied interests of the participants.  They are also at a crucial point.  The Committee is working towards a first cut at an agreement by late July - important to keep the overall negotiations on track for the meeting of WTO member trade ministers at the end of the year.  The New Zealand government's agreement to support Groser for a while recognizes this.

Nikki Mandow profiles Groser here: "Our man in Geneva" (Unlimited Magazine, Sept. 1, 2004)

Here's what he's been doing for a living:

Groser was not in the chair in Mexico [for the Cancun meetings - Ben]. In fact, when he took over the job in February this year [Feb 2004 - Ben] negotiations had been going on for two-and-a-half years, without a single point of agreement.

Believing it was impossible to negotiate with 148 countries in a room, Groser spent four months after taking office hunting out trade ministers around the world, and pulling people into what he calls “nodal points of agreement” — groups of countries with largely the same view on a particular topic. By finding one person to negotiate for each node, he could get much smaller negotiating groups and start building consensus. By the time of the Geneva talks in July, Groser had a key group of five countries he believed could be broad representatives for the other 143 nations. If these countries could nut out a deal, he believed unanimity might be possible. The five: the big boys (the US and Europe); Brazil and India (representatives of the increasingly powerful G20 group of developing nations); and Australia, chair of the Cairns Group of largely agricultural exporting nations (including New Zealand) looking to reduce trade barriers.

By June Groser reckoned he had enough agreement to put out an 11-page personally-drafted document as a basis for discussion. More intense negotiations followed (including talks with the African cotton exporters), and two weeks later he put out a second paper, which became the basis for the Geneva negotiations from July 27.

However, by the final day there was still no agreement. So, around 9pm that night Groser pulled 18 Ministers (including our own Jim Sutton) into a negotiating chamber and told them to come up with a deal. At 4am there was no deal, and even Groser was getting concerned.

“Tim kept us in that room and forced us to keep negotiating paragraph by paragraph,” says Verheul. By 7am the deal was done.

Negotiators say Groser’s style is a mixture of almost obsessive determination, single-minded effort, a sense of drama and huge good humour. “He’s easy to get along with, outgoing, gregarious,” says Verheul. “He’s good at judging the mood, changing direction if the process is stuck, or using a humorous story about a previous negotiating experience to break the tension.”

Here's another profile by Fran O'Sullivan of the New Zealand Herald : "Groser seeking a stage much closer to home".  O'Sullivan reviews the Groser episode here: "Labour’s tribalism far from rational".  Audrey Young reports on the the NZ government's evolution on this issue on Monday, May 23: "Industry lobby backed Groser" (NZ Herald, May 26).

Peter Gallagher considers the pros and cons of keeping him on as chair: "'Lame duck' chairman of WTO agriculture talks digs in".

Revised and updated late on May 24, 25.

May 19, 2005

What do developed and developing countries have to offer each other?

Aaditya Mattoo and Arvind Subramanian are not optimistic about the potential for success in the Doha Round: "Why Prospects for Trade Talks Are Not Bright", (Finance & Development, March 2005) - summarized in the post: "Why is it so hard to reduce trade barriers?".

But William Cline thinks "Doha Can Achieve Much More than Skeptics Expect" (Finance & Development, March 2005).

Mattoo and Subramanian don't think there are strong incentives for the business interests in the developed countries to pursue trade barrier reduction through the WTO process.  But Cline thinks developed and developing countries each have something worthwhile to offer the other :

...plenty of protection remains to be negotiated downward through the traditional dynamics of reciprocity.  Despite their new recognition of the merits of open trade, developing countries continue to have relatively high protection in manufactures—albeit far lower than during the 1970s peak of import-substituting industrialization. Manufacturing tariff rates actually applied by developing countries average about 15 percent (weighted by trade and GDP), and “bound” rates ["bound" rates are maximum rates agreed to in trade agreements, often larger than the rates actually applied - Ben] (to which protection could legally revert) are even higher. Industrial country tariffs average only 3 percent on manufactures outside textiles and apparel (for which the average is 12 percent). So industrial country manufacturers have a strong interest in successfully negotiating a further reduction in global protection. To mobilize this kind of pressure for reciprocal reduction of industrial country protection (including in agriculture), the major developing countries should be prepared to negotiate cuts in their bound rates that leave bound tariffs well below current applied rates.  Seeking merely to cut “water in the tariff”—very high rates that provide excessive protection of domestic production—by reducing bound rates but leaving them above applied levels will fail to spur major breakthroughs.

For their part, developing countries have a strong interest in obtaining reductions in industrial country protection in agriculture and in peak tariffs in industry (including textiles and apparel). I have estimated that when both tariffs and the tariff-equivalent of domestic subsidies are taken into account, agricultural protection amounts to about 20 percent in the United States, 50 percent in Canada and the EU, and 80 percent in Japan. Other parts of a reciprocal deal involve further opening in a range of services, possibly including some progress in temporary labor market access...

