Doha Round: the opportunity of a century to liberalise farm trade
Chief Executive Officer and Policy Manager for Trade and Quarantine,
National Farmers' Federation
The new negotiations in the World Trade
Organisation (WTO) are a unique opportunity for the world to fix a global
problem that has persisted for half a century. Protectionism in world
agricultural trade is an enduring and costly mess that causes social and
economic damage in developed and developing countries alike.
Director General of the WTO, Mike Moore, said
at the United Nations’ ‘Financing for Development Summit’ in Monterrey
this year, “If governments put their minds to it, the new trade round
launched at Doha can bring huge benefits. The World Bank’s Global Economic
Prospects report estimates that abolishing all trade barriers could boost
global income by US$2.8 trillion and lift 320 million people out of
Agriculture is the backbone of almost all
developing countries. Yet, massive agricultural support in the rich world
undercuts developing countries and forces even the most efficient producers
out of the marketplace. The return to developing countries from agricultural
trade liberalisation would be eight times all the debt relief granted by the
developed world thus far.
Some people say that it is not ‘politically
realistic’ to expect free trade in agriculture. That view is wrong. The
troubles with agricultural trade have not occurred by accident. They are a
man-made problem. Therefore, they can be un-made. Playing the ‘politically
realistic’ game is irresolute and narrow-minded and more suited to the
actors in the ‘Yes Minister’ television series. What was yesterday’s
politically ‘impossible’, such as the fall of the Berlin Wall, is
today’s common sense. Liberal trade for agriculture is a possibility. We
know that it is a difficult thing to achieve, but assertions that it is not
politically feasible should be rejected.
The disappointing and untimely outcome of the
2002 farm bill debate in the United States might also seem good enough
reason to think that agricultural trade liberalisation is out of reach.
Although understandable, such a reaction is mistaken.
It is true that the 2002 farm bill represents
a significant departure from the 1996 ‘Freedom to Farm’ policy designed
to wean farmers off the public purse. Described by the Washington Post as
“the mother of all pork”
the 2002 farm bill increases government support for American agriculture,
which damages the proper functioning of world agricultural markets.
Nevertheless, it would be wrong to walk away from Washington.
The formal position of the United States
Government in the current round of negotiations in the World Trade
Organisation (WTO) is closely aligned with that of the Australian-led Cairns
Group. A cluster analysis of the negotiating positions of all 145 members of
the WTO by the Danish Research Institute of Food Economics
shows that the United States and the Cairns Group have many similar
objectives for agriculture reform. It is the European Union (EU) that is
isolated in its position of opposing substantial reform of agriculture
policy and in seeking negotiations on so-called multifunctionality, animal
welfare and the environment.
In market access the European Union’s
negotiating proposal would do little to address tariff peaks or tariff
escalation, areas that the United States, the Cairns Group and developing
countries have targeted for reform. The United States and the Cairns Group
have proposed the elimination of the special agricultural safeguard, while
the European Union wishes to retain it. The United States, the Cairns Group
and developing countries have lined up against the EU with robust demands to
reduce and eventually eliminate export subsidies. In domestic support the
United States, the Cairns Group and developing countries have called for the
blue box to be subject to reduction commitments followed by elimination. The
EU wants to retain the blue box, which it considers critical to the
multifunctional role of agriculture.
None would suggest that Australia and the
United States see eye-to-eye on every issue in the WTO. For example,
Australia is likely to line up with the developing countries in seeking
constraints on the green box, a move that will be opposed by the US. The
bottom line, however, is that the Cairns Group and the United States have
mostly compatible policy objectives and both groups have greater potential
to achieve their objectives by cooperating than by working alone.
Throughout the farm bill debate there were
many brave and sensible voices calling for reform of US agriculture policy.
In the Congress, Senator Richard Lugar, Ranking Republican Member of the
Senate Agriculture Committee, said in an editorial in the New York Times,
“If agriculture policy is to change, new forces must become engaged”.
Senator Lugar is correct. For farm policy to change, new political forces
inside the United States must become engaged in the debate.
There is no more powerful country than
America to fight for the broad mass of people in the world and it is in
Australia’s interests to support the American leadership that wants to see
The issue for Australia, therefore, is to
find ways of working with Washington to build and consolidate a consensus in
favour of agricultural trade reform. US leadership is the key to reforming
the international trading system for agriculture. The US has provided strong
international leadership for trade reform in manufactured goods and with the
election of the Bush administration there remains a strong ideological
commitment to free trade.
Negotiations on agriculture have been taking
place in the WTO over the past two years and in November 2001 those
‘sectoral’ negotiations were consolidated into the broader ‘Doha
Round’. But just as a horse can be dragged to water and not made to drink,
so negotiations can be started but not made to yield results. It was US
leadership under Ambassador Zoellick that brokered the deal at Doha. What
the world needs now is another injection of American leadership to put some
horsepower under the talks. Without a further injection of leadership we run
the risk of repeating the results of the Uruguay Round, where overall
reductions in protection were limited, largely because of loopholes in the
Agreement on Agriculture. In short, the Uruguay Round outcome permitted
countries to meet the letter of the agreement but not its spirit.
By working together, the United States and
the Cairns Group can overcome the defensive stance of the European Union and
provide global leadership to support a visionary and bold result for
agriculture in the Doha Round. To encourage this process, Australian
agribusiness leaders and the National Farmers’ Federation (NFF) are
working with agribusiness leaders in America to support the Cordell Hull
Institute in Washington, D.C. in an effort to start and promote a process
for overcoming the hurdles to agriculture reform in the WTO.
In May 2002, the Cordell Hull Institute,
which is a non-profit educational foundation dedicated to fostering
initiative and leadership in international trade policy, hosted a trade
policy roundtable in Washington, D.C. NFF
and Australian agribusiness leaders participated in the roundtable, which
developed a process for ongoing trade policy engagement throughout the Doha
This important initiative has shown that
Australia and the United States have placed agriculture at the ‘heart’
of the Doha negotiations and that there will be no progress in other parts
of the Doha Round until serious progress is made on agriculture. The WTO’s
credibility as a trade liberalising body is at stake with this issue. In the
21st century the world deserves nothing less than to extend to
agriculture the same treatment that it has extended to trade in manufactured
goods. Turning the minority in the US who are campaigning for reform of
world agricultural trade into the majority and securing US leadership is the
place to start.
Beierle, T. C. (2002) “From Uruguay to
Doha: Agricultural Trade Negotiations at the World Trade Organisation”,
Resources for the Future, Washington, D.C.
Stoeckel, A. & Cuthbertson, S. (1987)
“The Game Plan: Successful Strategies for Australian Trade”, Centre for
International Economics, Canberra.
Moore, M. (2002)
Summit-level opening speech, Monterrey, 21 March, UN Financing for
Editorial, (2002) “The
Mother of All Pork”, Washington Post, Monday February 18, page A22
Bjornskov & Lind
(2002) “EU Isolated from the Rest of the World”, WTO Negotiations
and Changes in Agricultural and Trade Policies, Policy Brief 1, Danish
Research Institute of Food Economics.
Lugar, R. (2002) “The
Farm Bill Charade”, New York Times, Monday January 21, 2002.