November 8, 2005
From the desk of Jane Galt:George Bush and the terrible, horrible, no good, very bad week for trade
Daniel Drezner has a good post up on the dreadful week trade is having: the FTAA is a no go, and Doha seems to be perilously close to stalling out. I was going to write about this, but why bother when Mr Drezner has done such an excellent job?
[So this is Europe's fault, right?--ed. Well, at this point the answer is yes and no. Certainly EU intransigence on agricultural matters doesn't help. On the other hand, the developing countries are now in a position where they need to make concessions as well. Consider the Indian Commerce Minister's remarks in this story by the Independent's Philip Thornton In a wide-ranging interview with The Independent, Kamal Nath lashes out at the attitude taken by rich nations in the WTO talks � especially that of Europe's trade commissioner Peter Mandelson. He appears baffled that Europe has offered to eliminate domestic subsidies and reduce tariffs � but in exchange for concessions in other areas, notably service industries and market access for industrial goods."I welcome Peter Mandelson's proposal to say he will reduce by so much but then he says 'I want my pound of flesh'," Mr Nath said. He compared Mr Mandelson to a politician seeking a knighthood simply for obeying a traffic light. "He is looking to be rewarded and rewarded for behaving as one should.
"It is a step in the right direction but it is a question of giving an inch and asking for a mile � not just asking for a foot but a mile."
On the one hand, Nath is correct in saying that the EU should liberalize its agricultural sector no matter what. On the other hand, the GATT/WTO process was designed for states to get concessions from other countries in order to gain the concessions they want. From an economic standpoint, this kind of reciprocity makes no sense (it's better for countries to unilaterally lower all their tariffs, quotas, and barriers). From a political standpoint, however, the Indians are going to have to reciprocate for the Doha round to have any meaning.
Not to pass up an opportunity to bash the French, who have been working their Gallic little hearts out to make Doha as messy as possible. But the developing world, having successfully scuttled talks at Cancun by banding together to demand real movement on agriculture, seem to have decided that intransigence will get them everything they want. It won't. Western politicians cannot afford to make concessions on agriculture without developing-world concessions on other issues to take back to their voters. Posted by Jane Galt at November 8, 2005 10:47 AM | TrackBack | Technorati inbound links"); ?>
Of course, none of this is the fault of George... after all, his negotiating went so terrifically well! All the reports of his statesmanlike behaviour in the last week have been glowing. And he campaigned on how well he 'got' South and Central America, so it must be true.
Posted by: Fishbane on November 8, 2005 12:12 PMI'm afraid that as far as trade issues go, George Bush is currently a shining example of liberalising fervor, a beacon of principled support for free trade to the rest of the world. Which is kind of like saying "I'm rich in Bulgaria", but there you are.
Posted by: Jane Galt on November 8, 2005 12:23 PMI'm not disagreeing, Jane. I'm simply pointing out that his performance was slightly less than stellar, which is disappointing.
-Fishbane, exploiting the locals and rolling in leks.
Posted by: Fishbane on November 8, 2005 1:19 PMWell, it's really impossible for any sort of negotiating to bring Hugo Chavez onside. Argentina and Brazil are absolutely refusing to cut their own agricultural tariffs at all, as mentioned, and they're taking that tactic with regards to all trade negotiations, not just FTAA. Bush has at least made a fairly generous offer, but unilateral reductions are sadly impossible through Congress.
At least we're working on a bilateral agreement with Panama, and seem likely to get that one through. Certainly bilateral agreements aren't perfect, but I've never been convinced by the various arguments that they're worse than nothing.
The developing countries anger is probably justified . The EU offer is woeful. In the July Framework agreement that re-started the Doha Round, developed countries agreed to remove export subsidies AND make 'substantial' cuts in agricultural tariffs and subsidies. The EU offer delivers about a 39 per cent average cut in tariffs but most suggest that you need cuts of above 50 per cent to have any real impact on trade flows (both because the EU's tariffs are already very high and at times are below the bound rate). Moreover, the EU's reservation of around 180 tariff lines as 'sensitive', and thus not subject to cuts, means that the EU could potentially meet their obligations by hardly lifting a finger. Hardly substantial progress.
Posted by: Matt Canavan on November 9, 2005 4:51 AMBut, WHY have free trade at all? All it does is shift jobs from the richer nations to the poorer nations. Without jobs, the people in the richer nations cannot keep on buying the stuff that made tham rich in the first place. Free trade and the outsourcing of manufacturing also reduce the ability of a nation to protect itself from external threats. I can go on, but, in general I believe that free trade is a destructive thing. And, just for all those weenie-wet liberals, I believe that the poorer nations need to raise themselves by their own efforts, just like the richer nations once did.
Posted by: RRH on November 9, 2005 4:59 PMComments are Closed.