The WTO: Much Ado about Nothing?

On September 21, negotiators for the WTO member countries wrapped up a third week of agricultural talks in Geneva. Ambassador Crawford Falconer, chairman of the WTO agricultural commissions and initiator of this process of standing negotiations, noted that “tangible progress” had been made in the talks thus far.

Two contradictory signals have nonetheless been received from the United States.

On September 20, it was learned that Joseph Glauber, U.S. agriculture negotiator, had announced the previous evening in Geneva that his country was now accepting as a basis for negotiations the figures that the WTO had proposed back in July. In practical terms, this means that Washington has agreed to cut its farm subsidies down to the 12.8 to 16.2 billion dollar annual range that Crawford Falconer had proposed over two months ago. This “positive development,” however, as the U.S. commitment was described by the European Union, was tarnished by the announcement, also on September 20, that U.S. Secretary of Agriculture Mike Johanns was to resign. Johanns has decided to leave the top position at USDA to seek the Republican nomination for a Senate seat from Nebraska. His skills as a negotiator were highly appreciated during his tenure at the WTO talks. Despite George Bush’s enthusiasm in welcoming, with a show of great confidence, Charles F. Conner1 as new chief of the USDA, this news most likely will not speed up completion of the final version of the Farm Bill, the country’s agricultural policy, which most notably sets out the terms for domestic agricultural supports for an additional five years. Democrats had set their hopes on succeeding in blocking the full provisions of this new framework legislation for agriculture in the United States before its current expiration date (late September 2007). There is no chance of that happening, but the next iteration of the Farm Bill could be signed into law before Christmas. At the very latest, the legislation should be in effect by the spring 2008 planting season.

Talks have nonetheless continued at the WTO on other issues related to agriculture. These include:

› Special products: These are areas of flexibility granted to developing countries for certain agricultural products according to how much those products contribute to food security, rural development or the security of livelihoods. Talks have focused on the indicators and thresholds that would characterize a product as “special” in light of the aforementioned points.

› Sensitive products: : All Member States will be able to designate products for which market access rules will be more flexible. The number of products and how they will be treated are the two issues still under debate. Differences have placed countries with high production levels (European Union, G102), in favor of relatively wide use of this measure, on one side and agricultural exporting countries (mainly the Cairns Group3 and G204) on the other.

› The special safeguard mechanism: This mechanism should allow any developing country to temporarily protect its agricultural producers from unfavorable external conditions (an increase in the volume of imports and/or a drop in prices). On this issue as well, the indicators allowing for such measures to be taken and the scope of those measures remain to be determined.

The delegations will be leaving to consult with their respective governments. Mr. Falconer is expected to circulate a new draft text for agriculture in mid-October. It is nonetheless recognized that any progress on the agricultural issues will have to be in exchange for changes in market access for industrial products and services in developing and emerging countries.

As for the European countries, France, via President Nicolas Sarkozy, has already brandished the threat of a veto. In a speech given on September 11 during the international livestock trade show (“SPACE”) in Rennes, Mr. Sarkozy declared that he “would firmly oppose any deal that does not serve the interests” of France on agricultural issues.

WTO Director-General Pascal Lamy nonetheless hopes to reach a deal regarding the overall structure of the Doha Round by the end of the year, with the goal of finalizing the deal in early of next year, as soon as possible before the 2008 elections in the United States, yet most likely not before the final vote on the Farm Bill.

In spite of the overall positive tone at the WTO, the road ahead is still quite long and the expected outcome has been marred by the nature and quality of the indicators for special and sensitive products and by the safeguard mechanisms. This is because the full complexities of managing agricultural trade, along with the related strategic aspects, have been diverted into those unique mechanisms.

Henceforth, how valid is a deal that is made on the surface, yet tied to an array of exceptions, when those very exceptions constitute the crux of the issues for which solutions must be found at the global level?