Wednesday, July 26, 2006

WSJ.com - Doha Is Dead...

WSJ.com - Doha Is Dead...

Trade diplomats have been quick to point fingers after negotiations in the Doha Round collapsed Monday, and for once they're all correct. Far more important, however, will be whether the world's economic powers continue to push for the free trade of goods and services by other means, or simply retreat and let the protectionists pounce.

The U.S. has taken most of the criticism so far, some of it deserved. The Bush Administration has never escaped the subsidy shadow cast by the 2002 farm bill, which increased government aid to American agribusiness to $190 billion over six years. This largesse, pushed by Iowa Senator Chuck Grassley among others, made it more difficult for the U.S. to cut farm handouts enough for a successful Doha.

It also eroded confidence in the White House's ability to deliver any real cuts in the face of Congressional opposition, particularly with midterm elections coming up. To clear Congress, a Doha deal would have to be ambitious enough in other areas -- such as services and manufactured goods -- to offset the steep farm subsidy cuts that the U.S. would have to make. This is where the talks really collapsed.

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