Monday, July 21, 2008

What if something actually happens?...

I haven't posted about the WTO process in many moons, as it had exceeded my attention span, but perhaps some reference to still existing is warranted this week. As usual it takes a deadline or deadline missed to generate much measurable progress, but at least we have some interesting aspects to mention.

First, the EU is sending all kinds of mixed signals.  Last week, f'rinstance, the French administration was adamant holding the line on concessions.  Today the EU upped their offer.
The European Union (EU) has offered to cut its farm tariffs by 60% to kick-start trade talks in Geneva.

EU trade commissioner Peter Mandelson said this was the best offer yet from Brussels on the crucial farming issue.

Mr Mandelson urged emerging economies such as Brazil, India and China to reciprocate by slashing their industrial tariffs.

Meanwhile, the US trade chief vowed to help make the talks succeed if emerging nations made a contribution.

Rich versus poor

"When it comes to trade negotiations, the vast overwhelming contribution has to come from market liberalisation rather than the subsidy side," US trade representative Susan Schwab said. [More]

Meanwhile, the US is pinning much of their hopes on the power of China to bring emerging economies along to agreement.
    US Trade Representative Susan Schwab said she was heading to the talks under the auspices of the World Trade Organization in Geneva "cautiously optimistic."

    "Many of us feel a real sense of momentum," she said at a news conference, citing discussions with officials as they work to break the deadlock on the Doha Round, launched in the Qatari capital in November 2001.

    But, she cautioned, "it's not the first time," recalling feeling the same way just before a similar effort -- talks between the US, the European Union, Brazil and India -- collapsed a year ago.

    Schwab, who will lead the US team at a gathering of 30 ministers opening Monday, said the United States has "the intent and hope and expectations that there is a deal to be had."

    "I think a deal is eminently doable ... it is doable next week," she said.

    Still, emerging market economies must make "meaningful market-opening contributions" to achieve a successful outcome of the Doha Round, she said.

    China, which joined the WTO in December 2001, just after the launch of the Doha Round, and has seen its exports explode under free trade, needs to show more leadership, Schwab said.

    "China has a particular obligation to give back to the Doha Round" of WTO negotiations, she said, noting that China has reaped "hundreds of billions of dollars" since opening their trade system. [More
While there could be a breakthrough many doubt our own Congress would approve it, especially if it requires as it almost certainly will, substantial subsidy reductions.  I am less pessimistic about this outlook.  With prices still pretty good and immense pressure from sectors in our economy like finance and manufacturing who badly need this agreement, the farm lobby may meet its match.

It doesn't help that the recent Farm Bill left a bad taste in many mouths. Or that a food crisis has erupted in its wake, regardless of causes. Finally, the farm lobby here is badly splintered as a result of the ethanol/feed price controversy. The meat folks have nothing to lose by pushing for freer trade and much to gain.

I continue to be suckered into hoping for a WTO farm agreement.  If it comes to pass, I think we will approve it over the outcry from subsidy proponents.


Ol James said...

Forgive a dum-ol-kuntry-boy here Mr. John. I looked at the links you posted and those on the site. I thought our Congress had a case of the drag-butt,(to put it cleanly). But the WTO and their representatives and leaders are sure enough playing a game of politics!! Somebody needs to sit them down and explain, when your having a peeing for distance contest, Grandma just might win.

John Phipps said...

Umm, james - as colorful as your comments always are, this one is the over the edge.

A metaphor isn't always the best way to get a point across.

Please help me out here.

Ol James said...

OK Mr. John, I didn't want to make a long post, so here goes.
The WTO is trying to resolve a simple but fair agreement between the major and minor players, so to speak. The EU with France in the driver seat is hollering liberalism. This from a country who disregarded trade sanctions with certain oil producing countries behind the backs of the UN. The EU ,(or Grandma), just wants the rest of the world to follow them into the "New World Order" of things globally. The G8 wants to set the precedent economically. Then you have the next section of countries that want to be recognized and believe they have the answers for the economic goings ons globally. Hence the contest is about to begin. Then there are the former third world countries that are becoming real players in the market by either buying everything in sight or trading it. Now the players are warming up.
Each side or sect or section or group has their own agenda that they believe will benefit them and throw a bone to the rest. This has been going on for years, I don't have to tell you because you see this almost daily. However the others see it as an advantage and it offers nothing for them. Both sides are right and wrong at the same time.
All the players in the game are wanting the biggest slice of the pie chart. Bragging right I reckon. Now you throw in a good helping of political tug of war and see who lets go first.
I believe it is going to come down to the Golden Rule that Mr. Al pointed to on AgDay. He who has the gold makes the rule. Grandma or the EU will probably come out on top, unless India and China and their buddies buy that too. There is a fair compromise that will benefit all, but getting everybody to agree and not wanting to be #1...goood luck with that. Just think what the outcome would be if they were trying to set the precedent for OPEC.
You have seen how our elected officials handled the latest version of the Farm Bill. Now to me it's the same thing but on a global stage.
Sorry bout goin over the edge.