WTO: Clash of interests generates great heat
By Alan Beattie, World Trade Editor, Financial Times, July 29 2008
At the core of the Doha talks are seven ministers struggling to hammer out common ground on trade in agriculture and industrial goods. But weighing on their discussions are the millions of farmers and manufacturers who form powerful, often intractable interest groups.
The heat of Monday’s spats was generated by some of the most influential interests clashing head-on.
The powerful US agricultural lobby is very wary of backing the $14.4bn (€9.2bn, £7.2bn) ceiling on farm payouts that US negotiators have suggested without gaining new access to export markets in return. In particular, cotton farmers, whose lavish subsidies are under close scrutiny in Doha, want to be able to sell more to China, the world’s biggest cotton consumer.
China’s refusal to give guarantees that it will open its cotton market thus strikes directly at one of the most sensitive areas of the US’s negotiating interests.
Zhang Xiangchen, a senior Chinese official, on Monday charged the US with hypocrisy. “Extremely high cotton subsidies by the US have caused serious damages to cotton farmers in developing countries including ... 150m in China,” he said. “The US is not in a position to discuss cotton tariffs with developing members until they eliminate their subsidies.”
The leaders of the American Farm Bureau, which represents many subsidy recipients, have been in Geneva tracking negotiations but have so far declined to comment.
Similarly, heavily subsidised US rice farmers – up to a third of whose income has come in federal handouts over recent years – insist they need to be able to sell to the increasingly rich and lucrative rice markets of Asia. They are joined by highly efficient growers, such as Thailand, which has threatened to scupper Asian trade deals if it does not get more export markets.
But at a time of global food crisis, with rice prices having rocketed in response to fears about supply, countries such as India insist it would be political and economic suicide to open up their markets and imperil domestic production. Kamal Nath, Indian trade minister, frequently says: “We will negotiate over commerce but not about livelihoods and food security”.
Meanwhile, with Nicolas Sarkozy, the French president, conducting a war of attrition against the concessions on farm support offered by Peter Mandelson, European trade commissioner, European Union negotiators need to be able to show gains in industrial and services exports. China’s refusal to link voluntary discussions on opening whole industrial sectors to other parts of the talks thus undermines Mr Mandelson’s position with his most voluble domestic constituent.
Ivan Hodac, the secretary-general of the European Automobile Manufacturers’ Association, said that the pact emerging from Geneva was “an extremely bad deal” for his members. “We simply will not accept that we will open the European [car] market without getting anything in return,” he said.