Another DOHA Round WTO Deadline Missed

On April 24, 2006, World Trade Organization Director-General Pascal Lamy said that the April 30 deadline for establishing modalities in agriculture would not be met. "The progress made is insufficient for Ministers to be able to negotiate with a reasonable chance of success." He therefore cancelled the planned Ministerial level meetings for the last week of April. The next target date is the end of July, but as Mr. Lamy himself said, "It is simply not possible to backload the modalities on agriculture … to July; that would guarantee failure."

Even proponents are now admitting that the Doha Round of WTO talks could soon collapse. What has happened is that even the scaled-down ambitions established at the failed Hong Kong Ministerial in December, when the deadline for modalities in agriculture was set back to April 30, have been missed.

Looking ahead, negotiators were supposed to agree by July about how to open up trade in many critical areas other than agriculture, such as trade in services, construction contracts, banking, and intellectual property rights. These are primarily of interest to the developed nations; reform in agriculture is of primary importance to the developing nations and those nations negatively impacted by the US Farm Bill and the EU Common Agricultural Policy. Most other nations are refusing to proceed on other trade issues and sectors until the US and EU address the negative impact of their respective domestic agricultural policies. This Doha Round hinges on meaningful progress in agriculture, and the April failure means negotiators still haven't resolved fundamental issues such as bringing true reductions in trade-distorting domestic subsidies. Without that, meaningful progress may prove impossible.

Time is rapidly running out for a WTO deal. US President Bush's trade promotion authority runs out June 30, 2007. Formerly called fast-track authority where the US Congress only gets a thumbs-up or a thumbs-down vote, not line-by-line veto authority, trade promotion authority means a trade deal can be negotiated through a designated US Trade Representative. When that authority runs out, Congress gets back the power to negotiate trade deals line-by-line which means no country would sign a deal that Congress could then gut.

Time is slipping away. The President must notify Congress and give lawmakers time to change any laws to comply with any trade deal. If Congress doesn't have sufficient time to make the necessary changes in existing legislation and regulations, the US cannot comply with any new WTO obligations. Therefore, any WTO deal likely has to be completed six months before June 30, 2007 which means by the end of December 2006. Congress is extremely unlikely to grant President Bush an extension of the trade promotion authority given the anti-Bush, pro-homeland security, and mid-term November 2006 election flavour pervading US politics. As Representative Jerry Moran (R-Kansas), member of the House Ag Committee and spokesperson for the US in Geneva recently said "That's why the April 30 deadline was so important and it seems to me there's only a matter of a few weeks before that flexibility disappears."

It was indicative of the US's opinion of the probability of Doha Round success when President Bush on April 18 removed Mr. Rob Portman, US Trade Representative to the WTO negotiations from the start of the Doha Round, and made him White House Budget Director. Switching horses in mid-stream sent a very clear signal that success at WTO is very unlikely in the opinion of the US.

What is likely to now transpire is a ramped-up flurry of bi-lateral trade deals between individual nations or small group of nations. The Caribbean Area Free Trade Agreement between the US and 6 Caribbean nations is a perfect example. These bi-lateral arrangements build regionally-based clusters of preferential treatment. Those on the inside benefit; those on the outside do not.

Canada, as usual, has been asleep at the switch. We are neither making any real progress at reducing the negative impact of trade-distorting domestic subsides contained in the US Farm Bill, nor are we making any real progress at constructing meaningful bi-lateral trade arrangements of our own.

What Canada continues to do, at least at the bureaucratic level certainly, is to maintain the mantra and charade that the agricultural marketplace is already free, fair, and unfettered. Their belief is that the current WTO negotiations will be successful, and will resolve the income disaster for grain and oilseed producers and all we have to do is wait. Bureaucrats continue the noise that those farmers that can't compete in this free, fair, and unfettered business environment should seek employment elsewhere while only those that can compete deserve government support, but of course don't require any because they are successful. In other words the true objective is to do nothing.

This line of thinking is correct. That is IF the marketplace is in reality free, fair, and unfettered. It is not. If it was, why would we need WTO negotiations? Therefore this line of thinking is absolutely wrong. It is government that establishes the business environment for agriculture. After all, governments negotiate trade deals. When that business environment fails Canadian participants, Canadian governments at both levels are charged with remedying the situation. After all, they created it.

The failure of the WTO Doha Round to achieve modalities in agriculture by April 30, 2006 should be a signal to both levels of government in Canada that Canadian agricultural policy has been a dismal failure. Time to wake up!