Doha Negotiations on Wrong Track

By Dr. Gary Adams|December 30, 2009

Recent press reports from the World Trade Organization (WTO) should give not only U.S. cotton, but all of U.S. agriculture, serious concerns. Even though formal negotiations have been in somewhat of a suspended state since last year’s unsuccessful attempts by WTO Director General Pascal Lamy to broker a trade agreement, it is clear that much work is going on behind the scenes. Informal meetings, bilateral talks between key countries and technical discussions among staff are inching the negotiations further down a path from which it becomes exceedingly difficult to envision a satisfactory agreement emerging.

It is hard to believe, but the ongoing trade talks within the WTO will celebrate its 10th anniversary in the early months of 2010. The eventual outcome of these negotiations will shape the rules for how countries provide domestic support and set trade policies for agriculture, manufactured goods, services and a host of the economy’s other sectors. While the U.S. cotton industry is supportive of a comprehensive, multilateral agreement where the gains in market access are of equal ambition to the restrictions placed on domestic support, we long have been concerned that the ongoing negotiations are not moving in a direction that will produce such an agreement. Going back to the early stages of the talks, when the round officially was christened the Doha Development Agenda (DDA), it became clear that these talks were going to focus on what the United States and other developed countries could give to the developing world, regardless of what was in turn received. The round has become more about wealth redistribution, rather than wealth creation.

When the trade talks stalled in 2008, the latest draft reflecting the state of negotiations already was unbalanced to the point that U.S. farm programs would face significant restrictions, while loopholes and exemptions in market access offered no tangible gains in trade. Unfortunately, the calls for even greater concessions by the United States continue with “blue box” support, which encompasses counter-cyclical payments, being targeted for another 10% to 20% reduction. It is time to say enough is enough.

Within the broader talks, there is, of course, cotton. Cotton continues to be a focal point of the negotiations, and Director General Lamy does not miss an opportunity to reinforce this misguided emphasis, as evidenced by his September 30 address to WTO members where he declared that cotton “remains key in the DDA and is a test of the Doha Development Round.” A statement such as this simply reinforces the position of West African countries that are 1) pushing for disproportionate cuts in the U.S. cotton program, 2) ignoring their own internal problems, and 3) turning a blind eye to India and China whose governments own significant stocks while further stimulating cotton production.

As we approach 2009’s end, what does all of this mean? First, it appears that countries are becoming more entrenched in their existing positions, and if anything, moving in the wrong direction. Second, this is indeed a challenging environment for an Obama Administration that still is filling key positions within the Office of the U.S. Trade Representative. USTR Ambassador Ron Kirk made strong statements that the current text is unbalanced, with the ambition in market access falling short of the disciplines on domestic support. In addition, he has bluntly stated that it was a “horrible decision” to single out cotton in the negotiations. Now, the challenge for U.S. negotiators is to either move the negotiations in a more positive direction or hold firm that no agreement is better than a bad agreement. Currently, the trade talks are on the wrong track, but let’s hope that a train wreck is not waiting at the end.