The $100 Billion Question
Agricultural liberalization is the keystone of the World Trade Organizations (WTO) Doha round. Yet progress on this front has ground to a haltwith members missing a deadline in March 2003 for agreement on the way forward for agricultural trade and putting off further debate until another meeting in Mexico in September later this year. At ...
Agricultural liberalization is the keystone of the World Trade Organizations (WTO) Doha round. Yet progress on this front has ground to a haltwith members missing a deadline in March 2003 for agreement on the way forward for agricultural trade and putting off further debate until another meeting in Mexico in September later this year. At the heart of this failure was an initial draft, published in February 2003 by WTO agricultural negotiations leader Stuart Harbinson, that laid out new rules and concessions on farm trade. The United States and other big agricultural exporters rejected the draft for not liberalizing trade enough; but the European Union (EU) and Japan, who are still keen on tariffs, rejected the draft for the opposite reason.
Agricultural liberalization is the keystone of the World Trade Organizations (WTO) Doha round. Yet progress on this front has ground to a haltwith members missing a deadline in March 2003 for agreement on the way forward for agricultural trade and putting off further debate until another meeting in Mexico in September later this year. At the heart of this failure was an initial draft, published in February 2003 by WTO agricultural negotiations leader Stuart Harbinson, that laid out new rules and concessions on farm trade. The United States and other big agricultural exporters rejected the draft for not liberalizing trade enough; but the European Union (EU) and Japan, who are still keen on tariffs, rejected the draft for the opposite reason.
Christian Bjov from the Aarhus School of Business and Kim Martin Lind from the Danish Research Institute of Food Economics took Harbinsons framework of concessions and calculated what their effect would have been on each member of the WTO. (See Note on the Harbinson Draft on Modalities in the WTO Agriculture Negotiations.) They conclude that this plan would have produced global welfare gains of $100 billion over the next decade. Ironically, the biggest winner would have been the most intransigent negotiator, the EU, with gains of more than $25 billion. [See chart below.]
Free agricultural trade, Lind and Bjov argue, would lead to lower food prices for consumers and a reduction in tax burdens. Moreover, in the absence of subsidies, the global agriculture industry would become more efficient as production shifted to the most competitive producers. The authors note that Harbinsons proposal benefits EU consumers and taxpayers so much that the EU could afford to hand out cash compensations to developing countries such as Tanzania or Malawi, who would have seen the prices of their exports of farm goods plummet. Whos to blame for the failure to reach agreement? Notes Lind: I hate to say it, but the really bad guy is again France, which together with Greece has been blocking further agricultural liberalization within the EU.
More from Foreign Policy
Saudi-Iranian Détente Is a Wake-Up Call for America
The peace plan is a big deal—and it’s no accident that China brokered it.
The U.S.-Israel Relationship No Longer Makes Sense
If Israel and its supporters want the country to continue receiving U.S. largesse, they will need to come up with a new narrative.
Putin Is Trapped in the Sunk-Cost Fallacy of War
Moscow is grasping for meaning in a meaningless invasion.
How China’s Saudi-Iran Deal Can Serve U.S. Interests
And why there’s less to Beijing’s diplomatic breakthrough than meets the eye.
Sign up for Morning Brief
Foreign Policy’s flagship daily newsletter with what’s coming up around the world today. Delivered weekdays.
By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.
