Doha is dead

The Doha development round died a quiet death last Friday, as the negotiators at the World Trade Organization, after 10 years of discussions, could not overcome their differences by the end of April deadline. This is an unfortunate tragedy, particularly for the poor of the world, and I feel it's worth going over briefly some of the motivations for the Doha development round, and why it was such a hard sell.


Trade is always a much harder sell than aid when it comes to development. Aid versus trade discussions all too often sound like a choice between helping the poor or leaving them to fend for themselves, when in reality the issue hinges on the fact that Western trade policy is often incredibly prejudical towards the poor, and removing those distortions is usually far more effective then paying compensation, whether it be through hit or miss development assistance, or through incredibly bizarre direct payments (really really bizarre).


To simplify somewhat, the disagreement with Doha hinged on the amount of trade distoriting subsidies/tariffs/regulations countries were allowed to place on their agricultural goods. Developing countries wanted developed countries to cut their subsidies more (because developing countries farmers are dealing with a different level of poverty), and developed countries were asking for lower tariffs on technology goods. I don't want to too aggressively take sides here, as developing countries should lower their tariffs on technology, and agricultural subsidies in developed countries are &*%ing ridiculous. Mostly I just wanted to point out that the main negotiatiors had a lot to gain from the maintainance of subsidies, and after 10 years of negotiations, no one was offering very much.


While slogans such as "fair trade" have attacked the concept of free trade in food stuffs over the past decade, the main people to benefit from the variety of tariffs, subsidies, and anti-trade regulations, are big companies with a large amount of lobbying power. Subsides require lobbying to receive, and large companies are quite a bit better at doing so. In 2009, Eastern Sugar Ceska Republica was the largest recipient of EU farm subsides in the Czech Republic at EUR33 million, while the 2nd-5th largest subsidy recipients received 20 million. The largest recipient in France received a cool EUR178 million.


Tariffs are also predominantly targetted towards the things that poor people buy and poor people produce, this robs poor farmers of the opportunity to sell their goods to countries that might pay more. If they do sell their goods, most smaller companies will have been scared away by the tariffs, leaving only large agricultural combines with near monopoly pricing power. If they're lucky those companies will pay a bit extra to have their goods marked as "fair trade."


With Doha dead this process will largely continue as is. But there's already been a few rather vivid signs that the current agricultural trading system is not sustainable even over the medium term. A population boom in the middle east and Africa is creating a growing demand for food in that area, as has growing amounts of meat consumption in China and India. While America for some reason doesn't realize that ethanol is horrible. Meanwhile, increasingly severe weather due to global warming has caused an increase in food shocks. 


Several countries, particularly in Asia and the Middle East, have responded by purchasing land for agricultural growth abroad. It would be a much better world if they could just trade for it.

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