MULTILATERAL FREE TRADE: AN ELUSIVE DREAM
ARTICLE BY ROSALIENE BACCHUS

Imagine nations trading fairly and freely across borders. No tariffs, no quotas, no barriers: the elusive dream
of agricultural producers and manufacturers. After seven years, the World Trade Organization (WTO) Doha
Round of global trade negotiations (
see Footnote 1) have failed again to agree on the terms for expanding
trade among its 153 member-states.

The WTO Doha negotiations began in November 2001 in Doha, Qatar, to assist developing member nations
to build their economies through trade. The proposition appears simple: I will open my market if you open
yours. But complications are inevitable when the parties involved are not on equal footing. The Geneva
meeting, held in July 2008, of ministerial representatives from 35 member-states revealed the contentions
that still exist.

Rich nations like the United States and France provide high subsidies to their farmers, allowing them to
compete on the world market. Poor nations cannot afford such protection for their farmers. They want the
USA and the European Union to reduce their subsidies to more acceptable levels. They considered the
ceiling of $15 billion per year offered by the US representative insufficient since it was double current
spending. On the other hand, developed countries opposed proposals by India and China for protecting
infant industries from industrial tariff cuts.

Leaders of poor nations and emerging countries, like China and India, with large populations of subsistence
farmers, fear that cheaper subsidized agricultural imports will undermine their agricultural communities.
They also fear that lower import tariffs on industrialized products will threaten fragile local industries.

With the reduction or elimination of tariff and non-tariff trade barriers, it is not difficult to imagine what would
happen to unstable economies and weak sectors in emerging economies. The question is how much time it
would take to cripple an industry or local production and the safeguards required to prevent this. The July
2008 round of negotiations came to a stalemate over this issue, termed the Special Safeguard Mechanism
(SSM).

India and China requested changes in the proposed terms of the SSM. To protect their farming populations,
they insisted on more flexibility when faced with a surge of imports or drop in prices. The US rejected their
proposals as this would mean tariff increases above current WTO agreed levels. Representatives from
developing countries, such as Uruguay and Costa Rica, voiced concern that proposed increases would
deter existing trade among developing countries.

The SSM is only one issue of many to be resolved. The Swiss formula with its varying coefficients for
determining tariff cuts on non-agricultural market access (NAMA) need circumspection. Caribbean
economies dependent on banana exports require safeguards to compete with banana producers in Central
and South America who will benefit from proposed reductions in import tariffs. Degree of cuts in US cotton
subsidies, affecting many African countries, remains on the table.

With so many parties and factors involved in expanding multilateral trade, there will be winners and losers.
Guyana and its Caribbean partners must be diligent in evaluating the impact of each Doha proposal on their
economies


Footnotes:
  1. The Latest negotiating texts and reports for the Doha July 2008 Package is available on the WTO Website.
  2. DOHA UPDATE: See 10th Ministerial Conference, Nairobi, December 2015.

Article published in the Guyana Journal, Guyana Journal Publication, Inc., New York, USA, September 2008, p. 11.
Reprinted with permission.
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