One More Chance for Doha

Davos seems to have worked a little bit of magic, and now there is talk of one more push on the stalled Doha round of WTO trade negotiations.  Richard Holbroke and Stuart Eizenstat wrote an op-ed on Doha in the WSJ, and it's a great primer for understanding why these negotiaitons are morally as well as economically urgent:

Africa's Last Best Chance Wall Street Journal

By RICHARD HOLBROOKE and STUART EIZENSTAT

 The long-stalled Doha round of trade talks recently had, in the words of WTO Director-General Pascal Lamy, a jolt of "new energy" after the recent meeting of key trade ministers in Davos. What is not clearly understood is that if a successful agreement is reached, it will be especially good news for Africa. 

Failure, conversely, would have tragic consequences for the continent. It would lead the United States and the European Union to negotiate more bilateral free-trade agreements with key countries, but not with sub-Saharan Africa and other poor countries, which offer few attractive markets for developed countries' manufactured goods and services. Africa, which has seen its share of world trade shrink in recent years, would fall even further behind. 

Developing countries felt that previous multilateral trade negotiations like the Kennedy round, the Tokyo round and the Uruguay round primarily benefited the highly developed nations. While they undertook costly obligations to protect developed countries' intellectual property and impose sanitary and phytosanitary standards, the developed countries did not significantly open their markets to the labor-intensive manufactured goods and agricultural products of developing countries. 

For the Doha round launched in 2001, however, there is a development agenda. At its heart is agriculture -- a politically sensitive sector in the EU and the U.S. but the largest employer in low-income countries, accounting for about 60% of their labor force and 25% of their GDP. The World Bank estimates that these agricultural products face what former U.S. Trade Representative Robert Portman observed is a practically insurmountable global average tariff rate of 62%, and that 93% of the benefits from a successful Doha round would come from improved market access for developing nations' agricultural products. 

Farmers represent less than 5% of the labor force in industrial countries, but they have very substantial political power in the U.S., EU and Japan.  These political forces, especially in the EU, led to the eventual derailment of the Doha round last summer. But as the Doha talks take on new life, Congress and the Bush administration need to stay true to the commitments of the Doha Development Agenda, especially in agriculture. 

Two weeks ago the administration proposed ending subsidies for 80,000 wealthy farmers, substituting trade-distorting subsidies with cash payments to farmers, and trimming traditional agriculture programs by $4.5 billion over the next decade. These proposals, if approved, would directly benefit some of the poorest people on earth, save lives and ultimately reduce American foreign aid, while helping Susan Schwab, the U.S trade representative, put wind in the sails of the ministers' pledge in Davos to restart serious talks. 

The promise for developing countries, and particularly the poorest African nations, is huge. In particular, Africa stands to gain significantly if sensitive product exclusions do not disproportionately target key African exports. Peter Mandelson, the EU trade commissioner, pledged recently that Europe will significantly improve its previous tariff reduction offer; he needs to make good on that promise. But even the current U.S. and EU proposals on the table far surpass those offered in previous multilateral trade rounds and offer real gains for developing countries: 

* WTO members have agreed to provide duty-free/quota-free market access to the least developed countries for at least 97% of their products. 

* An agreement has been reached to end the direct EU and U.S. export subsidies by 2013 that have squeezed out the products of farmers in Africa, Asia and Latin America.  

* Assistance will be given to help poor countries streamline their customs procedures to help with the red tape and corruption that historicallyimpeded engagement in significant international trade. 

Developing nations also must make serious commitments to complete the Doha round. A growing percentage of trade is between developing nations, withmore than 70% of the duties paid by developing countries to other developing countries. This makes no sense. 

The World Bank has found a significant increase in per capita income of developing countries that lower their own trade barriers, and concluded thattotally eliminating global trade barriers could lift 300 to 500 million of the world's poor out of poverty -- growing their economies by $259 billion by 2015. Opening their trade arteries to manufactured goods and services is also important. It will help developing nations trade with each other, which is growing 50% faster than world trade overall, but where levels of protection on goods are four times higher than levels of protection in rich countries. Intraregional trade in Africa was only 5.3% of GDP in 2002, in part due to self-destructive trade barriers between African countries. 

As trade ministers make an effort to reach a Doha deal, they should recognize that it is the poorest nations, particularly those in Africa, that would be the biggest losers if Doha collapses. We hope this will be understood by everyone, on a bipartisan basis, as this crucial negotiation heads into its final phase. For Africa, this may be the last best chance.  

Mr. Holbrooke is a former U.S. ambassador to the U.N. and vice chairman of Perseus, LLC. Mr. Eizenstat held several senior positions in the Clintonadministration, including U.S. ambassador to the EU, and heads the international practice at Covington & Burling, LLP. 

The NYT also wrote recently on the need for A Bipartisan Consensus on Trade, employing the same language NDN has been using for months, beginning with our major paper: Rebuilding the National Consensus on Trade