Martin Khor, of the Third World Network, doesn't want developed countries to give away too much in the part of the Doha process concerned with tariffs on manufactured goods (the negotiating group on "Non-agricultural market access" or NAMA).  He'd like to see developing countries retain what he sees as the opportunity to use tariff walls to protect the growth of domestic manufacturing industries. 

Here he discusses the tariff issue, and the state of play in the negotiations (as of late March), from this point of view: "Our industrial future hinges on WTO talks".

May 18, 2005

"Not with a bang but a whimper"

Aaditya Mattoo and Arvind Subramanian are not very optimistic about the prospects for the Doha Round of trade negotiations.  Mattoo and Subramanian are World Bank and IMF economists.

I posted on their recent article in the IMF magazine Finance & Development here: "Why is it so hard to reduce trade barriers?".

If things go wrong, they don't expect a spectacular meltdown.  They expect negotiators to cobble together a weak agreement and claim success:

If our analysis here is correct, the prospects for a meaningful Doha Round may not be too bright. We fear a scenario in which a limited set of concessions is agreed to, based largely on what has already been done—subsidy reduction in agriculture in the EU and locking in (“binding”) the already undertaken services reform in developing countries—and this package is trumpeted as a successful Doha Round.

After all, that's what happened last time:

...Ten years ago, a “successful” Uruguay Round was concluded, leading to estimates of large global welfare gains. But liberalization assumptions built into the models were disconnected from what the Round actually achieved. The models assumed substantial liberalization in agriculture and manufacturing by developed and developing countries. For many developing countries, however, “liberalization” attributed to the Round was notional, even illusory.Very little incremental liberalization took place: in both agriculture and manufacturing, developing countries agreed to bind tariffs at levels that often were higher than prevailing levels.

For industrial countries, meaningful liberalization took the form of quota dismantling, but apart from that very little was achieved. In agriculture, countries set tariffs at very high levels to offset the elimination of quotas (“dirty tariffication”).  Cuts in tariffs were rendered notional by an arcane process of choosing a base year well before unilateral reductions had been made. Furthermore, the model estimates conveniently ignored the impact of the intellectual property agreement, which would have reduced welfare gains, especially for developing countries.

We are not saying that there was no liberalization during the 1990s. Nor are we claiming that there is no value in locking in reforms that have already occurred. What we are saying is that the benefits of the Round were exaggerated and its costs were underplayed. Cutting through all the hype, the Uruguay Round was all about industrial countries eliminating clothing quotas in return for which developing countries increased their intellectual property protection  [And recall that the developed countries exploited the rules to delay most of the impact of the quota reductions for almost 10 years - Ben]. The rest did not amount to much. While framework agreements in services and tariffication in agriculture set the stage for future liberalization, much greater claims were made on their behalf...

May 11, 2005

Why is it so hard to reduce trade barriers?

If reducing barriers to trade is such a good thing, why are the members of the WTO having such a hard time doing it?

Aaditya Mattoo and Arvind Subramanian explain, in "Why Prospects for Trade Talks are Not Bright" (March 2005 issue of the IMF magazine, Finance & Development).

In the past, "multilateral trade liberalization has been driven by corporate interests..."  However, these interests have not been energized for the current round. Part of the reason is that they have weak incentives to pursue market openings in other countries.

  • Many developing countries have been reducing trade barriers unilaterally under the influence of the "Washington Consensus", and of World Bank and IMF prodding. Barriers have also been dropping because of regional and bilateral trade agreements. With trade barriers in developing countries dropping as for these reasons, corporations in developed countries have less incentive to pursue agreements through the WTO.
  • Barriers have also been dropping because of regional and bilateral trade agreements.
  • Developed countries have a lot to gain by reductions in barriers to trade in services.  However, countries are often reluctant to make the "deep [domestic - Ben] legislative and regulatory changes needed to open services markets"  "More importantly, scope for reciprocity within service sectors has been drastically curtailed by industrial countries’ unwillingness to consider greater openness where developing countries have a comparative advantage—notably, in the supply of services through the movement of persons."
  • Corporate interests find the multilateral approach slow compared to alternative approaches ("Nongovernmental routes to securing market access and standard setting - as well as the call of regional intergovernmental sirens...")
  • Many corporate goals with respect to intellectual property were accomplished in the Uruguay Round, or are being obtained through regional or bilateral agreements.

