Doha failure a cause for concern on global economy

by Morton Sosland
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No industry had more to gain from successful completion of the Doha Round of trade negotiations under the World Trade Organization than the global food business. The reverse of this is also sadly the case that no industry stands to lose more as the result of the failure of these talks in the way of potential trade expansion and liberalization than this same industry. From the post-World War II start of pacts that have brought rules regarding trade under an international body, it is the food industry, reflecting its importance to every national economy and the immensity of its volume that has been the linchpin of negotiations. Yes, the results have not always been what all the parties might have wanted or even found acceptable, but, on balance, the capture of these rules first under the General Agreement on Tariffs and Trade and more recently the W.T.O. has given great substance to global advances.

While every one of the positive changes in how production and marketing are supported by respective governments should not be credited to the multilateral negotiations that define each round, these agreements have stamped global acceptance in a truly effective manner. Writing finis to programs like acreage allotments and marketing quotas, high support prices for individual crops, huge government-owned inventories, aggressive export subsidization and various bits of chicanery aimed at gaining unfair advantage in international trade provide a list of what the food industry no longer must deal with, in large part due to the substance of prior trade agreements. Any familiarity with how these abandoned programs stood in the way not just of national but international progress should have prompted enthusiastic backing for concluding the now-failed Doha Round. Of all the disappointments in trade talks, none matches this sad result. This is particularly so as a growing number of food manufacturers look beyond national borders to achieve growth.

The few "so what’s?" voiced in response to the Doha Round collapse belie just how large the loss is. Pascal Lamy, the W.T.O. director-general, set this out when he said, "I had hoped to tell you that tariff peaks on industrial products of interest for developing countries had been slashed, that least developed countries would consolidate duty-free and quota-free access in the W.T.O., that export support in the form of subsidies, state trading enterprises, export credits or food aid had been removed."

Once more, this is a list that includes changes that might not have been universally pleasing for the entire food industry. Yet, like all such negotiations in the past, the advances would have outweighed the negatives, contributing significantly to expansion of global trade, while spurring economic advances that are important to industry strength.

Without passing judgment on the level of support that was forthcoming from the food industry in the major developed countries, it is probable that the Doha Round’s emphasis on improving the lot of least developed people might have prompted some lessening of advocacy. That possibility lurked behind the positions taken by trade negotiators of the United States and European Union. All too often, they were guided by domestic political strategies that were sharply different from what multilateral negotiations required. While the views expressed by American presidential candidates do not represent the trade-opening positions of the Bush and prior administrations, negotiations about trade seem to have a life of their own and even a supernatural power that favors revival, overcoming the most terrible of situations like the present. Seven years of talks may have come to naught in the Doha Round. But all hope must not be abandoned. This is particularly the case for the food industry, which is best served by asserting that many of the current economic problems are due, not to the failures of trade, but to the shortfalls of previous steps to eliminate barriers to open and, yes, free trade.

This article can also be found in the digital edition of Food Business News, August 5, 2008, starting on Page 9. Click here to search that archive.

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