Farm trade. To Doha’s rescue

Date: 15/10/05

America's offer should boost the Doha trade round--if Japan and Europe respond in kind

IT HAS been an awfully long time coming--but then the trouble with rounds of trade-liberalisation talks is that there are no real deadlines. Even so, the offer this week of cuts in farm protection by America's trade representative, Rob Portman, promises to jolt the current Doha round of trade talks out of their slumbers. It won't guarantee success at the next big ministerial meeting in the World Trade Organisation (WTO), in Hong Kong in December. But as a clear statement that America is serious about achieving an agreement over farm trade, following months during which American minds seemed to be focused elsewhere, Mr Portman's offer has suddenly made it plausible that the round could be completed during 2006--as long as the other rich-country farm protectionists, Japan and the European Union, produce comparable proposals. Which they must, if they really want to keep the WTO healthy and to prevent a revolt against freer trade.

The initial response from Japan--that America's offer changed nothing--was not encouraging. But that may merely be the reflexive action of trade negotiators who have not yet felt the effect of Japan's dramatic general election on September 11th, in which the balance of the ruling Liberal Democratic Party shifted decisively away from rural parliamentarians to urban ones, weakening the farm lobby's power. The European Union's response was more nuanced, showing some flexibility but not as much as Mr Portman called for. That may well reflect the EU's decision-making structure, however: Peter Mandelson, the European commissioner for trade, needs approval from national governments if he is to go as far as his American counterpart has demanded. Securing that, with the French government feeling vulnerable and the German one not yet formed, will take time.

But it must be done. Everyone knows that farm protection in Europe, America and Japan is a costly throwback to the past, one that does great damage to the rich countries' relationship with the poorer world, especially in Africa, and that by raising prices acts as a tax on ordinary consumers. Dismantling subsidy systems and cutting farm tariffs is not easy, given farmers' well-honed political tactics and many countries' sentimental attachment to the idea of food security. Like all disarmament negotiations, however, it is made easier if all the great powers are willing to lay down some of their arms.

America's proposal is a serious step in that direction. It is not quite as dramatic as it seems (see page 96): the 60% reduction offered in the most trade-distorting support disguises some transfers to other forms of subsidy, and the cuts pledged in spending are from allowable ceilings rather than actual sums being spent. But the point is that the proposal is large enough to send a strong signal. As long as other rich countries--and the developing world--play their parts, Doha is not dead--thank goodness.

Editorial says that America's farm trade reform offer should boost the Doha trade round - if Japan and the EU will respond in kind