Commentary

Doha Round and Round

The WTO’s five year marathon session of global trade talks is entering a crucial round in Geneva tomorrow. Sixty countries are involved in an attempt to liberalize commerce by opening borders to the international flow of goods and services.

This all looks good on paper(depending on where that paper is produced, and if there are subsidies involved), but in practice, this is turning out to be a stalemate between the developed world(US/EU/Japan) and the G20 group of developing nations(led by Brazil and India).

The G20 is pushing for lower US agricultural subsidies and EU farm market tariffs. The US and EU are pushing the G20’s largest nations to lower duties on industrial goods and to open their markets to competition in services. The US is facing midterm elections this fall, and Congress has signalled that they will not offer anything further in the way of reductions in agricultural subsidies. In the EU, it is France that is most adamant in refusing to budge from what is currently on offer.

The fact that the wealthiest nations support one section of their population at the expense of the others is a disgrace. Tariffs raise the price of food for the rest of the community, and they shut out competitors from other, mainly poorer, nations. Subsidies in the US end up supporting large commercial farmers, with the result being a significant drain on the nation’s finances and an unfair cost advantage created in the global marketplace. While the US and EU protect their agricultural base, they also look to strengthen the positions of their manufacturing and service industries as well. No wonder the G20 balks at barrier reduction in this area when there is not sufficient movement on the agricultural front.

At the start of the Geneva round, the large trading blocks are deadlocked over these issues. A logical first step would be to have reductions in agricultural support match those in manufacturing and services. But then again, logic and the pursuit of the common good have been missing from day one.

© 2006 Splendid Marbles.