US suggests new efforts on Doha Round

A summary of the proposals mailed to all WTO members by US Trade Representative Zoellick on Sunday is “avaialable(USTR web site)”: from the USTR website (PDF file about 50k). The reaction from other WTO members has been, predictably, cautious. According to Guy de JonquiZres in the “FT(link to Financial Times—no-subs page)”: : bq. The paper angered developing countries by toning down earlier US demands for radical liberalisation of farm trade. “The US move means the joint paper is now dead,” one trade official said. bq. However, much will depend on whether G20 members abandon their formal refusal to open their own agricultural markets. Though Brazil and some others seem ready to do so, India remains flatly opposed – a divergence that could force the group to choose between unity and negotiating flexibility. The “joint paper” is the muddled EU/USA [[wrongMarketAccessEU-USA paper on agriculture]] that was criticised from all sides at CancZn.  His call for new efforts by the US suggests that Zoellick is not intending to revisit the messy compromises that he cooked up with Pascal Lamy (the EU Trade Commissioner) last August.  In fact, Zoellick says in his letter that the earlier “radical” US reform proposals to eliminate agricultural tariff barriers are still on the table. Developing countries—and others—are understandably skeptical given Zoellick’s waivering line last year.  De JonquiZres correctly implies, however, that developing countries are passing the buck when they blame the USA for not living up to it’s rhetoric on trade reform. The CancZn collapse left many questions unresolved including how far the developing countries themselves will cooperate in a global market opening. If the G20 can’t come up with some progress on that issue then they’ll have reached precisely the same impasse that fractured the Cairns Group at CancZn.  The agriculture negotiations will fizzle again. The political economy of WTO mirrors the political economy of its member states. It’s an organization founded by politicians, after all, not by economists. Except in a ‘crisis’—like the aftermath of September 11, 2001 when the Members meeting at Doha put differences aside to launch the talks—WTO is a reciprocal framework (“mercantilist“, if you like, at least on the surface) where you have to ‘go along to get along’. Although a hundred economic models (for example, this one[⇒ related story]) demonstrate that the big winners from trade reform are the USA, Japan and the EU, developing countries won’t extract guaranteed agricultural market reforms from the major industrialized countries unless they are willing to participate in the reform by reducing protection in their own markets . In fact, given the increasing importance of “south-south trade(link to HTML version of World Bank staff paper on south-south agricultural trade)”: including trade in food products, developing countries as a group *will be among the biggest winners* from their own market liberalization.

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