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Round and Round the Doha Round.

EU Trade Commissioner, Peter Mandelson, was in Washington in late September trying to revive the Doha Round. Pascal Lamy, the head of the World Trade Organization, remains pessimistic about the resumption of the Doha Round. What is going on?

In Washington, at the end of September, Peter Mandelson, who packed a huge range of meetings into his three-day visit, demonstrated his commitment to reviving the talks. Mandelson reported that ‘We face a tough challenge to bring the Doha Round to a successful timely conclusion. I believe that the Administration is committed to this, and so am I’. Mandelson held meetings with the Secretary of State, Condoleeza Rice, as well as with the Agricultural Secretary, Mike Johanns and a range of others with interests in trade and agriculture. He also met with a number of influential members of Congress as well as with representatives of the private sector. The EU’s position is that it will cut domestic subsidies and remove export subsides and that this will create space for American and other producers in the international market but some of this will require changes in American policy.

The EU has already reformed its Common Agricultural Policy and has moved towards a system that brings benefits to the consumer (and the tax payer). Most subsidies will be de-coupled from production. Instead of a subsidy to production (that leads to over-production) there are new ‘single farm payments’ that are to be made with respect to policy objectives relating to environmental, animal welfare and food safety considerations. These reforms have a wider context, that of the development and modernization of EU trade policy. Here the consideration is making sure that the EU is competitive in international trade. Mandelson has helped develop a new approach that recognizes the need for Europe to be competitive in international terms. The force of this policy is that of reducing protectionism and opening up overseas markets. As in the United States current approach to trade policy, the EU is now also concerned with the protection of intellectual property rights (important with respect to China) and with a new round of bilateral trade agreements. As in the United States, there is a drive towards bilateral agreements. This suggests an alternative strategy on the part of both, just in case Doha really is finished. Multilateralism, which has the advantage of being simpler once agreements have been reached, is under question.

So the EU has adopted a system of de-coupling farm support from farm output. Mandelson seems to want the United States to adopt a similar policy for its support program. This is a question that links directly to the Farm Bill currently under discussion in the Legislature. There are voices that are pro-reform along the lines already adopted by the EU. These are not the only voices. The context is the commitment by the EU and the United States within Doha to open up the international markets through a process of domestic subsidy reform. The EU holds that it has achieved a significant reform that lives up to the commitment made and that enables it to remove export subisidies. It is looking to the United States to adopt a similar set of reforms. Even if the United States does so this may only reconcile the US and the EU but the reforms must also satisfy Brazil, India, Australia and Japan if there is any hope for the Doha negotiations to re-start.

Mandelson may have made a hopeful statement at the end of his visit but Pascal Lamy’s view on the 17 October is more pessimistic. As the head of the World Trade Organization (WTO) he disapproves of bilateral deals, including those made by the EU, and made this clear to his audience, the European Parliament Trade Committee. In his eyes such deals evade the significant issues: the reform in world trade in agricultural commodities and the issue of dumping. These are the reforms that are of significance for developing countries. They are the reforms that the Doha Round set out to tackle and that are central to Doha’s developmental agenda. He also feels that whilst leaders may be paying lip service to the idea of restarting the talks, ‘these political signals do not represent a change in negotiating positions’ though he was careful to add ‘But these may be forerunners of a new state of mind’. Lamy too sees the strategic importance of the shape of the Farm Bill with respect to the negotiating position of the United States. He also points to the negotiating mandate given by Congress to the Administration with respect to trade agreements (and soon to run out) and suggests that its renewal or otherwise is strategically important. It seems that with respect to what’s going on, we will have to wait and see.