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Doha Discussions Could Take Another Seven Years
By: Money Morning   Thursday, July 24, 2008 4:34 PM
Sectors: Finance

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For seven years, the Doha Development Round has been the staging ground for the World Trade Organization’s push for liberalizing global agricultural trade, but if this week’s round of discussion in Geneva, Switzerland is any indication, a global trade deal is nothing more than a pipe dream.

The Doha round of global trade negotiations began in November 2001, with the goal of liberalizing agricultural trade and encouraging growth. The World Bank estimates that a deal would add $100 billion a year to a weakening global economy, while others say an international compromise would stabilize food markets, lower tariffs, and spur food production.

However, time and again discussion has been derailed by the reluctance of wealthier countries to reduce government farming subsidies, and the unwillingness of poorer countries to open their markets to U.S. goods and services.

Talks began Monday in Geneva, with a preliminary outline previously agreed upon by participating delegations and revised on July 10 by the committee’s chairman, Crawford Falconer, New Zealand’s WTO ambassador. The Geneva talks were designed to address three main points of contention:

  • Domestic support (subsidies),
  • Market access (tariffs),
  • And export competition.

Two of the most contentious topics, biofuels and export controls, were left off the table.

Falconer’s July 10 draft placed the United States in a category of countries that offer between $10 billion and $60 billion in subsidies. Countries in that category are being asked to reduce the amount of government assistance offered by 66%-73%. The European Union, which is in a class of its own with more than $60 billion in farming subsidies, would have to cut its aid by 75%-80%.

Peter Mandelson, the European trade commissioner, opened this week’s talks by pledging the EU would reduce its agricultural tariffs by 60%, the highest and most specific figure so far. But the offer was brushed aside by developing nations, led by Brazil, who don’t think the wealthier countries of the West have gone far enough.

“It’s typically Mandelson,” a diplomat from one developing country, who was not authorized to speak publicly told the International Herald Tribune. “He is trying to sell something that is not new, saying it is the maximum he can do. This 60% is the consequence of what they have accepted in the course of negotiation.”

European officials insist that the figure was reached by combining an existing offer of a 54% reduction in tariffs with new estimates for the impact of tax cuts on tropical goods.

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