December 22, 2005

December 22, 2005 | Commentary on Foreign Aid and Development

On life-support

The bad news is that the Doha round of the World Trade Organization remains on life support. The good news is that, at least, it is not completely dead. At the ministerial meeting in Hong Kong, which concluded Monday, some very hard decisions on agricultural subsidies were kicked down the road and a tentative timetable for resolving them agreed upon. At least, this averted the risk of a complete collapse. Keeping trade liberalization moving forward in the difficult areas of agriculture and services is one of the most important issues now facing the international community.

There is therefore reason for (very) modest relief, though as the Financial Times put it, adapting a phrase from Winton Churchill, "rarely in the history of international negotiations have so many labored so long to produce so little." The deadline of 2007 for completion of the Doha Round seems very much in doubt.

Recent meetings have illustrated the perilous path of the Doha round, formally known as the Doha Development Agenda. These trade talks are on constant damger of foundering between anti-globalization protestors' luddite rejection of the modern world and the developed countries' attachment to subsidies of domestic interest groups which closes their markets to products from developing countries.

Both anti-globalizers and rich countries ignore the fact that the poor people they claim to care about stand to benefit vastly from open markets. According to William Cline at the Institute for International Economics, developed countries could provide economic benefits to developing countries amounting to double of what they pay them in aid transfers if they were only to eliminate their trade barriers. A chance to compete in areas where developing countries are strong is what this is all about.

These days, WTO meetings have become cliffhanger dramas. In Seattle in 1999, violent anti-globalization protestors and anarchists of various stripes grabbed the agenda and the headlines. At the Cancun meeting in 2003, developing countries walked away from a flawed deal on agriculture. And Hong Kong saw its share of drama as well. Outside the convention center, against the splendid backdrop of Victoria Harbor, thousands of protestors tried to crash the WTO meeting and clashed with police who tear gassed and arrested some 900 people.

The run up to the Hong Kong meeting had been distinctly unpromising. Ahead of time, the government of France had irresponsibly declared that it would not accept any further reductions in agricultural subsidies in the EU's Common Agricultural Policy, the world's most expensive system of subsidies. In the United States, Congress made no bones about its lack of interest, canceling delegations to the meeting. The agriculture policy of the United States itself is nothing to be proud of; this year, American taxpayers provided $26 billion in direct subsidies to U.S. farmers. Among the sticking points in the Doha round on the American side are cotton subsidies that make products from African farmers uncompetitive.

Still, the Bush administration has shown a determination to take the lead on liberalizing world agriculture. The Office of the U.S. Trade Representative has proposed a gradual phasing out of worldwide tariffs and trade distorting domestic support over a five-year period, at first allowing internationally coordinated lower levels with an eye to final and complete elimination.

In Hong Kong, the United States and the Group of 20 developing countries, whose influence under the leadership of India and Brazil has been growing, exerted significant pressure on the European Union. After five days of tortuous negotiations, the EU agreed to a modified timetable, which would substantially reduce agricultural subsidies by 2010 and eliminate them by 2013. There is some irony to be found in the fact WTO Director General Pascal Lamy, a Frenchman and the former EU commissioner for trade, was the man to twist the arm of the EU's current trade commissioner Peter Mandelson, a close associate of British Prime Minister Tony Blair.

We used to talk about teaching a starving man to fish, as a better solution to Third World poverty. Today, the question is whether we will allow him to sell that fish abroad and develop his economy.

Helle Dale is director of the Douglas and Sarah Allison Center for Foreign Policy Studies at the Heritage Foundation.

About the Author

Helle C. Dale Senior Fellow for Public Diplomacy
The Margaret Thatcher Center for Freedom

Related Issues: Foreign Aid and Development

First appeared in The Washington Times