The latest negotiations in the Doha trade round of the World Trade Organisation (WTO) in Geneva collapsed on 29 July, as the US, India and China failed to reach agreement on import tariffs on agricultural products.
The talks centred on the world’s developed countries trying to get developing countries to lower their tariffs on manufactured imports, in exchange for the developed countries lowering their agricultural subsidies. This would make it easier for developing countries to export farm products to the developed world. E ven before the talks collapsed Business Unity SA (Busa) expressed concern that the proposals would have “a disproportionate impact on certain key, relatively labour-intensive sectors of the SA economy. In a country with an unemployment rate of around 25%, these proposals are both politically and economically untenable.”
Tony Twine, senior economist at Econometrix, warned that if developed countries lowered farm subsidies international food prices could increase. “If developing countries have bigger export markets, their own people would also end up paying export parity prices for food,” Twine said. “Developed countries would also pay more as they’d have to pay unsubsidised prices, but they’d have the advantage of increased industrialised exports as they can export more freely to developing countries.”
I n the long term foreign currency generated by higher exports can help developing countries expand and modernise their economies, raising their income levels and enabling their people to pay the higher prices. “But this won’t happen simultaneously,” Twine warned. “It seems the negotiators didn’t take full account of the medium-term impact of these policies.
The middle period could be extremely uncomfortable and when food is involved, it becomes political dynamite.” S A already made tariff cuts as a developed country under the Uruguay Round of the WTO that ended in 1993. SA’s negotiators thus argued for greater flexibility under the new deal, to offset these bigger cuts. ome of the key compromises at the talks included a 80% cut in farm subsidies in the EU and a 70% cut in the US.
The industrial tariff coefficient for developing countries, which determines tariff reductions, was far lower than they’d hoped for – the higher the coefficient, the lower the tariff cuts. Busa said developed countries are demanding greater market access in industrial tariffs in exchange for concessions in agriculture, which fall short of developing countries’ expectations.
With the upcoming US presidential elections, it’s unlikely negotiators will meet again before the middle of next year. The Doha trade round has already been going on for seven years without a final outcome. – Drieka Burger
