- To help readers better understand the nuances of foreign policy, CFR staff writers and Consulting Editor Bernard Gwertzman conduct in-depth interviews with a wide range of international experts, as well as newsmakers.
The Doha round of global trade talks has foundered this year due mainly to the inability of rich states to agree on reducing protections to their agricultural sectors. Such concessions are seen as crucial to boosting the trade of farm-oriented poor states and reducing global barriers in other sectors such as services and manufacturing.
The United States has offered to cut its huge domestic support payments by an average of more than 50 percent. The European Union is proposing to cut tariffs by an average of 40 percent, but wants to protect a number of farm products deemed “sensitive.” Large developing countries have much higher farm tariffs than the United States and the European Union.
The U.S. Trade Representative’s chief agricultural negotiator, Richard T. Crowder, says trade officials are continuing “quiet” but intense talks to try to reach a deal but insists the European Union and some emerging market states will have to improve market access proposals to trigger a more generous U.S. offer. Crowder says presidential trade promotion authority will likely have to be extended by the U.S. Congress past next summer’s deadline for the Bush administration to continue the Doha round and maintain momentum on smaller free trade agreements.
There has been a flurry of talks this month on how to move the Doha trade round forward but the same issues—European Union market access and U.S. agricultural subsidies—continue to block movement. What are the chances of a breakthrough as the clock ticks down?
Well, I have not been one to try to put deadlines or timelines for any of these negotiations. We’ve had a lot of deadlines this year and we’ve had a lot of timelines that we have not met. My feeling is, as I’ve said in a couple of speeches recently, we will have an agreement, it’s not a question of if, but when. I lived through the Uruguay Round when we had the breakdown in Heysel [Belgium] in 1990 and there was a lot of hand-wringing at that time. But at the end of the day we had an agreement [in 1994], which included for the first time tariffication [rules making agricultural market access conditions more transparent and competitive], and discipline on agricultural export subsidies.
But there is a timeline, which is the expiration of U.S. presidential trade promotion authority [next summer]. Under the current term, you’re really up against the wall—and the U.S. needs this authority to be really engaged in Doha—so that’s something that’s driving it I would imagine. How much do you feel the pressure from that?
There are two issues, with respect to time on this. One is trade promotion authority [(TPA)] but we’ve been up against that since July when we didn’t reach an agreement on modalities [on liberalizing farm trade]. It’s going to be difficult to make it now even if we reached an agreement in the next couple of months. The other concern here is if we lose momentum in terms of the negotiations. We have entered a significant phase—and you can use that term for most any part of this—but right now there’s a lot of quiet discussions and technical work going on among a lot of countries in a quieter context than what we had during the first half of this year leading up to July and it’s important that we maintain the intensity of that as we go forward. And with respect to TPA, we need TPA extended in any case. We’ve got FTAs [Free Trade Agreements] we want to finish, obviously, the Doha round and so forth, so I would still say we need to just keep the intensity up, keep the momentum up and bring it to a conclusion but not setting an artificial date right now would be my opinion on it.
You mentioned the bilateral agreements and the FTAs. Some economists have said the momentum of those might be the thing that actually boosts the efforts to extend TPA even more so than the need to conclude Doha successfully.
The FTAs are important to us as we have noted in a couple of talks that we have done recently but we really need a multilateral agreement. That’s where we get the rules-based trading system globally and we need that. Maybe I’m a little bit idealistic and so forth but my basic belief is that if we as trade negotiators do the right thing in terms of negotiating agreements and bringing the right agreements home, Congress will do the right thing and give us TPA authority.
Looking at it from the outside it just seems so intractable. You have two major blocs with these very important constituencies that are pressing them. Obviously the European Union and the United States have tremendous domestic pressure that could constrain any sort of flexibility. How do you deal with this very strong domestic lobby?
The differences we have are significant. They are significant more on the market access side than anywhere else. What we have to do as trade negotiators for the United States is bring home an agreement that would have meaningful market access, in other words increases in trade flows, and I think our counterparts in other parts of the world want the same thing out of an agreement. There’s just some real hard negotiating ahead as there has been in the past and hopefully we will be able to bridge the differences. But I don’t want to underestimate those differences now despite my optimism.
On the issue of domestic pressures, Congressman James Kolbe (R-AZ) recently wrote in the Washington Post that one impact of continued high U.S. farm subsidies would be undermining the ability of developing nations to trade. How do you respond to that?
If I recall correctly, the World Bank made a study (PDF) that said the welfare gains from removing trade distortions to agriculture trade globally, of [those gains] 93 percent would come from reducing import tariffs, 2 percent would come from reducing exports subsidies, and 5 percent of the gains would be due to domestic support, so I go back to the point I made earlier that what we’d really have to have for this to be the most meaningful is to have real increases in market access. We also have to recall that we have—and it was made a year ago—a really significant and bold proposal (PDF) on both domestic support and market access already on the table.
There has been a sort of underwhelming response to that from the European Union, from Japan, and from other states that are crucial to this process. Is that just for show or are you hearing on the lower-level talks they are excited by the offer?
First of all, Japan has never been one that wants to open up markets. They’re pretty protectionist when it comes to their agriculture and the Europeans are of a similar vein. But there’s no question that the European Union, Japan, and others would like to see us improve our offer on domestic support. We’ve said that for any modification of that offer, we’re going to have to see meaningful market access, and we’ve not seen it yet. The thing that we do not intend to do is negotiate with ourselves in terms of putting more on the table and having it pocketed and not seeing any market access. We’ve got to see some market access cards before we move.
Could you cite an example of a meaningful market access card that would be laid out by them?
I could but I won’t because I will save that for these negotiations that we’re going to have.
What do you see as the role of China in this round and could it be more constructive?
China is obviously an important member of the [World Trade Organization]. We benefit from having China as a member of the WTO and vice versa and it’s important that all such major players play as big a role as possible. And we’ve encouraged the Chinese to do so.
Has that encouragement stepped up recently? Some observers have said they have been out of this far too long and you really need to hear from China to get things moving on the developing country front.
We would like to see China be more vocal than they are and try harder to move this process because they would be a big beneficiary of the Doha round.
Does it seem like the U.S. Congress and EU member states may be growing more frightened of the effects of globalization than enthusiastic about its possibilities?
I don’t think frightened is a good word to use in that case. I do think it is harder to sell trade agreements now than it was, for example, at the time when we were negotiating the Uruguay Round. But I will also tell you in the case of agriculture, when you bring home a good agreement, the agriculture community is leading the charge. If you look at what happened in the [Central American Free Trade Agreement] efforts, agriculture was right there. The agreements that we have announced recently with Peru and with Colombia, the agricultural community has been very supportive and will be very supportive going right through the process. So again I go back to a related point I made earlier about doing the right thing, you’ll get the support. So we’ve had a lot of support from the agricultural community on the agreements we’ve been bringing home.
There have been a steady series of these FTAs and a lot of them relatively small at this point. What about launching them with some of the bigger bilateral partners like Brazil and India, especially if Doha does not work out?
Rather than adding different ones now, we’re going to focus on the ones that we’ve got. We’ve got [South] Korea to finish, we’ve got Malaysia to finish, and we’ve got Thailand in the queue and that’s where our focus is going to be right now.
EU Trade Commissioner Peter Mandelson recently told reporters it doesn’t make sense to get into serious negotiations with Washington until congressional elections are held in November. Your response to that?
My response to that is the same as [U.S. Trade Representative Susan C.] Schwab has repeatedly said to the press, that our position after the election is not going to be different than it is before the election.