Where is the “wriggle-room”?
It helps if you can think of the negotiations as theatre. Something ritual, improvised and far too long. But not necessarily the stuff of tragedy. At this point the actors are keyed-up and tiring; alternately anxious and bored by their own lines. They’re looking for ways to bring the drama to a conclusion; probing … probing. For what? The 7 October London meting between ministers from the USA, EC, Japan, Brazil and India came, predicatbly, to not much. On the key issues of agriculture, the proposals of Europe, Japan and other highly protected industrialized countries are still too far from those of the USA, Brazil, the Cairns Group and others including many developing countries. There are other mismatches still in the mix, too. On the one hand, the G-20 demands for more concessions may not be as strong as Brazil paints them. Where is India on agricultural market access? Not a long way from Europe, probably, and hoping to take advantage of some of the ‘special product’ exemptions that the G-33 developing countries are demanding (but have not yet specified). On the other hand, the protectionist camp has its some softer edges: Japan’s new Agriculture minister is signalling some unexpected “flexibility” The anxiety in Geneva this week is leading to a public airing of the obvious: that the talks cannot be concluded at Hong Kong. Director-General Lamy is too canny to allow this to be used as an excuse for downgrading the Conference (whatever that means). Even if expectations of agreement are reduced, the demand for progress must be kept high. There is, naturally, a lot of speculation about whether Europe can move further, despite Mandelson’s insistence that he cannot move on headline market access numbers.
“Trade negotiators say privately they believe the EU does have some ‘wiggle room’ to improve its agricultural market access offer but acknowledge Brussels will need to show worthwhile gains in other areas to persuade France and its allies to give more ground on farm trade.”(FT) Where could the EC move? I have no idea whether Mandleson will change his line on the size of tariff cuts or the location of the tariff ‘bands’ on agriculture. It’s not impossible. But I think the ‘wiggle room’ has to come elsewhere first. The most obvious and desirable place is in the provisions on ‘sensitive products’ where Mandleson has indicated (but not firmly) that he wants to have the opportunity for smaller cuts in ‘up to 8 percent of tariff lines’. That’s about 180 products in which the EU proposes to cut prohibitive tariffs by 1/3 to 2/3 of the ‘headline’ rate and to expand the existing tariff quotas in those products to a very small degree, inversely proportional to the level of their current tariff protection (the AVE). This complex, restrictive cut in protection will leave most of these products (sugar, dairy, meats, some horticulture) still protected by prohibitive barriers with almost no additional imports after the agreement is implemented. A smaller proportion of ‘sensitive’ tariff lines (closer to the 2 percent proposed by others) and a simpler formula for accommodating ‘sensitivity‘—probably involving longer time-frames for implementation—that delivers bigger cuts to the most highly protected products would be the best place to make the EU ‘wiggle’. There are other adjustments that could be made in agriculture, too. The EU’s unreasonable demands on the register of Geographical Indications can be partly met. Its wholly reasonable proposals on anti-dumping should be fully met. More ominously the EC may be able to buy-off some of the pressure from Brazil (and India) on agriculture if it concedes lower ambitions for the ‘swiss’ tariff formula on NAMA. The EC and USA are currently proposing a ‘swiss-10’ formula for developed countries and a ‘swiss-15’ for developing countries. They are also aligned on their calls for an objective ‘targetting’ mechanism for liberalization of traded services. Brazil has been openly saying it would like a more ‘balanced’ approach from the EC on the cuts it is proposing for agriculture (too low) and for other sectors (too high).
Tags for this entry:
Losses all around from US-China garment deal
The beneficiaries are saying that this agreement to place new quotas on China’s exports to the USA restores market predictability. But that’s hogwash. Almost everyone except the US garment makers will loose from these restrictions, which make future trade deals less certain. It’s shortsighted, costly and likely to rebound on the USA
US consumers, who leaped at the chance to buy lower-cost Chinese garments, will loose from the new, three-year quantitative restrictions (some apparently stated in terms of square-meters of cloth). Chinese exporters will lose volume but may be somewhat compensated by higher prices in the US market.
