Trade Policy Roundtable
WTO Impasse Over Agriculture - What's to be Done? (November 17, 2005)
AFTER four years of frustrating back-and-forth, the Doha Round negotiations were at last getting to grips with the core issue, the liberalization of agricultural trade, before the French threw a spanner in the works. The United States has proposed an ambitious liberalization package, in keeping with what is required to commence opening agricultural markets, whereas the European Union’s initial proposals have fallen short. France’s strong objections to what the European Commission proposed, even asserting it has exceeded its mandate, suggests it will be hard for Brussels to secure EU agreement on a significantly improved offer ahead of the WTO Ministerial Conference in Hong Kong on December 13-18, assuming the event isn’t cancelled. Thus the impasse in the WTO negotiations can be expected to persist for a good while longer.
Unless the cuts in “bound” tariffs are substantial, and the permitted list of “exceptions” to across-the-board commitments is limited, the new opportunities provided by the negotiations will be minimal, wrote Carlos Braga, the World Bank’s senior adviser in Geneva, at the end of April, drawing on the bank’s major study on the subject.
Kym Anderson and Will Martin, the World Bank’s lead trade-policy analysts show, in a widely publicized paper reporting on the study’s results (presented at the Institute’s meeting on May 26), that cutting border protection would yield by far the greatest gains (93 percent) from liberalizing agricultural trade. The gains from reducing domestic subsidies and eliminating export subsidies would be small by comparison. They also show that the reduction of border protection, given the “water” in bound tariffs, would have to be in the order of 70 percent before it would have any actual effect in opening markets.
Progress in the Doha Round negotiations on agriculture has been mainly driven by the FIPs Group, the “five interested parties”, which consists of the United States, the European Union, India, Brazil and Australia (representing the Cairns Group). It got the framework agreement (without modalities) on agriculture in the “July 2004 Package” of agreements. Since then the agriculture negotiators in Geneva have been considering the reduction of border protection and domestic supports in terms of tiers – with progressively larger cuts for each higher tier of protection and support. This makes for complications in explaining and assessing the likely effects of the various proposals.
Simplifying matters, the European Union’s initial proposal on border protection amounts to an average reduction of 25 percent, whereas the United States and Australia have made proposals that amount to an average reduction of 75 percent, three times greater. The hope is that final offers for Hong Kong will be in place by November 15.
Draft Report on Breaking the Impasse
The first draft of a report on the WTO impasse over agriculture, which is being prepared for the Institute by an expert group, will be reviewed at a meeting on Thursday, November 17, chaired by Clayton Yeutter and Richard Cunningham. Key aspects will be address-ed: Hugh Corbet on EU reluctance to liberalize agricultural trade, Robert L. Thompson on the U.S. stake in opening markets worldwide, Herminio Blanco on the costs of failure, Andrew Stoeckel on the obstacles to progress and Harald Malmgren on what’s required for a successful outcome – even if it takes longer.
On the basis of comments at the meeting, the draft will be developed for further discussion, after the Hong Kong ministerial, at an international roundtable meeting early next year and then finalized for publication.
In 2002, the Institute held two international roundtable meetings on the Doha Round negotiations on agriculture, the first in May at Airlie House, near Warrenton, which yielded a report, Opportunity of a Century to Liberalize Farm Trade. The second was held in October at the Itamaraty Palacio, Rio de Janeiro, but with the then confused state of the negotiations it was difficult to identify a consensus that would have a reasonable shelf life.
