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Rich nations shatter Doha hopes of fair trade
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By Qiao Xinsheng

After a nine-day negotiation, the crucial ministerial meeting for trade ministers from some 35 major World Trade Organization (WTO) members collapsed last week.

The meeting had been expected to be the last chance for a conclusion of the long-stalled Doha Round this year. Yet it failed to do so for the ministers were "simply not able to bridge their differences," according to WTO Director-General Pascal Lamy at a press conference.

The conflicts between the developed and the developing countries were so sharp about the agricultural trade that they became the direct reason for breakdown of the negotiation.

Before this negotiation was started, a plan was raised by WTO officials as a possible solution to agricultural trade, one of the most controversial areas in previous talks of Doha Round: Special Safeguard Mechanism (SSM) for developing countries.

When the developing countries see a surge of agricultural imports, like a quick rise of import volume over 40 percent in a given period, they could raise their import tariff to protect domestic farmers.

However, such a solution did not help the talks. The developed countries did not want to cut their agricultural subsidies while several key developing countries held that the WTO should allow developing countries to resort to more flexible protection for their own markets as well as for their domestic agricultural producers.

As a matter of fact, this negotiation was scheduled at a wrong time. Several leaders of the developed countries are close to the end of their terms. Any compromise in the Doha Round negotiations might bring them endless trouble. So their best choice is to express their positive positions without making any concrete promise in the trade talks.

The developing countries have long had a grudge about the high agricultural subsidy in the developed countries. They felt it hard to accept when the developed countries wanted a full access of agricultural produces to their markets.

Therefore, the talks were almost set to collapse before they even started.

Agricultural trade is unique. The developed countries are not necessarily more competent in their agriculture, but their prod uces become really inexpensive compared to those from the developing countries thanks to the high subsidy given to farmers out of political interests.

From the angle of trade benefits, the developing countries should have welcomed the low-priced imports of agricultural produces. But the import surge might push a large group of farmers to the edge of bankruptcy.

In short, the political choice of governments is behind the differences over agricultural trade. The agricultural subsidy in the developed countries was granted to maintain their political interests while the developing countries hold their position about agricultural market access to protect their domestic farmers.

It is the author's long-held opinion that the WTO has become too large as an organization for it always tries to settle all the trade issues through a package of trade talks. It has been proven by facts that a negotiation mechanism involving hundreds of members could hardly bear any substantial fruits.

The latest meeting was obviously organized in an effort to avoid the above predicament because it was meant to focus on the agricultural trade.

However, most developed countries are seeing an economic slowdown at this moment and it was impossible for them to write off their agricultural subsidy. So, a tariff negotiation is unlikely to settle the imbalance in agricultural trade.

In other words, agricultural trade is such an extensive issue related with the interests of so many parties that it is not to be settled smoothly even though the WTO wanted to exclude other trades from the talks this time.

Many scholars think the WTO would keep playing a key role in settling global trade conflicts for its function is irreplaceable. Certainly, we hope it could do so by balancing the trade between the West and the East and easing the disputes between the developed and the developing countries.

However, it is no more than a multilateral negotiation scheme with special functions of setting trade codes and settling disputes. It is not going to change the unreasonable order of international trade.

The developed countries are often active in pushing the WTO to revise the trade rules because they are usually big trade powers. Since the WTO only accepts the revision after most members vote for it, the developed countries could hardly gain further benefits from changing the rule to their own advantages.

It is their natural choice to establish regional trade agreements or sign free trade agreements with selected partners instead of remaining in the WTO framework.

The biggest advantage for the developing countries to become WTO members is to gain the rights of setting trade rules. Yet, it depends on the common wish of the developed and the developing countries to eliminate unreasonable rules and establish a balanced order for trade and economy around the world.

If the developed countries refuse to compromise their own interests, it will remain a dream for the developing countries to gain fair trade by revising trade codes within the WTO framework.

Many developing countries are also exploring the possibility of economic cooperation through regional arrangements. They could sign free trade agreements and set up regional trade partnerships, and through both they could realize free trade.

Therefore, it is natural for the developing countries to feel dissatisfied with the WTO framework, which could not bring them the interests and benefits that they could enjoy from regional trade partnerships.

Of course, the WTO has many jobs even after the collapse of the Doha Round. It needs to re-examine its working style and promote the negotiation based upon an analysis of the politics of major countries.

The author is a professor with Zhongnan University of Economics and Law.

(China Daily August 6, 2008)

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