Oct 17 2005
Good News from WTO
NYT and wire services reported recently that US is ready to cede farming subsidies for services markets.
I believe US was already open to such a compromise earlier in Cancun. There was a big argument, as seen in one of an earlier Foreign Affairs article, about:
1. Developing countries gang up and wanted even more concessions from the US and Europe.
2. Domestic wisecrackers faulted Zoellick for giving up farm subsidies too easy (e.g. not using it as a bargining chip)
3. Zoellick was very upset as a result and threatened to forge more bilateral or regional FTAs to bypass WTO.
Europe will feel more pressure if US takes the lead. It may impact EU negotiations (Frech farm subsidies vs. British rebates) as well. More importantly, it will further institutionalize international division of labor.
The positive side is stimulating competition and efficiency in other economies. Nobody says US had the lead so it will win forever. Just look at the auto industry: it arguably had much higher barrier to entry.
Some quotes from the NYT article:
“For a change now, we have real numbers on the table, and people are exchanging numbers instead of rhetoric,” he said in an interview. “Once you start talking numbers, you can come to a middle ground.” (John Tsang, Hong Kong’s secretary for commerce)
United States cotton subsidies have increased global supply and are widely faulted for increasing poverty in poor cotton-growing countries like Mali.
Such an understanding is needed to clear the way for a final push to conclude a comprehensive deal, including an agreement on trade in services, among the 148 organization member nations by the end of next year.
—The reactions from Europe and Japan has been cool, according to the article.