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“Why the Trade Talks Collapsed”
By Jacques Carles,
Executive Director of WoAgri responds to the Wall Street Journal article
On July 7, following the failure of the June 21 G4 meeting 1 , the Wall Street Journal published an article entitled
“Why the Trade Talks Collapsed” 2. The article’s authors, Jagdish Bhagwati and Arvind Panagariya, both professors of economics at the renowned Columbia University in the United States, dispute U.S. Trade Representative Susan Schwab’s view that the negotiations broke down as a result of India’s (and, to a lesser extent, Brazil’s) refusal to make any concessions. The authors impute the causes of the “predictable failure” of the Doha Round to the United States: with the presidential elections around the corner, the Administration and Congress are not willing to take the political risk of getting on the wrong side of the powerful farm lobby and are therefore standing firm. The authors emphasize that agricultural issues were the core cause of the impasse, inasmuch as India has already made a concerted effort to open its domestic market to manufactured products. New Delhi, however, is determined not to expose Indian farmers to increased competition from American exports, just as the primary Farm Bill subsidies are about to be extended for an additional five years. Consequently, the only solution to save the Doha Round, according to the authors, would be a fundamental reform of American agricultural policy.
In a letter published in the Wall Street Journal on July 23 and provided here in full, Jacques Carles, Chief Executive Officer of WoAgri, broadens the debate and refers to the pressing need to protect farmers in developing countries from the damaging effects of full trade liberalization. These damaging effects, contrary to what the article’s authors assert, are not “exaggerated and erroneous beliefs” but rather represent the reality of farmers in the poorest countries. This is why WoAgri is developing a new economic model, adapted to the unique characteristics of the agricultural sector, in order to make a tangible contribution in this area.
« As president of a think tank focusing on world agriculture, I was interested in the views expressed by Jagdish Bhagwati and Arvind Panagariya (“Why the Trade Talks Collapsed,” Wall Street Journal, July 7), but would suggest that there is far more involved than indicated in their article, which largely focused on India. The reality, in our view, is that the agricultural economies of most developing countries have been grievously harmed by the free-for-all of globalization, which treats agricultural products as just another commodity, with little heed for the social and cultural consequences in individual countries when farmers can no longer make a living. Neither the World Bank nor the World Trade Organization seems to fully understand the dynamics and unique needs of the world’s agricultural economies, which are not interchangeable and – unlike non-agricultural products – can be subject to instant devastation from floods, droughts and other climatic factors.
The bottom line is that the developing world has a compelling need to protect its farmers, and the western world should have a real interest in helping them not only survive, but prosper. It is simplistic to assume that free and open markets will solve all problems. As we have seen, they can equally well lead to severe economic disruption, instability and violence. Our organization, in cooperation with others, is developing a model for better regulation of agricultural trade that we believe is increasingly needed in order to assure future security for the benefit of the world’s farmers and consumers alike.
Although not directly related to Doha, the absence of such a model is surely a fundamental reason for Doha’s collapse. »
Chief Executive Officer
World Organization for Agriculture
|1 See our “A Look at the News” article entitled “The Doha Round: no possible solution as things currently stand,” which appeared on our website on July 9, 2007. The Indian and Brazilian delegations decided, on Thursday, June 21, to bring an early close to their talks, held under the auspices of the World Trade Organization, with the United States and the European Union in Potsdam, Germany. The meeting was supposed to lead to a preliminary agreement between these four agricultural giants and breathe new life into the Doha Round, which has been in a stalemate for almost six years now. |
2 WWhy the Trade Talks Collapsed, Jagdish Bhagwati and Arvind Panagariya, Wall Street Journal, July 7, 2007, http://online.wsj.com/public/us.