Trade Policy Roundtable
Restarting the Doha Round (November 25, 2004)
EFFORTS are proceeding in Geneva to find a basis on which to get the Doha Round negotiations back on track, even as the “Quad” countries continue to blame others for the Cancún debacle, and others blame the Quads, as if none of them had anything to do with what happened. In the meantime, the multilateral trading system is again drifting, its frag-mentation quickening. So what are the chances of re-starting the WTO negotiations this year? Of completing them by the end of next year? If that’s not on, what about complet-ing them before the trade-negotiating authority of the U.S. Administration expires on June 1, 2007 – assuming a two-year extension? Those are the questions to be addressed at the this meeting of the Institute’s Trade Policy Roundtable.
Response to the EU-US Duopoly
Big questions are best put in an historical perspective. After World War II, and the earlier autarkic and discriminatory excesses of the inter-war period, governments restored some semblance of order to international commerce by establishing the multilateral trading system. The GATT succeeded through six “rounds” of multilateral trade negotiations in opening markets for industrial products traded among industrialized countries. But there were repeated failures to liberalize trade in agricultural products generally and, too, in manufactures of export interest to developing countries. After the formation (and enlargements) of the European Union, with all of its preferential trade agreements, the multilateral trading system turned into the duopoly that, in effect, has determined the scope, pace and direction of trade liberalization ever since. The momentum of trade liberalization, and the adherence of governments to internationally agreed trade rules, deteriorated throughout the 1970s in spite of the Tokyo Round negotiations then in progress.
As the European Union struggled in the 1980s with its internal problems (e.g., euro-sclerosis), the United States and others in the Asia-Pacific region were able in launching the Uruguay Round negotiations to pull the multilateral trading system back from the brink of collapse, to get to grips with the “old issues” of textiles and clothing, safeguard actions (including VERs) and farm support and protection and, too, to begin addressing the “new issues” of trade in services, trade-related investment and the trade-related aspects of intellectual property rights.
The emergence of the Cairns Group of smaller agricultural-exporting countries led to the Uruguay Round agreement on a framework in which to bring agriculture into the multilateral trade-liberalizing process by progressively reducing domestic subsidies, border protection and export subsidies (i.e., dumping). But the agreement was weakened by the last-minute Blair House accord between the European Union and the United States aimed at appeasing French resistance. By then time and patience had run out for much actual liberalization of agricultural trade to be negotiated.
After the Uruguay Round negotiations, there were promising changes in direction in the farm-support policies of the United States, but the direction was reversed in the Farm Act of 2002. Elsewhere, the European Union, Japan and other industrialized countries continued to temporize over the agriculture issue, which hardly changed when the Doha Round negotiations got under way. Thus as the first WTO round fell increasingly behind schedule in 2003, fears of “another Blair House” grew more palpable and so, after another fruitless “mini-ministerial”, the EU-US paper on agriculture issued just before Cancún was the straw that broke the camel’s back and the Group of 20 “suddenly” surfaced.
Re-launching the Doha Round?
What are the options now? Do nothing? Resort to more and more bilateral and regional negotiations? Or set about reversing the WTO system’s fragmentation? First of all, though, could the Doha Round negotiations really be completed next year, given how far behind they are – never mind the political difficulties in the United States of negotiating trade commitments (in consultation with the Congress) during a presidential election year?
What could be done to re-start the negotiations further down the track? Some would say do what should have been done in the first place: (i) remove the uncertainty about the U.S. commitment to promoting an open world economy, (ii) remind developing countries they also have a stake in the WTO system and are meant to participate in negotiations on a reciprocal and non-discriminatory basis and (iii) build consensus and support for a set of goals that are ambitious enough to generate the political commitment required to achieve a durable and worthwhile result. That would establish the clear reason the U.S. Administration will need to secure by June 1, 2005, a two-year extension of its trade-negotiating authority in order to complete the negotiations before the authority expires.
What of the Pressures for Change?
With farm-support policies, fundamental reform is always just around the corner, but they survive almost unscathed and continue, unloved and assailed as much as ever. The European Union’s common agricultural policy is a case in point. The CAP is expected to change with the Eastern enlargement and, indeed, there is growing public revulsion over its excesses and its impact on other sectors, on the environment, on development and on international relations. At a political level, environmental and related groups appear to be making a difference, while in the business community there is growing interest in markets outside Europe (with its continuing internal problems), especially in the developing world.
