A suspension of Doha Round trade talks could last for months, affecting global U.S. agricultural trade, a Texas Cooperative Extension expert said.
“(The suspension) could last even longer,” said Parr Rosson, Extension economist and director of the Center for North American Studies. “This could lead to some real pressure on the European Union, Japan and others to rethink market access into these countries.”
Negotiations ended July 23 in Geneva as talks focused on tariff reductions in agriculture, particularly on high-end products such as beef, Rosson said.
“The U.S. wanted to see tariffs cut by at least 54 percent, but the European Union was willing to only go 48 percent in cuts,” Rosson said. “Many sensitive products, such as beef, would still have 61 percent tariffs even after reduction for the 80 percent tariffs currently in place.” Texas agriculture will be affected, Rosson said. The potential for more litigation in the World Trade Organization dispute settlement process exists, he said, much like what happened in the cotton case where U.S. subsidies were found to create unfair trade.
“Soybeans, rice and corn policy could face challenges,” Rosson said. “Second, markets will remain closed to U.S. products. With an average global tariff of 62 percent on agricultural goods, it is difficult for U.S. companies to penetrate markets such as India where tariffs on food are 114 percent on average, compared to 10 percent in the U.S. market.”
European Union export subsidies of $2 billion annually “will limit trade opportunities for grains, beef and poultry,” Rosson said.
“This means lower prices for Texas products and more pressure to cut U.S. farm support,” he said. U.S. Secretary of Agriculture Mike Johanns said Monday the 80 percent tariff for high quality beef in the U.S. blocks the market.
“There is no more effective trade distortion than that,” Johanns said Monday during a teleconference media briefing. “Under the proposal, the new tariff would be 61 percent. That is still a remarkable blocking of the market. It makes it impossible to compete. It makes it impossible to sell beef into that marketplace.”
European Union officials for the past month said they were willing to meet the 54 percent reduction proposed by the G-20 countries (a group consisting of 19 of the world’s largest economies with the European Union), Rosson said. But at the trade table, several countries were still limiting market access and keeping their own farm market system closed to outside trading.
“The other big stumbling block was that the G-20 wanted to designate 20 percent of their products as ‘special,’ meaning that about 90 percent of all agriculture products would still have high tariffs even after agreed upon reductions,” he said.
Rosson said the U.S. had been clear that the offer of a 60 percent reduction in trade-distorting domestic support “could only be justified if the EU, Japan and developing countries, mainly G-20, made substantial reductions in agriculture tariffs.
“This did not happen, therefore the parties were so far apart that (WTO Director General Pascal) Lamy thought a suspension in negotiations was in order.”