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Thursday, Aug. 3, 2006

Death of the Doha round


LONDON -- When I came out of the house this morning, Jean-Baptiste was standing in the road gazing into the field opposite with a worried expression. He had lost two cows, he said. And he was obviously right, because there were only five cows in the field.

Jean-Baptiste is what polite people no longer call a peasant. He lives in a big farmhouse in the Basque-speaking part of France, he is 70 years old and he has only seven cows. (His wife calls them his "pets.") But they live well, and all their children and grandchildren still live within reach of them, mostly in very beautiful places.

This is "la France profonde" -- deepest France -- and 50 years ago it was desperately poor. Now it allows families like Jean-Baptiste's a modest contentment, and in return they keep France looking like the dream of rural bliss that the urban multitudes expect. And how does he achieve all this with a couple of stony hillside pastures, seven cows, and some chickens? The Common Agricultural Policy, of course.

France has defended the CAP tooth and nail for many years, although it subsidizes the European Union's farmers outrageously. Indeed, because it subsidizes them outrageously. But at the Group of Eight summit in St. Petersburg last month, the European Union's trade commissioner, Peter Mandelson, offered a 51 percent cut in EU tariffs on agricultural imports in order to keep the faltering world-trade talks alive. French President Jacques Chirac left the meeting fuming.

The United States yielded some ground on agricultural protectionism, too, offering to cap subsidies to its farmers at $15 billion compared to its previous offer of $22.5 billion. All this would theoretically help developing countries to trade their way out of poverty by exporting food to the rich countries -- and in return India and Brazil, representing the developing countries, said they would cut tariffs on imports of manufactured goods to 20 percent from the current average of 30 percent. So the "Doha round" of the trade talks stumbled on -- until last Monday.

The six negotiators at Geneva, representing the U.S., the EU, Japan, Australia, Brazil and India, had only a month to reach a deal: They would then have had to sell the deal to the WTO's other 143 members, and U.S. President George W. Bush's authority to "fast-track" a deal through the U.S. Congress (thus avoiding death by a thousand amendments) expires next year. But they had barely sat down around the table again before it became clear that the promises made at St. Petersburg would not be kept. Predictably, it was agriculture that proved the ultimate stumbling block.

At this point in articles on world trade, we were customarily told that the "Uruguay round" of talks on liberalizing world trade, concluded in 1993, began the globalization that underpins our current prosperity, and that the Doha round, under negotiation since 2001, was vital to maintain the momentum. Or else we are told that globalization has hurt the poor, and that this round must come out differently or they are doomed. However, this was mostly hot air.

Easier access to European and North American markets would not have helped most poor farmers in Africa or India; rather, it would have allowed rich farmers who can exploit those opportunities to buy up their land and turn them into urban poor. On the other hand, lowering the barriers against cheap food imports from the Third World doesn't have to destroy the lifestyle of people like Jean-Baptiste and the traditional countryside they maintain. Just admit that you are really subsidizing lifestyle and countryside, not food, and find a different way of getting the money to them.

In any case, energy prices are soaring and the climate is changing. In a recent study for the World Bank, professor Jyoti Parikh of the New Delhi-based Integrated Research and Action for Development institute concluded that a global rise in temperature of only 2 degrees Celsius would cost India one-quarter of its food production.

That amount of temperature rise is practically inevitable, and similar figures for crop losses probably apply for America, China, Brazil and Australia (though not for Canada, Russia or northern Europe). Even now, shipping more and more food around the world is a questionable proposition. Twenty years from now, everybody will be striving to achieve greater self-sufficiency in food, and the current debate will seem ridiculous.

As for the benefits of freer trade, it was definitely beneficial for the rich countries back when they could set the terms of trade in their own favor, but they are much less enthusiastic about it now that the developing countries can hold their own at the bargaining table. Since China became a full member of the WTO in 2001, the "Group of 22" has coalesced around the four heavyweights -- China, India, Brazil and South Africa -- and the rich countries don't win all the arguments any more.

The U.S. has pretty well given up on multilateral trade deals already, preferring to negotiate bilateral deals where it can still use its size to shape the outcome to its advantage. Various notables like U.S. trade representative Susan Schwab and EU trade commissioner Peter Mandelson are insisting that the Doha round is not really, truly, irrevocably dead, but it almost certainly is. The world isn't necessarily heading for 1930s-style trade wars, but the golden age of multilateralism is past.

Never mind. At least Jean-Baptiste found his cows.

Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.


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