A Different Perspective on Doha

From the Daily News Egypt

But look at the Doha agenda with a more detached set of eyes, and you wonder what all the fuss is about. True, farm-support policies in rich countries tend to depress world prices, along with the incomes of agricultural producers in developing countries. But for most farm products, the phasing out of these subsidies is likely to have only modest effects on world prices — at most a few percentage points. This is small potatoes compared to the significant run-up in prices that world markets have been experiencing recently, and it would in any case be swamped by the high volatility to which these markets are normally subject.

and further more…

But the myth of a “development” round, promoted by trade officials and economists who espouse the “bicycle theory” of trade negotiations — the view that the trade regime can remain upright only with continuous progress in liberalization — backfired, because the US and key developing countries found it difficult to liberalize their farm sectors. What ultimately led to the collapse of the latest round of negotiations was India’s refusal to accept rigid rules that it felt would put India’s agricultural smallholders in jeopardy. More importantly, the fears underlying the bicycle theory are wildly inflated.

We live under the most liberal trade regime in history not because the WTO enforces it, but because important countries — rich and poor alike — find greater openness to be in their best interest. The real risks lie elsewhere. On one side is the danger that today’s alarmism will prove self-fulfilling — that trade officials and investors will turn the doomsday scenario into reality by panicking. On the other side is the danger that a completed “development round” will fail to live up to the high expectations that it has spawned, further eroding the legitimacy of global trade rules over the longer run. In the end, it may well be the atmospherics — psychology and expectations — rather than the actual economic results on the ground that will determine the outcomes.

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