The global Doha Round of trade negotiations, originally proposed by members of the World Trade Organization to help the economies of the developing world prosper in a global free-trade environment, have foundered over the failure of key developed and developing nations to agree on market accessibility, tariffs, and subsidies. The U.S. Congress can help these talks along by passing a U.S. farm bill that is now very close to completion.
Negotiators from the U.S. Senate and House of Representatives and the White House are now finalizing the language to reauthorize the U.S. farm bill, a process that happens in Washington every five years. Meanwhile, low-level Doha Round negotiations are ongoing, with delegates to the talks having given themselves a tight deadline in the first months of this year to complete a new global trade deal.
This means the United States still has an opportunity to boost its economic leadership and increase international market access for competitive U.S. farmers while reinvesting a modest portion of its current funding for agricultural commodity programs toward the further development of new renewable energy sources. With volatile oil prices, and the threat of higher oil costs imposing increased burdens on less developed nations, reaching a comprehensive trade agreement with the Doha talks that contributes toward diversifying our energy sources would help to offset these prices while combating climate change.
Last year, during the last push to complete the Doha Round, the Center detailed in the “G8 and the Doha Round” why reforming U.S. agricultural policies and trade rules would allow the United States to negotiate increased international market access for competitive U.S. farmers in return for limits on our agricultural subsidy programs that are needed for purely domestic reasons. Budgetary pressures will likely reduce the inflation-adjusted value of the programs in any case.
The U.S. Congress is poised to enact new farm legislation that would work at cross-purposes to the Doha Round. Two versions of the Farm Bill were passed late last year by the House of Representatives and the Senate—neither of which would do much to help the majority of U.S. farmers and would continue to give subsidies to the largest farms, causing increased consolidations and enabling larger farms to buy out smaller farms. Congress and especially the president should not only reconsider the policies of the farm bill but also focus on better ways to use the current subsidies, which would need to be limited under a Doha agreement. In exchange, fewer subsidy payments will help U.S. farmers attain expanded international market access.
These U.S. farm programs should be better targeted to family farmers, and to promoting sound environmental and energy policies, including the next generation of cellulosic biofuels, which are liquid fuels produced from energy crops such as switchgrass and agricultural wastes such as corn stalks and rice hulls. Advanced biofuels can make a key contribution to diversifying our energy sources and meaningfully reducing greenhouse gas emissions that contribute to global warming.
The focus on agriculture also underscores why these negotiations are called the Doha Development Round. The potential benefit to agricultural interests in poor developing countries is a strong independent reason to support this round. The market-based boost to development would serve U.S. political and security interests in avoiding failed states, humanitarian interests in combating poverty around the globe, and commercial interests in a stable and growing world economy.
Furthermore, as outlined in CAP’s “Virtuous Circle: Strengthening Broad-Based Global Progress in Living Standards,” part of the Progressive Growth project, taking steps to expand trade and investment with developing countries to drive strong increases in their living standards and domestic consumption will end up helping the United States, generating additional demand for our own products and services to produce further improvements in our own living standards. Using this approach, the United States could also make clear that current efforts by the European Union and G20 countries such as Brazil and India to footdrag on a deal on agricultural and industrial tariffs may be impeding the complex process to actually improve living standards in their own countries.
Beyond the advantages that would flow from the terms of a Doha agreement, an American initiative to bring the Doha Round to a successful conclusion serves our interests in maintaining a healthy multilateral trading system. A world dominated by bilateral and regional trade agreements would not only be less efficient; it would also reduce the U.S. influence that comes from being the most important single actor in any global arrangement.
It would be a serious mistake to pass up the opportunity to seek agreement. As Dan Tarullo makes clear in “The Case for Reviving the Doha Round,” to seize this opportunity, we need:
- President Bush to become personally involved in restarting the Doha negotiations.
- The Bush administration to seek genuine cooperation with U.S. congressional leaders.
- The United States to take the lead in expanding trade opportunities to the world’s poorest countries.
By signing the Energy Independence and Security Act, Bush showed he could reach a level of cooperation with Congress on energy issues. If he became personally involved in restarting the Doha negotiations, and took the lead in expanding trade opportunities for less developed countries, then it is likely other G8 nations would follow his lead. After all, the United States is the biggest trader in the world and wields enormous economic influence.
Additionally, reaching an agreement on the Doha provisions would help liberalize global trade, giving the United States and other G8 nations better access to foreign markets for their industrial goods, and giving developing countries better access for their farm exports. Although the gains to U.S. export interests—while real—would not be as great as many would like, the economic effects on trade-sensitive domestic industries would also be less severe. In the long term, a comprehensive Doha deal would be a win-win situation for the G8 and the G20 nations.
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