Geneva: Some blamed soybeans. Others blamed cotton.And many pointed a finger at American election-year politics.
But the collapse of negotiations to open world markets gave way on Wednesday to resignation that a shift in the global economic hierarchy had darkened the prospect of a new accord to further open markets any time soon.
“This is simply too complex,” director general of the World Trade Organization (WTO) Pascal Lamy said of the multidimensional game of chess that finally ended in stalemate.
The negotiations foundered on the right of India and other developing countries to protect critical agricultural products from competition in exchange for cutting tariffs on imported industrial goods.
Stocking up: A vegetable seller in Beijing. China has become increasingly focused on making sure its farmers can continue to produce most of the food its 1.3 billion people need and is wary of having to rely on imports. (Doug Kanter / Bloomberg)
China and India have seldom shared the same views on free trade in recent years, but they were on the same side when the talks collapsed here on Tuesday because China made an abrupt about-face, signalling it may have leavened its interest in free trade with concerns about food security.
At the same time, the US, which often made concessions to lubricate previous deals, refused to make one now.
The issue was whether China and other countries can impose tariffs on some foodstuffs. Of particular interest was soybeans, of which the US is a major exporter. US trade representative Susan C. Schwab argued that with certain measures in place, China could have increased tariffs on soybeans in eight out of every 10 years.
Critics argued that the US had forced the issue because other problems remained unresolved, including the level of US cotton subsidies. According to several American officials, Washington saw the talks as a place to resolve the issue because it had earlier lost a WTO dispute with Brazil over cotton. Other negotiators said that in an election year, the US probably never wanted to confront its farm lobby, including cotton farmers.
The recriminations grew increasingly bitter on Wednesday, as Peter Mandelson, the European negotiator, accused Schwab of refusing to budge even when her demands were met, and then going public with her grievances too quickly.
Schwab hit back by criticizing Mandelson’s negotiating tactics, and argued that the US farm lobby had been largely supportive of the Doha agenda, which aimed to give smaller and poorer developing countries greater access to consumers in the US, Europe and Japan.
During the marathon talks, Lamy sought to accommodate an array of competing interests among developed and emerging nations. His innovation was to include China, India and Brazil in a seven-member group of countries that brokered a draft text. But the breakdown in those discussions highlighted the limits of even that flexible approach.
For Celso Amorim, the Brazilian foreign minister and trade negotiator, the collapse was a sign that the nature of WTO negotiations had changed for good. “In the past, it was an EU-US business, or, maximum, the Quad,” Amorim said, referring to a group comprising the US, the European Union (EU), Canada and Japan that once shaped the direction of trade talks. “Now, it is a more complex trading system. You have to look at developing countries as a force.”
Even as the US dug in against making fresh concessions, China’s efforts to protect its own interests has tilted the playing field in a profound new way. Growing concerns in China about food security appear to have overridden the country’s previous commitment to free trade, which has given it the world’s second largest trade surplus after Germany’s in recent years.
Since joining WTO in November 2001, China has been an outspoken defender of free trade principles. It has been especially critical of the US, for example, for invoking so-called safeguard rules to prevent an increase of Chinese textile imports that threatened to put American manufacturers out of business.
But this week, China allied itself with Indian negotiators in insisting on safeguard rules for agriculture, and sought to require that developing countries be allowed to impose prohibitively high tariffs on food imports from affluent countries to halt increases in imports that might put farmers in poor countries out of business.
When the US and other food exporters refused to accept the Chinese and Indian positions, the talks broke down.
As food prices have soared worldwide in recent months, many countries with a food surplus have imposed limits on exports to retain supplies for their own populations. China has become increasingly focused on making sure that its farmers can continue to produce most of the food needed for the 1.3 billion people in that country, and leery of having to rely on imports.
China and India had long had divergent vested interests in international trade negotiations, because they joined the WTO under different circumstances and are covered by remarkably different trade rules.
The world’s major trading powers forced China to lower, or eliminate most of its trade barriers in exchange for letting it into the trade group in November 2001. China accepted this deal because its membership forced other countries to eliminate quotas and cut tariffs on Chinese exports—and these exports have been soaring ever since. Since China has relatively few trade barriers to defend, and since its exports are highly competitive in many industries, it has tended until now to favour open markets.
By contrast, India still has some of the world’s highest barriers to imports, because it was a charter member of the WTO’s predecessor in 1947 and has been able to resist lowering many protections for its industries ever since.
India’s commerce and industry minister Kamal Nath said in a recent interview that developing countries needed to be able to protect their own food supplies. “Every country must first ensure its own food security,” he said.
Nath also contended that developing countries’ farmers have too often faced unfair competition from industrialized countries—a point that China repeated this week. The US and the EU agreed to accept some limits on their farm subsidies in negotiations this week, but their reductions were much more limited than developing countries wanted.
There is a long history of countries’ endorsing free trade in manufactured goods while opposing free trade in farm products. The US and Western European nations created the current international trading system after World War II and dismantled many trade barriers for industrial products. But they did relatively little for farm trade until the completion of the Uruguay Round talks in 1993.
©2008/The New York Times