Jump-starting Doha Last Sunday U.S.

Jump-starting Doha

Last Sunday U.S. Trade Representative Robert Zoellick tried invigorate the Doha Round of trade negotiations. I posted links to newspaper reports, here: "U.S. wants to jump start Doha Round".

Zoellick sent a letter to some 150 trade ministers, the text of the letter may be found here, at the web site of the International Centre for Trade and Sustainable Development (ICTSD): "Dear Minister".

The next day, Monday, the Council of Foreign Relations (CFR) held a panel discussion with three former U.S. Trade Representatives (Carla Hills, Mickey Kantor, and Charlene Barshefsky). The transcript of the discussion is here: "Former U.S. Trade Representatives ".

Panel Moderator Louis V. Gerstner (former Chairman of IBM) started off asking the panelist about the prospects for reviving Doha, and "in particular what concessions the U.S. may have to make to move discussions forward." Barshefksy had the best response:

"I think the truth is that the developing countries were never ready for a round. They weren't ready for a round in 1999, and they're actually not ready for a round now, unless it can be absolutely on their terms. And "their terms" tends to mean on agriculture -- elimination of agricultural export subsidies. That was the U.S. position from 1998 forward. Last year I think U.S. policy took a turn for the worse when the U.S. and Europe jointly got together on agriculture. Normally U.S.-European agreement signals a push forward. But on agriculture the U.S. ended up being colored largely with Europe's brush. That was a mistake, and I'm glad to see that Bob is now coming forward, going back to the original policy, which was elimination of agriculture export subsidies, and leaving Europe where Europe belongs, which is very, very much a pariah in the international community, given the size of its agricultural export subsidies.

Second, developing countries have always said no bloated agenda -- no competition policy, no investment, no procurement, no trade facilitation. Particularly acute are the issues of competition policy and investment, where the developing countries since 1996 when Leon Brittan enunciated this agenda for the European Union, have been entirely consistent on this point. And only now -- so this is now eight years later -- the European Commission is finally recognized that its very, very bloated agenda does not have the support of the developing countries.

Third, and I think this is most problematic, the advanced developing countries don't really want to undertake obligation. Their view is they were created in the Uruguay Round. They never got the benefit of the bargain. They never understood fully what they had agreed to. And in any event, developed countries never did what they said they were going to do. So the view of the more advanced developing countries in particular is: Now it's our turn. You open your agriculture markets. Get rid of the bloated agenda. Make, as Mickey said, some other changes. And we will go along.

And the problem with that is not that they are entirely wrong. The problem is what it doesn't tell you. So, for example, India is very quick to criticize the closed U.S. market in for example textiles. But India doesn't buy from Bangladesh. So to say that the U.S. is a problem when there is no interregional trade in South Asia is a little bit disingenuous, and the result I think is that an aggressive developed country agricultural proposal, paring down the agenda, the trade for that it seems to me is on the part of the advanced developing countries to undertake obligations, the more significantly open their markets; and, in addition, advanced developing nations need to be somewhat more generous to the poorest of nations."

Hills chimed in:

"Let me just say a word on behalf of the developing countries, because what Charlene says is right, but the trading system is tilted against poor countries. The fact is if you look at our market, which has an average tariff of below 2 percent, that on the things that poor countries produce, it's between 40 and 100 percent -- fruit juices, vegetables, low manufactured. On sugar it's 274 percent. On peanuts it's over 150 percent. And so they are legitimate when they say in the last round we didn't get much of a market opening. And I think the United States has to play on their need -- no round, none of the eight rounds that we have completed, as ever been successfully concluded without the U.S. taking the high road. And I think there was a perception that we didn't, because of steel tariffs, our farm bill, and the pharmaceutical dispute that occurred in December. And I think that Bob with his letter did wonderful thing about reaching out. And I think that we have to do more of that to bring the developing world.

And let me quickly say that when we say the "developing world," there are only about 30 countries that aren't developing. This is a big problem. We have got 49 countries that the U.N. says are desperately poor. And I think any of us would agree that for them we could have a period of a transition that would give open markets, rather like the Europeans have on anything but arms. But what do you do about the advanced developing country -- the Brazils, the Indias, the growing export capacity of China? There they have to contribute. And since 70 percent of the trade of poor countries is with other poor countries, Charlene is right on. If Bangladesh and India deal themselves out, then they are not going to get the prosperity that we dream of as a result of our opening our markets.

But we've got a lot to do too. Our trade picture is not a happy one from the point of view of poor countries."