1 This was the conditional offer made on 28 October 2005.
Should we be expecting a revival of the Doha round in the short or medium term?
While any resumption in the short term is jeopardized by the mid-term elections in the US, we have to assume that, in the longer term, conditions for such a possibility are far from being united.
This is all the more true because "the agricultural precondition" no longer stands, since the potential benefits anticipated from totally liberalizing international agricultural trade are increasingly doubtful: the number of surveys which relativise the benefits generated are increasing, and it seems that the Doha round, having encountered problems associated with the intransigence of the US, is underlining the fact that it is not willing to abandon its position in order to prioritise development of the poorest countries.
This was according to French National Assembly Member Alain Marleix in his "
Information report on Franco-US relations " of 5 July 2006, from which the following extracts derive.
Benefits to be strongly relativised for the least developed countries (page 8 of report)
"What would be the consequences of liberalizing international trade, particularly with regard to agriculture, for developing countries?
The erosion of preferences which would result from lowering customs duties multilaterally will diminish the advantage given by developed countries to the least developed countries with regard to their trade preference mechanisms.
A recent survey undertaken by the World Bank referred to its first evaluations relating to agricultural liberalization and demonstrated that totally cutting back customs duties for European countries would give rise to annual losses of 460 million dollars for Africa’s least developed countries.
If all OECD countries abolished their customs duties, African countries would stand to lose 110 million dollars, while all of the least developed countries as a whole would lose 266 million dollars. The IMF, meanwhile, has estimated that lowering customs duties by 40% for developed countries would lead to an erosion of preferences worth 530 million dollars for middle-income countries (Mauritius for its sugar exports to the European Union, St Lucia for its banana exports, Belize, St Kitts and Nevis, Guyana and Fiji).
Econometric surveys are also revising benefits derived from the conclusion of the Doha round downwards, and show that Africa may lose out from this round.
The World Bank’s most recent survey therefore demonstrates significant uncertainty with regard to evaluating the welfare anticipated from the round, varying from 96 billion dollars in the case of a credible scenario involving partial liberalization, to 290 billion dollars annually at the very most between now and 2015, only 30% of which would be for developing countries (these will essentially comprise Brazil, Argentina and Thailand). The countries which have been identified as losing out in the short term are the entire continent of Africa, Bangladesh, Vietnam, Mexico and the Middle East.
Other surveys, in particular those by UNCTAD and CEPII, anticipate lower levels of welfare for developing countries caused by the erosion of rate preferences and higher food prices (due to the lower subsidies for agricultural exports), in particular among net food importing countries, and by the lack of ability to adapt among the poorest countries.
Agricultural liberalization is therefore not a condition sine qua non for development. It will increase instability in relation to world currencies because of the inflexible nature of production choices year-on-year and because of the very low price elasticity of agricultural produce. Volatile currencies will make long-term choices with regard to agricultural policy and investment profitability difficult for developing countries. In addition, currency instability will lead to unstable incomes for producers from these countries, these already being the most vulnerable because of their poverty. The disastrous effect of the current slump in world cotton prices on sub-saharan Africa attests to this.
This is why even emerging countries such as India, where millions of farmers are living on subsistence farming, are hostile to tariff liberalization and are demanding their right to food sovereignty.
It is therefore to be deplored that WTO negotiations within the framework of the Doha round are nowadays nothing more than a pretext for trading "jousts", particularly between the European Union and the United States. To a large extent an objective with regard to development has been forgotten, while regional trade agreements, in particular bilateral preferential agreements such as those concluded by the European Union with ACP countries, have the ability to improve prospects for a speedy reduction in poverty. It should therefore be stressed that the least developed countries account for 3.2% of agricultural imports of the European Union, compared with only 0.7% of those of the US, which is five times less.
It is therefore highly desirable to refocus the round on its main objective, and to deal bilaterally with sensitive questions, with particular regard to agriculture, which are not of determining multilateral interest, in particular for poor countries."
Incompatible negotiating positions which leave little room for reviving the Doha round in its present state (pages 9 to 13 of report)
"The WTO negotiations concern 149 countries and several groups of countries have differing interests which they wish to defend. […] The positions of France, via the European Union, and of the United States, are currently incompatible within this environment, considering, in particular, the bluff which made up the United States’ last agriculture proposal placed on the negotiating table. This originated in October 2005 and has, since then, not been modified, despite strong pressure from other states.
