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Too Big A Price


By Mark Lange
NCC President/CEO

The recent collapse of the World Trade Organization Doha Round talks was due, in large part, to the fact that there was no guarantee of increased trade flow for U.S. agriculture.

What was on the table?

Senior trade ministers from more than 30 WTO member countries tried to develop final negotiating texts or modalities for the Doha Round of trade negotiations. Basically, the agricultural text would have allowed several emerging developing countries, including India and China, to raise tariff rates above the current Uruguay Agreement bound rates under the special safeguard mechanism. Simultaneously, U.S. agriculture was facing a definite reduction in domestic government support. Further, wide differences also were evident in the proposals for treatment of special and sensitive products, and the United States pushed China, unsuccessfully, for meaningful commitments on market access for agriculture.

The U.S. negotiating team, which included U.S. Trade Representative Susan Schwab, USDA Deputy Undersecretary Dr. Mark Keenum and USDA Chief Economist Dr. Joseph Glauber, declared other countries had shown commitment to the Doha Round objectives, but when India and China refused to move, the talks stalemated. Fortunately, the U.S. team repeatedly stated that the gains in agricultural trade realized in the 1994 Uruguay Round would not be lost by actions taken in the Doha Round and that a successful negotiation must result in increased trade flows for U.S. agriculture.

What does the future hold?

Over the next 20 years, the world’s marketplace action will be in trade among and between developing countries and developed countries. However, the current Doha agriculture negotiating text just does not get U.S. agriculture to a point where it can be assured of basic competitiveness in the global marketplace – a fact I emphasized to the U.S. negotiating team while in Geneva. The current market access text for developing countries centers on what is known as “special products.” For example, India would have had to trim the tariff on imported agricultural products by 10 percent to 90 percent. However, even now India’s duties rarely exceed 60 percent. So, where’s the concession? Basically, the tariff flexibility created in this proposal is so loose – you can bet there would be no change in the existing trade flows. On the other hand, U.S. agriculture was being asked to give up $11.6 billion in government support. That tradeoff was unacceptable. Specifically, the current negotiating text could mean stagnant U.S. cotton export growth – on top of significantly curtailed government support.

At the time this column was being submitted in mid-August, WTO Director General Lamy was planning to visit India and the United States in an effort to restart WTO negotiations and seek ideas on how to “preserve the gains made at the July 21-29 ministerial meeting in Geneva.” Unfortunately, the wide chasm between developed and non-developed countries’ needs does not bode well for a successful jump-start, much less a conclusion, to the Doha Round.

Mark Lange is president and chief executive officer for the National Cotton Council of America. He and other NCC leaders contribute columns on this page.

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