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WASHINGTON PERSPECTIVES
WORLD TRADE OR TRADE-OFF?
U.S. trade negotiators deserve credit for their role in the agreement that launched a new round of WTO negotiations to reform the world trading system. Looking at the November summit of the world's trade ministers in Qatar, most observers were skeptical about chances for success at Doha, partly because of strong disagreements over agriculture terms. In fact, agriculture was one of the most contentious issues and not compromised until the eleventh hour.

While the final agreement achieved the goals that the American agriculture community sought, it also opened an arduous negotiation certain to test the farm community's commitment to global trade liberalization.

While reform of the rules affecting agricultural trade promises to open new markets for U.S. farmers and ranchers, it may also erode some of the programs key to moving U.S. commodities into those markets. The new WTO negotiations promise to bring that conflict into sharp relief, as well as to test the trade-offs American farmers are willing to accept for greater access to foreign markets.

Rekindling a debate left over from the Uruguay Round, U.S. negotiators acknowledged that USDA export credits will be on the table, bringing relief to the conflict between trade liberalization and trade promotion. These are some of the last, most effective and widely used USDA programs to facilitate farm exports. However, other countries view them as variations of the export subsidy programs the U.S. has so strongly attacked. Those countries have attempted to scale them back as part of the overall WTO effort to liberalize trading rules.

In part, sharp divisions within the U.S. farm community contributed to the inability to conclude the commitment made during the last trade negotiations to limit the use of the programs. This prompted U.S. competitors to extract the commitment for further negotiations on these programs within the context of the U.S. desire to see other export subsidy programs ended.

Meanwhile, some segments of American agriculture that are sensitive to imports have expressed reservations about opening the U.S. market. Yet, one of the key goals of the U.S. is to see other countries lower their tariffs on agricultural products and increase the amount of imports they will accept. The countries that will have to reform the policies and open their markets for the U.S. to attain those objectives have signaled they will do so, only if the U.S. is willing to open its markets. This tension will test the skill of U.S. negotiators and the strength of the U.S. farm coalition, pitting the interests seeking greater overseas market access against those in the industry who want to protect the U.S. market from greater foreign penetration.

In addition, these tensions will test the commitment many in the U.S. agriculture community have to freer trade. Agriculture is becoming increasingly skeptical of promises made in the name of free trade. Some of that skepticism is well placed: Exports, while vital to the prosperity of American agriculture, are not and will not be the sole solution to its problems. Yet, some have held it out to be just that. Failure to realize that goal is feeding the trade fatigue. For instance, ample evidence occurred during recent trade policy debates when key agriculture state members of Congress and senators either opposed or were slow to support trade-related legislation. Public officials, especially trade negotiators, will be well advised to temper the promises they make about new trade agreements, being especially careful not to oversell their potential.

Finally, U.S. negotiators would be well served to devote attention in this round to strengthening the WTO itself. Many in agriculture have been disappointed in its ability to referee, settle, and bring to conclusion trade disputes - the EU's ban on beef produced with growth hormones is, perhaps, the best example. No matter what new opportunities emerge from the next round of negotiations, unless an effective WTO enforces the new rules, the hard fought gains will be meaningless. AM



Dan Glickman served as the U.S. Secretary of Agriculture from 1995-2001. He currently is an attorney with the Washington, D.C.-based law firm Akin, Gump, Strauss, Hauer & Feld and is a member of Doane Agricultural Services Co.'s Advisory Council.


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