CHAIRMAN Clayton Yeutter – Of Counsel, Hogan & Hartson, attorneys-at-law, Washington, DC, and Chairman, OppenheimerFunds Inc., New York; former U.S. Trade Representative and U.S. Secretary of Agriculture
09:30-10:15 Status of the Doha Round and the Place of Agriculture
SPEAKER Hugh Corbet – President, Cordell Hull Institute, Washington, DC; former Director, Trade Policy Research Centre, London, and managing editor, The World Economy, Oxford and Boston
10:15-11:30 U.S. Agricultural Interests in the WTO Negotiations
SPEAKER Robert L. Thompson – Gardner Professor of Agricultural Policy, University of Illinois at Urbana-Champaign, and Chairman, International Food & Agricultural Trade Policy Council, Washington, DC
11:30-12:30 Consequences of Failure in the WTO Negotiations
SPEAKER Herminio Blanco – Chairman, Consultoria Soluciones Estrategicas, Mexico City, Mexico; former Mexican Secretary of Commerce and Industry (1994-2000)
12:30-13:30 Buffet Luncheon
13:30-14:00 Objectives of the United States in the WTO System
SPEAKER Chuck Hagel – Senior U.S. Senator from Nebraska and a member of the Senate Committees on Foreign Relations, Intelligence and Banking
CHAIRMAN Richard O. Cunningham – Senior International Trade Partner, Steptoe & Johnson, attorneys-at-law, Washington, DC; and author of Trade Policies and Strategies (2005)
14:00-15:00 What’s Holding up Progress in the Doha Round?
SPEAKER Andrew Stoeckel – Executive Director, Centre for International Economics, Canberra, Australia; former Director of the Australian Bureau of Agricultural Economics
15:00-16:30 Overcoming Obstacles to a Worthwhile WTO Agreement
SPEAKER Harald Malmgren – President, Malmgren Group, business and economic consultants, Fredericksburg, VA; former Deputy U.S. Trade Representative (1973-75) and earlier Assistant U.S. Trade Representative for Agriculture
16:30-17:00 Summary and Conclusions
SPEAKER Clayton Yeutter – Of Counsel, Hogan & Hartson, attorneys-at-law, Washington, DC, and Chairman, OppenheimerFunds Inc., New York; former U.S. Trade Representative (1985-88) and U.S. Secretary of Agriculture (1989-91)
ABOUT THOSE ON THE PROGRAM
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). In 1985-88, Dr Blanco was one of three members of the Council of Economic Advisors to the President of Mexico, having served in 1978-80 as Senior Adviser to the Minister of Finance.
HUGH CORBET has been President of the Cordell Hull Institute, Washington, DC, since 1998, having earlier been at the Woodrow Wilson Center, the Brookings Institution and the George Washington University. In 1968-89, he was the Director of the Trade Policy Research Centre, London, where in 1982-88 he convened eight international roundtable meetings of ministers of trade, senior officials, business leaders and independent leaders in different parts of the world, part of the effort that led to the Uruguay Round negotiations.
RICHARD O. CUNNINGHAM, senior international trade partner at Steptoe & Johnson, attorneys-at-law, Washington, DC, and the author of Trade Policies and Strategies (2005), has been active in dispute-settlement cases and advising companies, governments and Congressional committees on WTO and NAFTA issues. Mr Cunningham has chaired many trade-related committees of the American Bar Association, including the Standing Committee on Customs Law and the task force on international trade and competition laws.
HARALD B. MALMGREN is President of the Malmgren Group, business consultants, Warrenton, VA. As Deputy U.S. Trade Representative in 1973-75, Ambassador Malmgren played a key part in guiding the Trade Act of 1974 – which introduced “fast track” negotiating authority – through Congress and in launching the Tokyo Round negotiations. In the Kennedy Round negotiations he was Assistant U.S. Trade Representative for Agriculture; then he was at the Overseas Development Council, before returning to government.
ANDREW STOECKEL is Executive Director of the Centre for International Economics, Canberra, Australia. As head of the Australian Bureau of Agriculture Economics (1981-86), he directed 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).
ROBERT L. THOMPSON recently became Gardner Professor of Agricultural Policy at the University of Illinois, having earlier been Director of Agriculture and Rural Development at the World Bank (1999-2002). Since 2002 he has been Chairman of the International Food and Agricultural Trade Policy Council, Washington, DC. In 1985-87, Dr Thompson was Assistant Secretary for Economics at the U.S. Department of Agriculture, where he was engaged in preparations for the Uruguay Round negotiations of 1986-94.
CLAYTON YEUTTER, Of Counsel at Hogan & Hartson, attorneys-at-law, Washington, DC, and Chairman of the OppenheimerFunds Inc., New York, played a major 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 the 1970s, Ambassador Yeutter held senior positions at the USDA and the USTR, then 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, Miller & Chevalier, O’Melveny & Myers, Sidley Austin Brown & Wood, Steptoe & Johnson and Wilmer Cutler Pickering Hale & Dorr