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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

10 October 2005

Farm liberalization redux

Rob Portman, America’s trade representative, outlines in today’s Financial Times a vision to eliminate farm subsidies and tariffs. He writes, “The US will do its part and more, but consistent with the framework’s harmonisation commitment, greater cuts must be required by the European Union and Japan, which have much larger subsidies. All countries must also simultaneously deliver real market access” (1).

This is not the first time America has come out with a dramatic plan to salvage the Doha trade talks. But the excitement over this commitment needs to be tempered by two realities: the first is that the EU is unlikely to volunteer to reform the Common Agricultural Policy soon. Reform of the CAP was one of the reasons the EU’s budget deal was torn apart this summer; the separate issue of the UK rebate has yet to settled; and it also not clear whether the EU can psychologically close the one chapter—farm subsidies—that has endured as one of the Union’s economic rationales for over half a century.

The second reality has to do with the reformed future. This year was supposed to witness a liberalized market in textiles, according to agreements made in the WTO. But as the year started rich countries rushed to cut deals with China to curtail imports from that country to the West. In the European Union this led to crisis and embarrassment. A similar future, whereby international commitments are not met by realistic domestic pledges by governments, could unravel whatever deal is reached on agriculture at the WTO.

There is nothing in today’s declaration to justify celebration. The path to reform remains long and bumpy.

References:
(1) Rob Portman, “America’s proposal to kick-start the Doha trade talks,” Financial Times, 10 Oct 05

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