Monday, April 04, 2011

Complete Doha Round demand reform states

The prime ministers of the nine of the more reform oriented states have called on the EU to do it all it can to conclude the Doha Round in 2011 which they term a 'make or break year'. The letter, entitled Getting Europe Growing is signed by the leaders of the UK, the Netherlands, Sweden and Denmark, the leading lights of the traditional reform bloc. They are joined by the Baltic states, Poland and Finland. The absence of any southern member states is significant.

WTO trade rounds have been the most effective driver for reform of the CAP because they provide an exogenous pressure which helps to overcome internal obstacles. Manufacturing and service industry interests exert pressure when they see an agreement with benefits for them jeopradised by a failure to agree on agriculture. This is what happened in the concluding phase of the Uruguay Round.

Unfortunately for the hopes of reformers the political context has changed. The current administration in the US has not given a higher priority to trade policy and is preoccupied with coming up with a political deal that can provide an agreement on the budget. The political pressure for greater liberalisation that came in the past from agribusiness interests has weakened.

Even if the US and the EU could agree on the outlines of a deal they can no longer impose it on the other participants with some side payments. Emerging countries have become powerful players and while liberalisation suits Brazil's interests, India and China want to protect their peasant populations.

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