Other exporters in Asia and Africa may have hoped to pick up what the Chinese lost will be disappointed because the higher US prices will cut back on consumption to some extent and surplus Chinese supply will depress prices in all other markets (except Europe, which has done its own wretched deal).
The US-based garment industry that failed to adjust to competitive conditions during the 10-year phase-out of the ‘old’ quotas on garment imports (finally eliminated in January this year) will get almost no benefit from an additional break of 3 years because they can’t close off access by other suppliers to the US market. The ‘screw-you’ safeguard built into China’s terms of accession to WTO don’t apply to Bangladesh or Cambodia or Vietnam. They will go on supplying US demand ahead of the domestic industry. My guess is that whatever is left of the US industry will be heading off-shore as fast as it can.
Consumers elsewhere in the world may gain temporarily from lower import prices, but they’ll lose overall because, thanks to this deal, world trade rules that are supposed to guarantee open markets will be just that little bit weaker. It turns out that the multilateral trading system is about power and pragmatism, after all.
We can be confident the Chinese have learned from this restriction (and from the earlier restrictions by Europe). The USA wants to continue to protect its market against China’s garments even after a 10-year phase-out of the old quotas, but insists that the Chinese fully implement the WTO rules on intellectual property. What the textile/garment deal says to China is: “It’s ok to be purely pragmatic about these things; when it’s inconvenient to stay the course, don’t”. China won’t need to be told twice.
Tags for this entry:
Agriculture: reading the entrails
What determines the attitude that any government takes towards the negotiation of global agricultural market liberalization? You might as well ask: “what affects the pricing of equities in the stock market?”. At any given point in the talks, the fundamentals—in this case changes in the competitiveness of agricultural production—may have less impact than sentiment; changes in the perception of competitiveness.
Take, for example, Japan. Following the Koizumi cabinet reshuffle, and the replacement of the un-reconstructed former Agriculture Minister (Iwanaga), there seems to have been some sort of change in the atmosphere, although no change in fundamentals of this tiny (< 1% of GDP) sector of the Japanese economy.
“Newly appointed farm minister Shoichi Nakagawa says Japan needs to make compromises where it can to contribute to progress in market-opening talks under the World Trade Organization.”(The Japan Times Online)
This attitude contrasts with that of France, which remains ready to throw up the barricades against the impacts of ‘globalization’ on French agriculture. But guess which economy leads world agricultural trade? Europe. That leading position is not due mostly to export subsidies at all. Only dairy, among the major export products of the EU, continues to receive substantial export subsidies and even in dairy, sales of the most valuable products (e.g. cheese) are unsubsidized now in many markets.
More alarming, still, is the story of USA commodity groups’ work to entrench massive taxpayer funded support in the next Farm Bill (2007). Bob Thompson’s paper on “The U.S. Farm Bill and the Doha Negotiations“ (.pdf file from the IPC—thanks to Ben Muse for the pointer) points out that there is a massive jump in the USDA’s projected payments under the current Farm Bill between 2004 and 2005. He argues that this funding, combined with a persistent ‘export pessimism’ on the part of U.S. commodity producers, is a bad augury for the 2007 Farm Bill—and for the Doha round.
I agree Thompson on both counts. United States commodity groups are gloomy about their export prospects in soy (Brazilian competition), dairy (problems on price competitiveness due in large part to support structures), beef (BSE problems), and some grains (exchange rates). But, look again at the chart. The USA has an outstanding agricultural export record and plenty of opportunity to expand shares of Asian and Middle-East markets, particularly for processed food products, if it can maintain price-competitive commodity supply.
