Talks intended to re-start the Doha Round of World Trade Organization liberalization began on Monday. The Doha Round, which had been designated the “Development Round” by its proponents, was supposed to address a wide array of issues of concern to developing countries, including liberalization of trade in agricultural goods, reducing agricultural subsidies, and access to essential medicines. The talks originally broke down two years ago, largely because of the unwillingness of US and European officials to cut subsidies to their farmers. Parties to the talks are expressing guarded optimism about the outcome.
What’s on the table? The major sticking point continues to be the slow pace at which the United States and some members of the European Union are willing to remove agricultural tariffs and subsidies. While the World Trade Organization (and its predecessor organization, the General Agreement on Trade and Tariffs, or GATT) has overseen a dramatic decrease of tariffs and non-tariff barriers to trade in industrial sectors, the agricultural sector has remained largely outside of liberalization efforts. The European Union has offered to cut its agricultural subsidies by 60% (from €10 billion to €4 billion in annual subsidies). The United States has offered to trim its agricultural subsidies to $7.6 billion per year. Both sides face strong domestic opposition to the proposed cuts; both proposals have been dismissed as inadequate by the developing countries at the WTO talks.
Developing countries have long been told by the World Bank and International Monetary Fund that open markets and free trade are the most effective and efficient way to develop an economy. From their perspective, resistance by the US and EU to liberalize their agricultural markets highlight the injustice of the world trade system, which appears to have one set of rules for the rich and another set for the poor. That’s what makes the position of the developing countries, particularly of countries like Brazil and India, so compelling. They have effectively turned the argument in favor of liberalization against countries which historically promoted it most.