Sunday, January 28, 2007

Farm trade deal faces many hurdles

Talks on the resumption of the stalled Doha Round took place in the margins of the World Economic Forum at Davos, Switzerland during the past week, but many hurdles remain to be overcome before an acceptable farm trade deal can be sketched out. Such negotiations are necessarily complex, even arcane, but the essential elements are as follows:

1. Can the EU and US reach an accommodation of their mutual differences? Probably yes, with the EU willing to give some ground on market access and the US willing to concede on domestic subsidies. The notion of 'sensitive' products also gives room for fudges and compromise.
2. Can they sell such a deal to their own constituencies? Much more difficult. In the US, there is a Democratic, more protectionist Congress. Attempts have been made by the White House to square the Colin Peterson, the influential chairman of the House Agriculture Committee, but they may not work, particularly in terms of the renewal of trade protection authority. In Europe, France has presidential and parliamentary elections coming up and already thinks the EU has gone too far in its concessions. The poor state of Franco-German relations leaves Angela Merkel little scope to broker a deal.
3. Can the leading developing countries be brought along? This remains a major difficulty, although Brazil and India have been trying to broker a common position. The real problem is between the US and the emerging countries. The Americans want substantial access to their consumer markets. They are looking for any agreement on farm trade to be offset by reciprocal concessions by Brazil and India on lowering barriers to trade in industrial goods and services. This remains politically difficult.

The recent talks have sought to grapple with the core issues, but the political difficulties remain considerable and there is not much time.

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