Tags for this entry: trade Next week will see the first serious attempt by WTO officials and cabinet-level negotiators to draft decisions by the Hong Kong Ministerial Conference. Agriculture remains a lynch-pin: as indicated by the reports that the Five Interested Parties (FIPS) will meet in London to try to bridge differences face-to-face that they have already spelled out over video-conferences in the past week. I do not believe that they can yet bridge the gap on the ‘headline’ tariff-cut number, but there are three or four other items they need to nail down. The gap between the US/Cairns/G-20 demand that the EC lift its tariff cut offer from an average 39% to an average 54% (or more) is too big to bridge right now and I believe that neither the USA nor EC wants to force this issue … yet. One reason is that forcing the point of disagreement means a possibly mortal wound to the negotiations. Experience tells the negotiators that if you hammer home the sharpest disagreement, all you get is blood; not an agreement. But, there are at least two more reasons. Both sides know they have more time (at least until the end of the first quarter next year) and plan on using the pressure of the real last days to extract concessions; from their interlocutors, of course, but also from the intransigent groups in their own domestic lobbies. Also, they want to use that time to probe further for advances in their own objectives and concessions from the other side. The USA wants to see developing country pressure build up for more concessions from the EC. The EC could use more time to secure a substantial ‘supporting deal’ on Geographical Indications (GIs) and to pressure the USA over anti-dumping measures (both mentioned in its proposal on 29 October) and its narrow concessions on the trade of the poorest countries (the ‘least developed’). They cannot, however, let Hong Kong slip by. First, there’s too much to decide to leave everything until next May or June (my guess for the ‘last days’). There must be some interim steps taken in December. Second, there’s the credibility issue. They have the same pressure operating on them in Hong Kong as they felt post-Cancún to come up with a credible set of decisions that conveys assurance that the negotiations will conclude before they run out of time ( really out of time). There is no agreement until everything is agreed: so anything done in Hong Kong remains ad referendum to the final package. But it’s time some things were put away. My list for the ‘must do’ at Hong Kong, on agriculture at least: Three things that would be Nice To Do at Hong Kong (but will probably wait until the last minute): Tags for this entry: trade The EC Commission’s offer increases the cut in import duties in the higher ranges, offers a smaller variable cut in import duties in the lower ranges and reserves approximately 180 tariff lines for ‘sensitive’ product treatment (up to 8% of all agricultural tariff lines). The USA has called the offer ‘disappointing’; a nuanced reaction which I interpret as designed to allow the two sides to continue to wrangle—between themselves and with the G-20 and others—beyond Hong Kong. The EC has provided more detail, too, on it’s complex and restrictive proposals for handling the expansion of tariff quotas. I have modified the quick-comparison charts of the main offers to reflect the ‘headline’ numbers in the new EC offer. Click this thumb: I have also obtained the full EC proposal, which you can download as a PDF file (about 120k) here. The USA calculates that the new EC offer amounts to a 39 percent average cut in tariffs—as opposed to the 54 percent proposed by the G-20 group of developing countries—and has ‘too many strings attached’. This rejection of the EC offer is not as hard-edged as it might have been. The reaction from the spokesperson from the US Trade Representative’s office was: “From our early analysis, we are disappointed with the new EU proposal. While in some ways it is a step in the right direction and we acknowledge the EC’s efforts, much more needs to be done. First, the proposed tariff reductions are lower than proposals from the G-20 developing countries and far lower than the U.S. proposal. As concerning, the large number of exceptions for so-called sensitive products apparently has not changed from earlier EU proposals, and another element – the ‘pivot’ – actually walks back from their last proposal. Both of these elements would allow substantial loopholes to the relatively lower tariff cuts the EU has offered. If the final Doha agreement on agriculture were to go no further than this, other areas would also be weak and the Doha Round would not approach its potential for promoting development, opportunity and global economic growth.” In other words: this is better, but still not good enough. This sort of language signals that the USA wants to take this debate on through the Hong Kong Ministerial conference (of course). More analysis to follow. Tags for this entry: trade 
agriculture doha usa subsidies
Must do list for agriculture negotiations
wto agriculture doha australia protection usa subsidies negotiations anti-dumping
Europe’s revised offer on agriculture ‘inadequate’
agriculture doha usa tariffs
Page 5 of 94 pages « First < 3 4 5 6 7 > Last »
Amusing, anecdotal, accurate 