Noticias
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de la OCA
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A Reuters news article from Friday (via DTN, link requires subscription) reported that, “Domestic producers are waiting for a trade court ruling this month amid charges by anti-poverty groups that U.S. subsidies bankrupt farmers in developing countries by distorting market prices."
The article noted that, “But a World Trade Organization panel is expected to decide by July 20 whether the United States, which accounts for 40 percent of world cotton exports, has done enough to reform government cotton subsidies after an earlier ruling found the supports depress prices for foreign producers."
More specifically, the article pointed out that, “At issue now are two remaining programs: marketing loans and counter-cyclical payments, price supports that are a bulwark for crops from cotton to corn to soybeans.
“Gary Adams, an economist with the National Cotton Council, said last month that the U.S. industry has been ‘worried throughout the process,’ but believes the United States has done enough to comply with the WTO’s earlier ruling.
“Dan Sumner, a University of California-Davis academic who provided advice to Brazil in its case, believes U.S. subsidies, largely the two price-support programs under scrutiny, depress world prices by 10 to 15 percent."
With respect to potential consequences of the anticipated WTO ruling on the case, the Reuters article explained that, “The decision later this month will be an interim ruling, which may not be made public until the two countries have a chance to comment.
“But if the panel’s final decision supports Brazil, and the United States takes no action, Brazil will be authorized to apply trade sanctions."
Meanwhile, a separate Reuters news item from Friday indicated that, “Indian Commerce Minister Kamal Nath said on Friday he believed it was ‘still possible’ to clinch a World Trade Organisation (WTO) accord in 2007 despite recent setbacks.
“‘Of course we can do it. We are still committed to the end of the year. It is still possible,’ he told reporters in Geneva after speaking to Brazilian Foreign Minister Celso Amorim, who is participating in developing-nation meetings at WTO headquarters.
“Nath said he would meet European Trade Commissioner Peter Mandelson in London on Saturday ‘to try to move this forward’, referring to the Doha round of talks, which were launched in the Qatari capital in 2001 with the aim of boosting global trade flows and helping poorer nations export more."
In editorial perspective regarding the Doha round, Jagdish Bhagwati and Arvind Panagariya opined in Saturday’s Wall Street Journal that, “The WTO talks between the G-4 nations — Brazil, India, the United States and the European Union — have collapsed yet again. This time, the only surprising twist was that U.S. Trade Representative Susan Schwab put the blame primarily on India and secondarily on Brazil.
“In truth, the breakdown of the Doha Round in Potsdam, Germany, had less to do with India and Brazil’s protectionism than with the U.S.’s paralyzing inability to respond to long-standing, world-wide demands for the reduction of its (and the EU’s) agricultural subsidies. Until we confront this central fact, success will remain beyond our grasp."
The authors stated that, “With its strong farm lobby, the U.S. could not permit meaningful reduction in its substantial subsidies simply in exchange for concessions in manufactures and services; it sought ‘sectoral reciprocity’ in agriculture itself. It’s not hard to see why the situation was unacceptable to India and Brazil. At Potsdam, Ms. Schwab refused to offer any real concessions on U.S. agricultural subsidies, while at the same time insisting that the poorer countries offer more. Even as the G-4 talks were in progress at Potsdam late last month, the agriculture subcommittee of the U.S. House of Representatives voted to retain the subsidy portion of the 2002 Farm Bill for another five years.
“Ms. Schwab cannot ignore that it is politically impossible for a democratic, developing country such as India to persuade the public that its farmers, often at the margin of subsistence, should agree to competition from rich-country farmers who enjoy heavy subsidies. Furthermore, contrary to what U.S. officials might like to believe, India is hardly a protectionist spoiler that refuses to make concessions on manufactures and services."
Near the editorial’s conclusion, the authors noted that, “Instead of scapegoating and bluster, Ms. Schwab can choose options to help push Doha forward. Her problem is that currently there is no political support from either party in the U.S. for reducing agricultural subsidies. The Democrats are salivating to take the White House; the Republicans are terrified that they will lose it. Neither will risk the farm belt’s vote.
“There is one politically viable solution: Take the estimated $20 billion worth of these production-distorting subsidies and turn, for example, two-thirds into nondistorting ones — unlinked from production levels and given instead, for instance, to farmers for environmental purposes, today’s popular issue. That worked in far more protectionist Europe; let us try it here."