Chances of World Trade Organization negotiators reaching an agreement by summer may be slim, but talks go on and continue to influence U.S. farm bill debates.
The primary goal of those talks, as stated in the Hong Kong meetings, is to eliminate all export subsidies by 2013. A key hope for United States agriculture is that a Doha agreement will open markets to U.S. farm goods. Trade observers also hope better market access will reverse a long, disturbing trend for farm exports.
“The U.S. share of ag exports has been declining since the 1960s,” said Jaime Malaga, with the Texas Tech Department of Agriculture and Applied Economics, at the recent Texas AG Forum in Austin.
“The United States (farm economy) depends on agricultural exports,” Malaga said. “We export one out of every three acres we produce, 30 percent of our production. But annual export growth, 3 percent, is not enough. Brazil’s export growth rate is 20 percent per year.”
He said U.S. ag export share stood at 38 percent from 1950 through 1959. In 2005, share had dropped to only 9 percent. “It’s shrinking rapidly.”
Malaga said tariffs limit access. “We need a severe cut in tariffs,” he said, “to gain market access.”
The G-20 countries, a coalition of 21 developing nations formed in 2003 before the Cancun meetings to push for agricultural trade regulations that favored their interests, represents a serious challenge.
Those countries (Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela, and Zimbabwe) account for 60 percent of the world’s population. They also maintain high tariffs.
Sensitive products (those granted exemptions under trade rules) help these countries maintain trade barriers, Malaga said. “Some 90 percent of G-20 products get tariff protection,” he said. “That’s way too much protection for market access.”
He outlined three possible scenarios for WTO talks going into the summer.
“The first is an agreement before June 1, 2007. To accomplish that, we need a breakthrough by late March or early April. Then we have to get U.S. Congress approval to begin implementation by 2008.”
An agreement that soon would affect farm bill debates,” Malaga said.
A second scenario puts an agreement after June. That would require a breakthrough before June. “Congress would have to approve Trade Promotion Authority.”
A third scenario would be no agreement. “That means we lose five years of negotiations and negative effects on WTO credibility,” Malaga said.
Malaga said with no Doha deal nations would be more interested in regional free trade agreements. The United States would continue with bilateral agreements. Those could include Asian trade agreements with China, Japan, India and others possibly creating trade blocs.
The United States already has bilateral trade agreements in the works. Agreements with Peru, Colombia and Panama await congressional approval. Others are in negotiation stages.
Without a WTO agreement, Malaga, expects more litigation against U.S. farm programs and said corn, soybeans, wheat and rice would be targets. “Canada pressed a corn case in January.” Others could follow from the European Union, Brazil and Argentina.
“It will be difficult to come up with an agreement in a short time,” Malaga said. “The sensitive product loophole remains a problem to market access.”
He said convincing developing nations to reduce tariff rates also promises to be difficult, especially the G-20 countries.
He said the demand to separate cotton from other commodities poses serious concerns for the U.S. cotton industry.