The trade round that began in Doha, Qatar, was supposed to in effect end in Hong Kong this week. The ministerial summit had been held up as the venue for working out the nuts and bolts of a global trade deal. The finger-pointing of the last few days is one indication that the predictions and hopes for Hong Kong were optimistic.
EU officials have been notably defensive in and leading up to the Hong Kong summit — and for good reason. Thanks in part to the no-nonsense diplomacy of U.S. Trade Representative Rob Portman, it has become increasingly clear that the European Union is chiefly responsible for the deadlock in the trade round. Mr. Portman has not been timid about putting the onus where it belongs — on EU farm subsidies.
In an Op-Ed for the New York Times on Tuesday, EU trade chief Peter Mandelson thrashed around looking for other potential culprits for the stall in the round. The EU “has made significant concessions on agriculture on several occasions …While the United States was busy increasing its farm subsidies last year, we broke a taboo by offering to end all our agricultural export subsidies if others would match us in their comparable programs,” he said. From his patrician perch, Mr. Mandelson even chastised WTO countries for trying to negotiate freer global trade last week. The round has been “reduced to a crude haggling over market access,” said Mr. Mandelson, paradoxically enough for a trade chief. Imagine, WTO countries trying to bolster market access during trade negotiations.
Even Joseph Stiglitz, who is closely aligned with EU economic policy on a number of fronts, and Andrew Charlton, of the London School of Economics, called Mr. Mandelson to account in a Tuesday Op-Ed for the Financial Times. It is “misguided” for EU officials to “present European agricultural liberalization as a [trade] concession to the developing countries,” they said. The union’s agricultural policy, they said, “is an unsustainable system that cheats European taxpayers and consumers and is running foul of Europe’s expansion and reform agendas.”
Brazilian Foreign Minister Celso Amorim, who has served as a spokesman for all developing nations, similarly said the summit in Hong Kong will be successful only if the EU sets a date to end export subsidies to farmers, a policy that depresses global food prices and hurts farmers in poor countries. The United States and Group of 20 developing nations have agreed that all subsidies should end by 2010, but the European Union remains the holdout in that area, refusing to agree to an end date for farm supports.
The Hong Kong summit will more than likely end with little more than a face-saving agreement, under which rich countries financially support the export capacity of poor countries. Such aid could be constructive for the developing world, but does not bring World Trade Organization members any closer to a global trade deal, which is the purpose of the ongoing round. If Europe were ever to strike a more constructive position on farm subsidies and tariffs, U.S. sensitivities on textile trade and cotton subsidies would come into sharper focus, requiring U.S. flexibility in those areas.