The United States put forward a conditional offer with regard to the agricultural question before the ministerial meeting in Hong Kong in December 2005. […]. This agricultural proposal, which enables a 53% reduction in total trade-distorting support to be demonstrated, is very skilful, since it imposes in practice no new constraints on instruments of US agricultural policy. Moreover, the proposals for aid reduction concerned only overall figures, without any commitment to an upper limit of support according to product.
The conditionality of the US offer with extremely ambitious results in respect of market access has been strongly put forward. It may enable the US to retrace its steps by showing itself in the best light during negotiations. In the meantime, it remains a trap proposal for the European Union, which made it a condition of its own offer with regard to access to its domestic market that domestic support within the US be reduced. The EU is therefore under very strong pressure to put forward an improved offer with regard to market access although it no longer has any room for manoeuvre. Reducing the number of sensitive products able to benefit from protection against raised rates will again, in particular, call into question the very existence of various procedures in Europe. A target of at least 8% of tariff lines1 is imperative to the survival of European agriculture, while Congress may well reject an agreement beyond 5% of agricultural produce.
Farmers in the US are not really motivated by the Doha round. Many of them do not want an agreement (in the cotton and sugar industries, as well as in other major ones within the farming industry, which see bioenergies as offering much more certain and lucrative prospects than competition with the southern hemisphere in foreign markets). This is why the Administration is explaining to farmers that the WTO will open up foreign markets to them, without changing their situation.
In order to obtain a WTO agreement which is acceptable to the US, it is therefore not a matter of losing a little on agriculture and gaining in industrial goods and services. Agriculture in the US has to benefit from the Doha round since Congress will not be in a position to back a trade agreement without the support of its farmers. The farming lobby in the US therefore requires tangible results with regard to eliminating European export subsidies and to market access, without further concessions relating to US domestic support, or to food aid or protected geographical areas.
In Europe, the reasoning is diametrically opposed: the Commission tends towards explaining to our farmers that the European Union must import agricultural produce and that they must "make a sacrifice" for other sectors of the economy. This is snapping one’s fingers at the historical and demographic importance of agriculture in Europe, which is much more pronounced than in the United States.
This position is unacceptable, since it places us in a position of domination by the US, although we have the means, the capacity and the will to compete on equal terms with them on the global markets, while respecting competition rules.
France supports the position, often against the Commission, and along with more than ten or so member States, which rightly considers that agriculture cannot give in to profits and losses in current negotiations. A WTO agreement is therefore justly undesirable if such an agreement is only made at the expense of European agriculture, using a fool’s bargain which, in short, benefits the US as much as it benefits the few developing countries which are net exporters of agricultural produce, in particular Brazil.
With regard to a timetable, the US is also exerting pressure on its partners, since expiry of the conclusion of the current round would, in fact, only be answerable to internal expiry dates within the US. It is because of the internal balance of powers between Congress and the Administration that the Doha round would need to be completed by the end of 2006 or the beginning of 2007 at the latest, given the technical constraints before expiry, in July 2007, of the trade promotion authority (TPA)2 . The political cost of temporarily extending the TPA would be such that it would only be justified if a result which was very favourable to the US were within reach.
The existence of an expiry date certainly makes it possible to force a conclusion to an agreement which has reached maturity, but negotiating with a knife at your throat has never been a means of reaching an agreement which is acceptable to all, within a framework that is still governed by unanimity.
In this context of closely argued and time-constrained negotiation, the interplay of alliances between countries is in full swing. For the US, the aim is still to isolate France, both within the European Union and in relation to other WTO partners.
[…] It is a dishonest policy, since the US is well aware that agriculture on both sides of the Atlantic has to take up the same challenges in future, and can therefore not unilaterally "disarm" their agricultural policies. We must, on the contrary, give ourselves the means to adapt our agriculture to both technical and society-based developments."
2 This authorisation for the promotion of trade, also known as fast track, enables the US President to negotiate without formally consulting Congress, which has only to approve (or reject) outright the signed agreement without being able to amend it. Without this procedure, no international trade negotiations can take place.