Food has is more expensive now than it has been in a generation. In part this is because many of the input costs for food production has risen. There is also growing demand to use base crops for energy production and there are the now exceptionally high costs of transportation. We see the impact on our grocery bills, but the real impact is in countries where the poor now find their access to food severely restricted.
The World Trade Organization (WTO) was intended to have an impact on both price and the freedom on producers to operate competitively globally. It has failed to do so. The final attempt to salvage the so-called Doha round of talks collapsed this week, mainly due to the reluctance of developed countries (most especially France and Germany) to significantly reduce farm subsidies. They also refused to remove barriers to imports from developing countries – a battle which is basically between the US, India and China. It was very much a “rich” versus “poor” debate, with the rich not wanting to help the poor nations grow through trade.
The cynic might conclude that the failure to make a base agreement around a core industry reflects badly on the World Trade Organization. It does not. It reflects badly on the European countries who cannot stomach telling their overly subsidized farmers to “make it or go bust” and the US who wants to protect its farmers from competition. The proposal which was floated in the recent round was for cutting the limit on European farm subsidies by 80%, and US payments by 70% to about $14.5bn and for the reduction of tariff barriers to agricultural trade – bringing all jurisdictions closer to true market conditions.
What will happen now is already clear – Canada will begin to make bilateral arrangements with other countries in the Americas, with Japan, India and China. It will aggressively pursue access to these last two markets as well as Brazil and Russia – all fast growing economies. What will not happen is that we will persuade our largest trading partner to liberalize access to markets for developing countries, which Canada sees as an important strategy to support the economic independence of nations.
Canada will also need to look again at the concept of free trade as it relates to agriculture. A serious rethink is needed of the weakened internal transport infrastructure for grain, the role of supply agencies such as the Wheat Board, incentives for biofuels and the future of key agricultural industries, especially livestock. Free trade within Canada and open markets for producers selling to the US directly would be a strong sign that Canada is serious about reform of the subsidy regime. Any remaining trade tariff barriers for developing countries need to be removed. Canada should show by doing that it is serious – unilateral action aligned with the Doha round objectives would show global leadership.
There should also be a serious inquest into the processes used by the WTO to try reach agreement. The Doha round began in 2000 with great fanfare and hopes of a real breakthrough outcome . In meeting after meeting, the same players have effectively blocked change for the same reasons that the first round did not produce a result. There is no court of appeal for stubbornness borne out of self serving, small minded protectionism.
Speaking of which, with the possible election of a US President who is more protectionist than their predecessors , this round of talks was seen as something that needed to be “closed” before George W Bush left office. Barrack Obama has been clearly protectionist in many of his comments about trade, jobs and globalization. Obama’s “audacity of hope” extends to Arkansas but not to those in Africa who seek an end to US trade restrictions – it is obviously too audacious to ask Americans to compete directly with others in the agricultural sector without substantial subsidies and protection.
So we are at impasse – the talks have definitely failed, some 200 or so new bilateral agreements will be negotiated by the 153 nations associated with the process and the poor will stay poor. This failure shows what happens when the global community tries to tackle a global issue- national interest trumps what everyone knows to be right. Just wait until we get really serious about climate change!