Doha Negotiations

1
Doha Negotiations obstacles and alternatives to
a successful Doha Round outcome

• Lecture 26
• Economics of Food Markets
• Alan Matthews

2
Lecture objectives

• To evaluate Chairs revised draft modalities
  February 2008
• How much convergence, how much divergence?
• Role of WTO litigation
• Alternatives to Doha?
• Regionalism, protectionism

3
Reading

• Falconer Revised draft modalities February 2008
• Josling on litigation
• Schott, Neary on alternatives

4
Revised draft modalities Feb 2008

• Export subsidies
• Elimination agreed by end-2013, but phasing of
  phase out still contested
• Domestic support
• OTDS and AMS limits
• AMS cuts
• Blue Box ceilings
• De minimis cuts
• Green Box changes

5
Revised draft modalities Feb 2008

• Market access broad outlines
• Tiered reductions
• Minimum average cut in tariff commitment
• Future of Special Agricultural Safeguard
• Sensitive Products
• Tariff escalation
• Tropical products
• Preference erosion
• Tariff simplification

6
Outlook for a deal

• US commitment to successful outcome doubtful
  despite Bush rhetoric
• Farm lobby and Congress deeply suspicious (e.g.
  CAFTA vote)
• Trade Promotion Authority ran out mid 2007
• EU the champion of a Development Round
• Has invested much in a successful Round
• But agriculture ministers (i.e. France) keeping
  tight rein on the negotiators
• Developing countries (G20) may feel no deal is
  better than a bad deal
• Concerns of weakest developing countries must be
  addressed (e.g. cotton)

7
Politics of the endgame - EU

• Mandelson and the mandate
• Can the French/Irish block a deal?
• Timing
• Incentives for an early deal
• German presidency
• The shape of its acceptable deal
• Looking for concessions on NAMA, services and
  rules (anti-dumping, trade facilitation and
  Geographical Indications)

8
Politics of the endgame - US

• The US position
• Bush and political will
• Timing - Trade Promotion Authority
• Attitudes of the new US Congress
• The new Farm Bill
• The biofuels factor
• Aftermath of Presidential election
• The shape of its acceptable deal (limited
  offensive gains, adjustment issues)

9
Politics of the endgame G20

• Brazil now experiencing exchange rate
  appreciation
• China accepted tight restraints on trade policy
  on accession in 2001
• India concerned to protect its defensive
  interests
• Butcontext of strengthening world market prices

10
Doha fails to conclude?

• URAA continues
• It would be wrong to conclude that the mosaic of
  agricultural policies across the world,
  post-1995, is a stable set
• policies are being challenged, and changed
• This would continue even if there was no
  conclusion to the Doha Round
• But would it survive.?

11
Litigation as a source of pressure for changes in
rules

• The significance of the WTO Dispute Settlement
  Understanding
• The WTO panel process
• Some important agricultural cases
• EU sugar
• EU bananas
• US cotton
• EU GSP

12
Panel Findings on Sugar and Cotton

• US Upland Cotton (Brazil)
• Production flexibility contract payments (1996
  Farm Bill) and Direct payments (2002 Farm Bill)
  are not eligible for the green box because fruit
  vegetables cannot be grown on the land
• EU Sugar (Australia, Brazil, Thailand)
• C sugar exports are subsidised
• ACP and Indian re-exports are wrongly excluded
  from EU totals

13
Regional integration

• Regional integration agreements
• e.g. Mercosur
• Trade creation but also trade diversion effects
• Stepping stone or stumbling block to more open
  trade?

14
Dangers of growth in protection?

• Continuing global economic imbalances..
• ..as well as shifts in geo-political power
• Many of the new protectionist demands rally
  consumer as well as producer interests
  (environmental standards, labour standards, food
  safety standards)
• Rising trends in income inequality linked to
  trade (outsourcing..)
• Nationalistic trends (energy, sovereign wealth
  funds,)