In Canada, agricultural trade policy has been ambivalent, with the supply-managed segment of the agri-food sector, chiefly located in the eastern provinces, set against the export-oriented segment in the western provinces. Recently groups in the latter have coalesced to challenge the dominance of the Canadian Federation of Agriculture representing the heavily protected dairy, poultry and egg industries.
Addressing the Political Difficulties
The political difficulties in tackling farm subsidies are formidable with public debate obfuscated by arcane terminology and technical complexities. But developments over the last two decades have helped to put the effects of farm subsidies in perspective. Among them have been (i) international comparisons of levels of support and protection via PSEs and CSEs, (ii) proposals in the OECD and the GATT to focus on the economy-wide costs and benefits of government interventions in the market process, (iii) the introduction of the Trade Policy Review Mechanism during the last GATT round and (iv) the tariffication of non-tariff measures in the Uruguay Round agreement on agriculture (even if undermined by tariff quotas in the Blair House accord).
Advantage needs to be taken of these developments to set about educating public opinion, overcoming resistance to change and reforming policies with a view to inducing adjustment in the agriculture sector to a rapidly integrating world economy. Public education needs to be promoted through assessments of the economy-wide costs and benefits (i.e., the inter-sectoral effects) of farm-support policies and the import restrictions required to sustain them. Many interests, ranging from taxpayers and consumers to those concerned about the environment, food safety and development, have a real stake in economy-wide analyses becoming an integral part of the domestic policy-making process and a regular feature of TPRM reports on individual countries and regional trading blocs. An open pro-cess of economy-wide analysis changes the politics of protection.
Re-launch Further Down the Track?
If the WTO system is not to suffer death by a thousand cuts, to disintegrate bit by bit, a conscious effort has to be made to address fundamental issues, to go back to first principles, to think again about the principles and rules on which the system is meant to be based, not brush them aside as if they do not matter. To expect ambassadors in Geneva to sort out issues that ministers and officials from capitals were not able to resolve in Cancún is a bit much – especially when the Quads are not seriously engaged.
Set out below is the agenda for the conference along with brief biographical notes on the speakers and discussants.
Chairman William D. Rogers – Senior Partner, Arnold & Porter, attorneys-at-law, Washington, DC, and Vice Chairman, Kissinger Associates, New York; former Under Secretary of State for Economic Affairs
10:15-11:15 FIRST SESSION
Why the Group of 20 was “Suddenly” Formed
Speaker Rubens Antonio Barbosa – Brazilian Ambassador to the United States, Washington, DC; former Undersecretary-General for Trade and Regional Integration, Brazilian Ministry of External Relations, Brasilia
Discussant José Manuel Salazar-Xirinachs – Chief Trade Adviser, Organization of American States, Washington, DC; former Costa Rican Minister of Foreign Trade.
Hurdles to Clear in Completing the Doha Round
Speaker Harald B. Malmgren – President, Malmgren Group, business consultants, Warrenton, VA; former Deputy U.S. Trade Representative
13:30-14:00 Address on the Continuing Role of the Cairns Group
Joanna Hewitt – Deputy Secretary, with responsibility for multilateral trade negotiations, Department of Foreign Affairs and Trade, Government of Australia, Canberra
Pressures for Change in the European Union…
Speaker Sherman Robinson – Institute Fellow, International Food Policy Research Institute, Washington, DC
Discussant Hugo Paemen – Senior Adviser, Hogan & Hartson, attorneys-at-law; former Head of the Delegation of the European Commission, Washington, DC
…and in Canada
Speaker Edward Menzies – President, Canadian Agri-Food Trade Alliance, Ottawa
Discussant William R. Crosbie – Minister-Counselor (Trade and Economic Policy), Canadian Embassy
15:30-16:30 FOURTH SESSION
Addressing the Political Problem of Farm Subsidies
Speaker Andrew Stoeckel – Executive Director, Centre for International Economics, Canberra; former Director of the Australian Bureau of Agricultural Economics
Discussant Robert A. Rogowsky – Director, Office of Operations, U.S. International Trade Commission
16:30-17:30 FIFTH SESSION
Towards Re-launching the Doha Round in 2005
Speaker Clayton Yeutter – Counsel, Hogan & Hartson, attorneys-at-law, Washington, DC; former U.S. Secretary of Agriculture and earlier U.S. Trade Representative
Discussant Herminio Blanco – Chairman of Consultoria Soluciones Estrategicas, Mexico City; former Mexican Secretary of Commerce and Industry
About the Speakers
RUBENS BARBOSA is the Brazilian Ambassador to the United States, having been Ambassador to the United Kingdom (1994-99. Earlier, he was Under Secretary-General for Trade and Regional Integration in Brazil’s Ministry of Foreign Relations, Brasilia (1991-93), having been successively Chief of Staff to the Minister of Foreign Relations (1985-86) and Under Secretary-General for Multilateral Affairs (1986-87); and Secretary for International Affairs in the Ministry of Finance (1987-88). Ambassador Barbosa is the author of several books including one on Latin American economic integration.
