Wednesday, July 26, 2006

'Yo liars' claim as Doha blame game gets under way

Rookie US Trade Representative Susan Schawb has effectively accused the EU of lying as the blame game for the collapse of the Doha Round gets under way. The US has been taking a lot of the heat and no doubt the search for someone to blame makes the participants in the failed talks feel better but it does little for the future growth of the world economy or fairer trade.

Ms Schwab said that the US had so far 'refrained from responding to the finger-pointing by some' but she said the EU's claim that the US had doomed the talks by failing to show flexibility in negotiations was 'false and misleading' and made with the intention of 'attempting to divert blame for the stalemate.'

Attention is now focusing on the US farm bill due to expire next year which has provided considerable aid to large-scale farmers. Three-quarters of the subsidies have gone to growers of rice, corn, wheat, soyabeans and cotton. One idea that is being floated around Congress is to extend for one year both the current spending arrangements under the farm bill and fast-track authority.

The EU is certainly not blameless in all this as its stance was weakened by the rebellion of agrarian states led by France, leading to a relatively weak, if cleverly presented, tariff cutting offer. Emerging countries like India have also been running scared of the electoral damage that can be done by their poorer farmers.

As Susan Sechler, US director for trade and development at the German Marshall Fund of the United States (a think tank) commented, 'It used to be that first you got a deal at the WTO and then used it to discipline domestic agricultural spending. That doesn't work any more, partly because developing countries in the WTO won't accept a post-dated cheque.'

At the heart of all this is the changing economic structure of power in the world. Relations between the EU and the US have become increasingly tense over a range of issues, not just economic ones. But even if they wanted to function as a duopoly resolving their own disputes at the expense of others, they couldn't do so because too much influence has passed to the emerging countries. That is why the G7/8 is largely an irrelevance and we need a G4 of the US, EU, China and Japan, with some involvement from medium-sized powers like Brazil.

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