President Bush earlier this month urged the Group of Eight to recommit to successfully concluding the Doha Round of World Trade Organization negotiations. Now, the United States is being blamed for the talks' collapse last weekend.
The final rift among representatives from the United States, the European Union, Australia, Brazil, India and Japan was sparked by the question of agriculture - the same issue that has made the climate of the talks tense from the start.
The EU, especially, but also India and Brazil - the coordinators of the Group of 20 developing countries that share common agricultural interests - held the U.S. responsible for the failure of the talks because of its refusal to cut the subsidies shelled out to American farmers.
"The United States was unwilling to accept, or indeed to acknowledge, the flexibility being shown by others and, as a result, felt unable to show any flexibility on the issue of farm subsidies," EU Trade Commissioner Peter Mandelson said.
Advocates claim that a new global trade pact would raise millions from poverty. Sadly, though, a Doha agreement would benefit mostly the wealthy and large, multinational corporations. It would offer little for smaller developing countries or farmers and workers in industrialized nations.
The sticking points in negotiations have appeared to be U.S. and EU reluctance to dismantle expensive agriculture support programs, and resistance in developing countries to slashing tariffs on manufactured imports. The issues surrounding farm and industrial products are extremely complex, and in the details lay the failings of Doha and agendas of politicians.
Agriculture is protected by so many layers of income support, export subsidies, tariffs and import quotas and questionable health regulations that gains negotiated in one or several areas can easily be undone by adjusting policies in others. We have seen that sort of thing many times - for example, to protect North American and European livestock industries.
Moreover, India and other developing countries want to exclude their most sensitive products from a Doha deal. This turns the agriculture talks into a farce.
Developing countries routinely sport tariffs of 25 percent and higher on autos and other complex industrial products where U.S. and EU-based industries could accomplish the greatest export gains. The United States wants these tariffs slashed, but developing countries routinely impose other protective devices, such as undervalued currencies, all manner of subsidies and regulations on the conduct of foreign investors. These devices are not meaningfully addressed by the Doha Round agenda.
