Monday, April 24, 2006

A darkening mood over Doha |

A darkening mood over Doha | "Efforts to liberalise world trade have suffered a setback, after large trading powers admitted that a self-imposed deadline of April 30th for preparing a deal on farm and industrial goods will be missed. Ministerial talks planned for this weekend have been called off. Although more negotiations are expected in May and June, and there will be renewed efforts to get a deal by the end of July, there is every reason to be gloomy about the Doha round

Europe and America are both to blame for the latest setback, and each is making strenuous efforts to hold the other responsible. But the failure to get a deal on the controversial question of cutting subsidies for farmers casts doubt on the chances of getting agreement in other areas. Negotiations on the liberalisation of trade in services may prove as impossibly tricky to achieve as a deal on farm and industrial goods.

Nor is the G20 group of developing nations giving much impetus to the talks. Led by India and Brazil, the G20 is refusing to negotiate without deeper concessions on agriculture. India, with its large population, may turn out to be a big problem. Its government worries that competition from Chinese factories and American farms represents too great a threat, while gaining more access to world markets is of only limited attraction.

Other poor countries are also unsure what they would gain. There is general talk of hopeful prospects for poor farmers gaining greater access to rich-world markets. But the benefits will not flow evenly from rich to poor. The World Bank estimates that removing current agricultural distortions would produce a general benefit of more than $300 billion a year. Relative to national income, poor countries would enjoy a third more of this benefit than rich, industrialised, ones. However, nearly half of that benefit would come from reforms by the developing countries themselves, something governments might do anyway were it not for the serious problem of the political pain the reforms are bound to cause.

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