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article imageOp-Ed: Seven years later, WTO Doha trade talks, aka Do Ha Ha, show signs of life?

By Paul Wallis     Jul 23, 2008 in Business
Against a background of protectionism and political grandstanding, the Doha trade talks haven’t really been expected to achieve much. What’s coming as a surprise is how little they’ve actually achieved, in seven years.
Yahoo/AFP explains the basic situation:
Emerging and developed countries have slipped into a familiar pattern of demanding new moves from each other, with the success of this week's high-profile gathering hinging on whether they can find common ground.
Speaking in Brasilia, Brazilian President Luiz Inacio Lula da Silva said the talks would fail unless the United States and Europe made greater concessions.
"If there is no effective reduction in subsidies in the United States, and if there is no flexibilisation of the agriculture market by the Europeans, there will be no deal," he told reporters.
In that case, "each one will have to assume his responsibilities, and each one will have to reap what he sows," he said.
The United States and the European Union have made opening gambits by offering to reduce trade-distorting assistance to their farmers and they are now waiting for steps by developing nations to open their markets for industrial products.
There’s been a few changes in seven years. The rise of China, the thunderous crash of the US housing and financial markets, Russia’s reincarnation as a plausible global power, and Europe’s unwitting emergence as an entity in comparatively good working order have been the main economic changes.
Meanwhile, the rest of the world has been looking for somewhere to sell its products. The “Third World” is backward and undeveloped as much because it can’t raise capital from legitimate trade, as for any other reason.
The West buys outworker-level products, at outworker-level prices. The effect is a buyer’s market, because the Third World countries have a very hard time selling direct onto Western markets. They've had to take what prices they can get, and those prices are kept very low, like the 20 cent a shirt range, across the whole range of their products.
This is nothing vaguely resembling fair trade, and never has been.
They know it, they're sick of it, and they want something done about it.
Tariffs, subsidies, and two way protectionism don’t help.
So about 60% of the world’s population, commercially, are second class citizens at best. To describe Doha as an atrocity in progress may be a bit generous. The problems have been well known for decades. The rest of the world has been complaining about US and European farm subsidies for decades, too.
Politically, in a very uncertain economic environment, protectionism is now an asset in the US. Ridiculous as that may seem, with American industry gutted by whatever fit of whimsy decided to outsource everything, the political platform is a safe one.
You may have killed the carthorse, but you can still make speeches about what a great carthorse it was.
Both sides of US politics were interested spectators while this gutting and filleting process went on. Neither side did a damn thing to stop it. Now trade is the big issue. The Star Spangled Spammer is on full blast as everyone produces their foreign policies, most of which don’t have a lot to do with trade or any other known form of reality.
But there’s that great, feelgood folksy approach to finding new ways of being downsized, outsourced, and generally insulted.
It must have been a long time since the US actually opened up a new market or new trade frontier anywhere. The competitive edge has been turned inwards, not outwards, and the lousy trade performance is one of the more obvious symptoms of the disease.
America’s almost subconscious isolationism has been working against it. At a time when the economy needs every cent it can get, not opening up new opportunities for trade just doesn’t make sense.
OK, you have to import someone’s products so you can export to them.
Natural trade terms.
So live with it. You can’t be the only grocery in town.
Europe, meanwhile, in its sudden rise to relevance as a global force, is still lugging around the remains of the original, expedient, and generally loathed by its competitors, subsidy mix it started with.
That made sense decades ago, but now, with an expanded EU, and a gigantic emerging market in the developing countries, it’s debatable if that can work any more. It may be more obstacle than asset. Whatever the case, the subsidies will need some modifications, anyway.
Europe stands to benefit in many ways from this large and very diverse trade opportunity. Because Europe is itself a highly diversified producer, some applied self interest, industry by industry, may be the better option.
China is far more than an interested spectator. China has been investing in Africa and elsewhere to develop markets and set up more than just shopfronts. These nations are undercapitalized, meaning they don’t have enough of their own money to build their economies, that’s what they need, and that’s what the Chinese are providing. It’s too early to say how these things are working out, but if they work, they’ll pay off well.
That’s also something the US and Europe might have figured out for themselves. Doha is providing the Chinese with a map of the world’s emerging markets, and a blow by blow description of their trade needs.
The “news” about Doha is that the EU is now proposing a cut in tariffs of 60%, not 54%. Over seven years, that’s less than a per cent a year.
The 60% cut also presumably means that 60% of existing tariffs aren’t considered dangerous to EU producers. So what were they doing there?
The US has proposed a ceiling to aid for farmers of $15 billion.
Out of which bit of thin air that figure came from, I’m not sure. $15 billion in direct aid doesn’t mean a damn thing. Relative to the amount of capital in the US agricultural sector, it's like Microsoft saying they'll give 15 cents to charity.
You might be able to grow a sunflower in Kansas for that sort of money, in a good year, maybe not.
You can call subsidies anything else, and keep it out of the so-called ceiling.
The problem is that subsidies, whatever you call them, are considered an unfair advantage, in international trade. That’s what the developing nations are bitching about, and nothing much has changed.
Add to this the fact that the US legislature had to sweat oceans to get the existing subsidies into anything like tolerable for anyone, and you can see that there’s not likely to be a lot of real movement.
Just a lot of catering, as delegations struggle on with taxpayer-subsidized trade missions that achieve nothing.
I suggest a monument for the Doha trade talks.
Just a simple, twenty storey, fluorescent pink, statue:
Of a cow, looking at a mirror.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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