Sunday, January 28, 2007

Actually, failure is an option...

There is a popular theme in modern political rhetoric that by denying bad outcomes we can command success. This could be the reason so many things have become "unacceptable."
In the first nine months of this year, Bush declared more than twice as many events or outcomes "unacceptable" or "not acceptable" as he did in all of 2005, and nearly four times as many as he did in 2004. He is, in fact, at a presidential career high in denouncing events he considers intolerable. They number 37 so far this year, as opposed to five in 2003, 18 in 2002 and 14 in 2001. [More]
Of course, after a few news cycles, events are accepted. There is no alternative.

Another similar locker-room mantra is "Failure is not an option". Of course it is - and frequently the most likely. Those who do not acknowledge it simply pass on the chance to glean data and refine the next attempt.

Anyhoo, it is suddenly occurring to free traders that the Doha round is really, really in trouble, and even worse, it might matter.

The administration seems less likely to be able to influence Congress with each passing day, and the steam behind free trade has been largely squandered. What has gone overlooked by many opponents of lower trade barriers is the status quo will not be the result if the Doha round stays dead or becomes even deader.

As Canberra joined a Canadian challenge to U.S. farm subsidies on corn, Australian Trade Minister Warren Truss said that if the Doha round negotiations could not be revived, then differences would move to international courts in coming months.

"The lawyers will have a field day," Truss told Reuters in an interview before traveling to Davos, Switzerland. "The negotiators will give way to the lawyers, who will take advantage of the expiry of the so-called peace clauses to exploit elements of the U.S. and current European programs in particular." [More]

The peace clause is very important to agriculture, and without its protection agriculture is fair game for a long, expensive legal wrangle. (Which, of course is good news if you are a trade attorney).

Recently, it looks like this means ethanol could become a litigation target as well. Like the Step 2 cotton program repeal, guys in really nice suits could rewrite farm policy via the courts while legislators and negotiators fume.

Regardless, the moribund trade talks are restarting with conflicting but persistent signals that the US may be willing to use ethanol to reshape US ag subsidies into a more WTO-compliant form.
The booming demand for corn as a fuel source will make it easier for the US to agree to cuts in farm subsidies, making a new global trade agreement possible this year, the US ambassador to the EU said.

"I am very confident that we are going to get a deal,” C. Boyden Gray told reporters in Washington yesterday. "This whole alternative energy revolution is taking hold.” "This will take the whole issue of agriculture off the table as a sticking point” between the US and European Union, Gray said. Gray was in Washington for the summit between US President George W. Bush yesterday and European Commission President Jose Manuel Barroso. Both leaders reaffirmed their support for the negotiations in the World Trade Organization.
The Doha Round talks, named for the city in Qatar where they began in 2001, broke down last July as the US resisted pledging further cuts in its farm subsidies unless India, the EU and Japan agreed to steep cuts in their agriculture tariffs. Barroso told reporters yesterday that he saw "unequivocal signals, very clear signals from President Bush, that he wants a deal for Doha.” Bush's trade negotiating authority expires at the end of June.
Gray said negotiators will try to make progress early this year, and the administration will ask Congress to extend so-called Trade Promotion Authority through the end of 2007. Negotiators "will be close enough to probably get an extension,” Gray said. Congress, "probably would not extend trade promotion authority” unless the trade talks looked promising, he said. [More]

We've heard predictions before, but as events unfold, policies that were unthinkable with corn at $2 are less repugnant at $4.

Crimony, everything looks better with $4 corn. I'd say it was very acceptable.

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