HERMINIO BLANCO, Chairman of Consultoria Soluciones Estrategicas (SOL.ES) in Mexico City, was Mexico’s Secretary of Commerce and Industry in 1994-2000, having been Under Secretary for International Trade Negotiations (1993-94), chief NAFTA negotiator (1990-93) and Under Secretary for International Trade (1988-90). Besides NAFTA, Dr Blanco oversaw the negotiations on Mexico’s free trade agreements with Latin American countries, EFTA and the European Union. In 1985-88 he was one of the three members of the Council of Economic Advisors to the President of Mexico.
WILLIAM CROSBIE has been Minister-Counselor (Economic & Trade Policy) at the Canadian Embassy, Washington, DC, since August 2000. From 1979 until 2000, he held various positions in the Canadian Department of Foreign Affairs and International Trade, focusing on trade policy issues and negotiations. Mr Crosbie’s experience in trade negotiations began in 1988 with the Canada-U.S. free trade agreement, NAFTA, the Uruguay Round negotiations and the creation of the World Trade Organization. He earlier worked in the Federal Government as a ministerial adviser.
JOANNA HEWITT has been Deputy Secretary, responsible for multilateral trade negotiations, at the Department of Foreign Affairs and Trade, Government of Australia, Canberra since September this year. She was previously the Australian Ambassador to the European Union, Belgium and Luxembourg (2000-03). Prior to that she was Deputy Secretary and Ambassador for Asia-Pacific Economic Cooperation (APEC) in 1998-2000. In 1993-96, Mrs Hewitt was the Head of Division in the Food, Agriculture and Fisheries Directorate at the OECD Secretariat in Paris.
HARALD B. MALMGREN is President of the Malmgren Group, business consultants, Warrenton, and Chairman of Malmgren O’Donnell, London and Washington, DC. In the early 1970s, as Deputy U.S. Trade Representative, Ambassador Malmgren played a major part in drafting the Trade Act of 1974 – which introduced the concept of “fast track” negotiating authority – and launching the Tokyo Round negotiations. In the Kennedy Round negotiations he was an Assistant U.S. Trade Representative for Agriculture. He has also taught economics at Cornell, Johns Hopkins and George Washington universities.
EDWARD MENZIES is President of the Canadian Agri-Food Trade Alliance (CAFTA), based in Ottawa, and has operated a 2,000-hectare grain, oilseed and pulse crop farm in Southern Alberta for the past 30 years. CAFTA is the result of a merger between the Agri-Industry Trade Group, of which Ted Menzies was co-Chairman, and the Canadian Alliance of Agri-Food Exporters. Mr Menzies has also served as President of the Western Canadian Wheat Growers, on the executive of the Grain Growers of Canada and as an appointee on the Alberta-Idaho Task Force on Trade.
WILLIAM REINSCH, President of the National Foreign Trade Council, was previously Under Secretary of Commerce for Export Administration, U.S. Administration (1994-2001). Earlier, on Capitol Hill in Washington, DC, he was legislative assistant to Senator Jay D. Rockefeller (1991-93) and, before that, chief legislative assistant to Senator John Heinz III (1977-91). Mr Reinsch has also been an adjunct professor of international relations at the Graduate School of Management and Technology, University of Maryland at College Park (1990-2000).
