Wednesday, 04th Dec. 02
The Financial Times
Sir, “In the long run we are all dead,” said John Maynard Keynes. Last month, the US unveiled an ambitious plan to eliminate industrial tariffs by 2015. Earlier, the European Union postponed its plan further to cut farm spending by putting a 10-year ceiling on the growth of already very high farm subsidies. These are all long-term programmes, which cannot be realised until we achieve our short and medium-term targets. One wonders whether the US initiative can act as an impetus to the Doha trade round (“Trading barriers”, November 27). Many in the developing world are not so excited, for several reasons! Better market access is dependent on many factors, not least non-tariff barriers.
It does not require much imagination to see that without a resolution on agriculture, the Doha round will not move an inch forward. “As we all know, agriculture is critical to the negotiations as a whole and so we simply must meet our deadlines if we do not, the credibility of the Round could be undermined,” noted Stuart Harbinson, chairman of the World Trade Organisation’s negotiating group on agriculture, at the end of the September negotiating session.
A close examination of the US proposal on agriculture and the more recent one on industrial tariffs demonstrates that the ball will be lobbed into others courts. In agriculture, its proposal of capping trade-distorting domestic support to 5 per cent of the value of agricultural production would require no reduction in its current level of support, which is about $10bn. The EU would be forced to reduce its support from $47bn to about $12bn, and Japan from $33bn to $4bn. One can see who will have to move, if negotiations are to make sense.
Similarly, the proposal to end industrial tariffs by 2015 would put greater burden on developing countries as many poor countries have high average tariffs of up to 40 per cent, compared with 4 per cent in the US and the EU. Dr Supachai Panitchpakdi, director-general of the WTO, has also echoed this view.
The progress on the Doha Development Agenda has been miserable. We have failed to meet the key deadlines. It is not industrial tariffs; it is agriculture liberalisation which holds the key. So far, neither the US nor the EU has touched this most contentious issue. This is other than the special and differential treatment review, tariff peaks, tariff escalation and clarification on trade-related intellectual property rights and public health, which need to be addressed first. Clearly the burden for this lies more on the world’s two largest trading powers: the EU and the US.