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By Philippe Legrain 2 COMMENTS

President Bush rarely intervenes directly in the WTO debate. So it is a sign of how the White House is ratcheting up the pressure for an ambitious Doha Round deal that he talked about it at some length in a speech this week:

Now we’re confronted with a really good opportunity, by the way, to deal
with global poverty, and that is to complete the Doha Round of the WTO
negotiations.  And it’s tough sledding right now… The Doha negotiations are at a critical moment.  It is — in my view,
countries in Europe have to make a tough decision on farming.  And the
G20 countries have to make a tough decision on manufacturing.  And the
United States is prepared to make a tough decision along with them.
That’s my message to the world.

It’s great that the most powerful man on earth appears committed to freeing up world trade – and multilaterally, to boot.  His intervention does indeed come at a  ‘critical’ moment: as I discussed in a recent post, time is running out for the Doha Round. And since the deadline is of the US’s making – the expiry of fast-track authority next year – it is particularly fitting that America should be seeking to break the deadlock.

But ironically, America’s insistence on an ambitious deal could be preventing agreement on a more modest package. As a top aide to India’s commerce minister, Kamil Nath, told Reuters:

The rest of the world could reach an agreement on a modestly ambitious
outcome. The real problem is going to be the United States.

But a modest deal may be unsellable in Congress: unless Doha opens up new markets for US exporters (including farmers), it will be nigh on impossible to win support for cuts in farm subsidies.

While no deal might appear preferable to a modest one, the failure of the Doha Round could have devastating consequences:  a potentially fatal weakening of the WTO, and with it efforts to regulate world trade multilaterally and settle disputes fairly; a multiplication of iniquitous and inefficient preferential trade agreements, which harm poor and weak countries and gum up world trade; an upsurge in protectionism – and a question mark over globalisation itself.

Posted 17 Jun 2006 in Blog, Trade, United States
  1. Hi Philip,
    I’m not too sure what you’re arguing for here.
    I’ve just come back from Geneva and two things are fairly clear.
    Firstly the terms on which the US wants an ‘ambitious’ deal are unacceptable to most countries.
    It has put forward an offer on its own subsidies that would allow the US to increase the level on its – already stratospheric – farm handouts. At the same time it is asking for an extremely sweeping liberalisation of agricultural tariffs by developing countries – who have both many more farmers and far fewer dollars with which to protect their agriculture by other means.
    This seems to me a classic case of having your domestic cake whilst wanting to dine out on international markets – as one developing country ambassador told me “The largest subsidisers and the largest trading partners don’t have the political will to reform their agricultural sectors. Why do we have to pay for that? Why does the Kenyan poor farmer and Venezuelan poor farmer have to pay for that?”
    We need to be more careful in unpacking what US ‘ambition’ would mean, before endorsing it so wholeheartedly.
    The second point is that the US approach seems more about appeasing domestic interests than in showing the necessary flexibility to come to a deal. We are now less than two months away from the de facto deadline for concluding a WTO deal. Deals like this require compromise. And a deal with little substantial movement from the US on its subsidies should see some backing down from the US on its demands to open others markets. .
    At present the US shows precious little sign of indicating flexibility here. US belligerence has increased markedly in the past month and it is difficult to see how this will produce any other outcome to a crisis of some sorts.
    If this continues the US will present other WTO members with an unenviable choice – ‘either you give in to our mercantilist interests on corn, rice, wheat and a whole host of other Congressional lobbies or we bring down the multilateral trading system’.
    This does not seem a good way for the leading global economic power to go about securing a inclusive and stable global trading system. This is where greater intervention by George Bush is required.
    Best wishes
    Matt Griffith
    Trade Policy Analyst
    CAFOD

  2. Philippe Legrain says:

    Hi Matt
    Thanks for your comment. I wasn’t supporting the US negotiating position, or indeed any other country’s. I was merely drawing attention to, and applauding, the new impetus that the US appears to be giving to reaching a deal.
    My preference is for a deal that frees up trade as much as possible in both developed and developing countries, but given the costs of not concluding a deal at all, I think a modest deal is preferable to none. My fear, however, is that a modest deal would not get through Congress – and hence that a deal may not be possible at all.
    Cheers
    Philippe

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