SHERMAN ROBINSON, Institute Fellow at the International Food Policy Research Institute, Washington, DC, which he joined in 1993 as Director of the Trade and Macro-economics Division. Earlier he was Professor of Agricultural and Resource Economics at the University of California, Berkley. He has held visiting senior-staff appointments at the Economic Research Service, U.S. Department of Agriculture; the Congressional Budget Office; and the President’s Council of Economic Advisers. In the U.S. Administration, he has worked extensively on the Uruguay Round negotiations, as well as NAFTA.
WILLIAM D. ROGERS is a Senior Partner at Arnold & Porter, attorneys-at-law, Wash-ington, DC, and Vice Chairman of Kissinger Associates, international affairs consultants, New York. Mr Rogers joined Arnold & Porter in 1953, leaving and rejoining to serve in other places, including in 1961-65 as Special Counsel and later Deputy U.S. Coordinator, Alliance for Progress, in 1971-74 as the President of the Center for Inter-American Relations, New York; and in 1974-77 at the U.S. State Department as Assistant Secretary of State for Inter-American Affairs, then as Under-Secretary of State for Economic Affairs.
ROBERT A. ROGOWSKY has been Director of Operations at the United States Inter-national Trade Commission, Washington, DC, since 1992 and supervises a staff of 240 responsible for anti-dumping and subsidy-countervailing investigations. In 1950-99 he served also as Chief Economist and Acting Director of the Office of Economics. In addition he is Professor of International Trade at George Mason University’s School of Public Policy. Dr Rogowsky is the c-author of Trade Liberalization: Fears and Facts, co-editor of Relevant Markets in Antitrust and co-editor of The Political Economy of Deregulation.
JOSÉ MANUEL SALAZAR-XIRINACHS has been Chief Trade Adviser, and Director of the Trade Policy Unit, at the Organization of American States (OAS), Washington, DC, since 1998. He was previously Minister of Foreign Trade, Government of Costa Rica (1997-98). Before that he was Executive Director of the Business Network for Hemipheric Integration (1996-97), Vice President of the Board of the Central Bank of Costa Rica (1995-96) and Executive Director and Chief Economist, Federation of Private Entities of Central America and Panama (1991-95).
ANDREW STOECKEL is Executive Director of the Centre for International Economics, Canberra, Australia. Earlier, as head of the Australian Bureau of Agriculture Economics (1981-86), Dr Stoeckel directed a series of ground-breaking studies on the economy-wide costs and benefits of agricultural protection in the European Union, Japan and the United States. Besides numerous studies for the Australian Government, the World Bank and other international bodies, Dr Stoeckel is co-author of Macroeconomic Consequences of Farm Support Policies (1989) and Asia’s Meltdown and Agriculture (1998).
MARK VAILE, MP, has been Australia’s Minister for Trade, and Chairman of the Cairns Group of Agricultural-exporting Countries, since July 1999 when he also elected Deputy Leader of the National Party, the junior member of the coalition Government of John Howard, the Prime Minister. Mr Vaile joined the cabinet in 1997 as Minister of Transport and Regional Development. In 1998-99 he was Minister of Agriculture, Fisheries and Forestry. Earlier, in 1996-97, he was Chairman of the Standing Committee on Communications, Transport and Micro-economic Reform in the House of Representatives.
CLAYTON YEUTTER, Counsel at Hogan & Hartson, attorneys-at-law, Washington, DC, and Chairman of the Oppenheimer Funds, New York, played a key part in the successful Uruguay Round negotiations of 1986-94, first as the U.S. Trade Representative (1985-88) in launching them, then as U.S. Secretary of Agriculture (1989-91) in carrying them out. In 1991-92 he was Counselor to the President for Domestic Policy and Chair-man of the Republican National Committee. Before returning to the U.S. Administration, he was President of the Mercantile Exchange in Chicago (1978-85).
The Cordell Hull Institute’s Trade Policy Roundtable is sponsored by Akin Gump Strauss Hauer & Feld, Arnold & Porter, Hogan & Hartson, O’Melveny & Myers, Sidley Austin Brown & Wood, Steptoe & Johnson and Wilmer Cutler & Pickering