If the world’s richest nations give in to the temptations of protectionism, the world’s poorest countries will suffer the most, said the New York Times in an editorial yesterday. Excerpts:
With the global economy slowing, prices soaring for oil and food and protectionist passions boiling up everywhere, it is an especially dangerous time to give up on international trade negotiations. Unfortunately, the world’s leading trading nations seem ready to abandon the World Trade Organization’s seven-year effort to reduce some of the world’s obstacles to trade.
The talks, initiated in 2001 in Doha, Qatar, were supposed to help the world’s poorest countries. An agreement would open markets to their main products, like food and textiles, and reduce the lavish farm subsidies in the rich world that have put poor farmers out of business. After years of wrangling, the negotiations now appear to be deadlocked.
While the reluctance to cut farm subsidies in Europe and the United States had been a main obstacle, the big developing countries also bear a lot of responsibility. At marathon meetings this week in Geneva, the United States offered to further lower the ceiling for its agricultural subsidies — to roughly $15 billion a year from the current $48 billion. Europe — with France objecting — also fleshed out a new offer. Big developing countries, notably Brazil and India, however, are insisting on even deeper subsidy cuts. And they are refusing to submit any offers of their own to reduce tariffs on industrial imports. They argue that the wealthy countries really aren’t giving up much. American agricultural subsidies, they note, have already fallen sharply as food prices have soared, to about half the proposed new ceiling. We fear the whole process is on the verge of collapse. This is the last chance to get a deal during the Bush administration, experts say. And if talks fail to make substantial progress, the new American president will probably want to start from scratch rather than pick up where his predecessor left off.
A breakdown would certainly be harmful. And the world’s poorest countries would lose the most.
Locking in lower farm subsidies would encourage direly needed agricultural investment in Africa and in poor nations that are struggling with soaring food prices. Curbing food export barriers would also push down prices.
A breakdown of the Doha talks would also weaken the WTO at a moment when the world needs a credible international body to mediate trade disputes.
If the world’s richest nations give in to the temptations of protectionism, the world’s poorest countries will suffer the most. But no one, including the rich nations, will escape the damage to the global economy.
