The latest “Doha†round of talks to open up international trade has collapsed without reaching an agreement on reducing agricultural subsidies and tariffs:
GENEVA, July 1– A conference intended to achieve a last-ditch breakthrough in global trade negotiations collapsed Saturday, sharply diminishing prospects for an agreement that has been touted as a potential boon for the world economy and poor countries in particular.
Trade ministers from about 60 countries, who had planned to negotiate at the World Trade Organization’s headquarters here until Sunday and perhaps even Monday, said this morning that they were so hopelessly deadlocked on issues such as reducing farm subsidies and tariffs that they were going home early. The impasse, some said, could undermine the WTO and the multilateral system that has underpinned the expansion of global commerce since the end of World War II.
“There is no need to pretend that this has not been a failure,” said Kamal Nath, India’s commerce and industry minister. He spoke at a news conference of representatives from developing countries, many of whom blamed the United States for making what they called unreasonable demands on them to open their markets.
Lots of people have been complaining for quite a while now that the United States needs to produce goods that people in other countries want and can afford to buy but we already do: agricultural products. That’s one of our greatest areas of comparative advantage. As long as countries, notably but not limited to China and India, erect barriers to our agricultural products for, among other reasons, the desire to remain self-sufficient in food production, lots of people in those countries will continue to be poor and hungry who otherwise wouldn’t need to be.
I completely support the idea that the U. S. should eliminate farm subsidies and I don’t know that anyone claims that our comparative advantage in agriculture will vanish if we do. But the United States is not the only villain in this story: the EU also subsidizes its farmer as do many other countries.
This story is also notable for what it doesn’t mention: intellectual property, one of our main interests entering this round of trade talks, didn’t even make it onto the agenda. I continue to have reservations that the United States can base its economic future on intellectual property when in many places in the world including some of our largest trading partners the words are just a meaningless noise.
It will be interesting to read the final report that emerges from the Doha talks (I think there remain 2 days of talks, so talk of a collapse may be premature. Given that politicians must be able to point to some accomplishment, something will have to be agreed on and trumpeted).
What the EU and US spend on farm subsidies is an outrage. The EU’s budget (the money the EU parliament disburses) is more than 40% subsidies, if I remember correctly. While Switzerland’s farmers are among the most subsidized in the world.
I completely agree with you about farm subsidies, pigilito. I guess the point I’m trying to emphasize is that the U. S. is far from being the worst culprit in this and, at least here in the States, to read the coverage you’d think we’re the only ones in the world with farm subsidies.
IIRC our total farm subsidies amount to something like 10% of the income of the agricultural sector. That’s below the average for OECD nations.
And China and India continue to think like autarkies. They’re just autarkies that export a lot.
Over here (Switzerland) I read lots about the EU subsudies. Even the European press sees the EU members as the prime offenders. More locally, Switzerland has any number of reasons why its large subsidies are not a problem.
We have the opportunity to buy chicken from either a Swiss source or from somewhere else (usually France) in our stores. The price difference is around 10 CHF/kg. Amazingly, many people buy the Swiss chicken without regard to their own pocketbooks.
BTW, pigilito, whereabouts in Switzerland are you? The home of my ancestors is a little village called Sattel about 50km east of Zürich in Canton Schweiz. I still have relatives there.
Dave,
I live 10km to the west of the capital, Bern. My family roots are from the city of Zurich.
Your family comes from one of the three Cantons which first combined to begin the nation that became Switzerland more than 700 years ago (the agreement they signed is on display in the US at the moment; I believe it served as an inspiration to the Founding Fathers).
We’re having a spectacular summer, your relatives must be enjoying themselves.
Yeah, I know. Whenever I mention where my family’s from to a Switzer I get the same response: “Oh, real Switzerland.” The guy who drafted the original Letter of Alliance was my many times great-grandfather.