In a paper circulated on April 30, 2007, the chair of the World Trade Organization’s (WTO) agriculture negotiations set out his ideas on how to accommodate WTO members’ positions to try to kick-start the stalled trade negotiations.
Agricultural issues have been at the crux of the WTO’s inability to move forward on the Doha Development Round through agreement among the members on improved market access, reducing or phasing out export subsidies, and substantial reductions in trade-distorting domestic support.
Ambassador Crawford Falconer’s paper sets out the disparate views of WTO members on these and other issues and suggests ways to achieve agreement. What countries are trying to reach consensus on are specific “modalities” in trade-speak terms. Those are the targets — the numbers and percentages of reductions in tariffs, subsidies, and other forms of trade-distorting protectionism and support.
Two principal players, the United States and the European Union, are still far apart in their target offers. Not only those targets are at issue, but how to deal with other contentious topics, such as so-called sensitive products — how big that basket should be and what products should be in it.
The Doha Development Round’s focus is increasing trade opportunities for developing countries, which can lead to improved economic growth and poverty reduction. Reform of agricultural policies is essential to this. As the World Bank noted:
Trade reform in agriculture would yield the largest welfare gains because agriculture is so much more distorted than other sectors and as roughly 70 percent of poor people in developing countries live in rural areas. Trade barriers in agriculture are extremely important to reduce poverty. At present, support to agricultural producers (including trade-distorting subsidies and market access barriers) in developed countries adds up to about $280 billion, more than three times the level of 2005 global overseas aid. Developing countries are investing to increase their agricultural productivity, but gains will not be fully translated into poverty reduction unless industrial and some middle-income countries reduce agricultural trade distortions. In the absence of reforms in developed countries, increased productivity in agriculture will instead give rise to overproduction and price declines for many commodities, undermining competitive poor countries’ efforts to expand exports and rural incomes.