On the other hand, were the corporate interests fully engaged, they would have little to offer in exchange for concessions by developing countries.  The developing countries would like "market access in four areas: agriculture, textiles, labor mobility, and cross-border supply of services.", but

  • Vested developed country agriculture and textile interests are politically powerful, and won't give up their trade privileges easily.
  • "In negotiations on services, labor mobility has always been a difficult issue... Notwithstanding the large mutual gains that would be derived from allowing greater labor mobility, immigration policy has yielded only grudging concessions so far. And with traditional political difficulties compounded by a new fear of terrorism, greater openness seems elusive."
  • "Industrial countries account for over three-fourths of all cross-border trade in services. But Brazil, Costa Rica, India, and Israel are among the 20 developing countries whose exports of business services have grown by more than 15 percent annually in the last decade. This growth and the outsourcing of service jobs have provoked deep concerns in many industrial countries—obscuring their own comparative advantage in services. A fuller reckoning of the forgone benefits by the United States and other countries might still occur in the future, leading to a more enlightened strategy. But for the moment, industrial countries, far from seeking greater openness abroad, seem reluctant to lock in current openness of cross-border trade."

May 10, 2005

A step forward on Doha Round agriculture negotiations

Last week trade ministers for WTO member nations reached an important compromise on a technical issue that had held up the agricultural negotiations.

The Economist reports here: "Progress at last".

...On May 4th, negotiators from America, the European Union, Brazil, India and Australia hammered out a formula for converting specific tariffs on agricultural goods, such as 10 cents per pound in weight, into percentage (or so-called ad valorem) tariffs.

Measuring all tariffs as a percentage of the goods’ value is a prerequisite for further progress in talks about reducing trade barriers for agricultural goods. Under the broad outline for the farm-trade talks agreed last summer, countries pledged to divide their tariff barriers into different tiers. Higher tariffs will be cut more than lower ones. Not surprisingly, those countries that protect their farmers most wanted a conversion formula that translated specific tariffs into lower percentages, as that would imply smaller cuts down the road. In the end, the deal was based on a compromise proposal made by the European Union...

EUbusiness describes the negotiations leading to the compromise, here: "WTO makes progress in agriculture talks".

Bridges Weekly Trade Digest has the story here: "Agriculture: Key Trade Ministers Strike AVE Deal In Paris". This negotiation took place in the course of a "mini-ministerial" meeting of some 30 WTO member trade ministers in Paris. Bridges has the story on the overall mini-ministerial here: "Paris Mini-Ministerial Revives Optimism About July 'Approximations'". (both stories from the May 11 issue).

Peter Gallagher provides a very helpful explanation of the details: The breakthrough on agriculture

Revised May 12

April 29, 2005

Where do the Doha Round negotiations stand?

The Doha Round of trade negotiations are moving slowly (maybe too slowly) along the road to the Hong Kong ministerial meetings.

Frances Williams reports (for the Financial Times) that"Doha global trade round 'close to crisis'" (April 29).

Peter Gallagher draws on what he learned during recent visits to Washington, Brussels, and Geneva, to survey the status of the negotiations, and speculate about their prospects:"Doha doldrums" (April 30).

April 01, 2005

Crowell and Moring's "Doha Developments Update"

The Crowell and Moring law firm publishes a weekly web newsletter on the Doha Round negotiations, the: "Doha Development Update"

Recent issues have been carrying short updates on the week's events in the WTO Director-General race.   The most recent issue (March 25) talks about the lobbying efforts of the Brazilian candidate, Luiz Felipe da Seixas Correa, at this month's meeting of the G-20 developing countries in New Delhi: "Seixas Correa Garners Support at New Delhi Meeting"

    "Indian trade minister Kamal Nath indicated to Brazil's Amorim during the G-20 conclave in New Delhi that India planned to support the candidacy of Brazil's nominee, Luiz Felipe da Seixas Correa for the WTO's Director General post. China and South Africa also indicated support for Seixas Correa, although Pakistan was more guarded (and may throw its support, at least initially, to Pascal Lamy). Mauritius candidate Jaya Krishna Cuttarree also attended the New Delhi meeting and sought support from attendees for his bid. The four candidates have about another week to firm up support from Members before the General Council chair Amina Chawahir Mohamed (Kenya) begins her canvassing of delegations for their formal positions in the winnowing-down process that is set to begin in April."

March 01, 2005

ABARE's Guide to the Doha Agricultural Negotiations

The Australian Bureau of Agricultural Economics (ABARE) has a good introduction to the interests in play in the Doha Round agricultural negotiations, in its March issue of Agricultural Commodities: "WTO Trade Negotiations. Principles and Politics Affecting Agriculture" (by Ivan Roberts, Roneel Nair and Andrew Jacenko).

On reason it'll be hard to reduce developed country farm subsidies - the transitional gains trap:

Continue reading "ABARE's Guide to the Doha Agricultural Negotiations" »