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Sunday, September 21, 2003

One Little Noticed Consequence

In all the heat generated over the collapse of the talks at Cancun, one, apparently minor, consequence does not appear to have received the attention it may deserve: the expiry of the so-called 'peace clause'.

Can any of these failures be addressed and the Doha round be revived? Some countries are more optimistic than others. The G21, for instance, left Cancún determined to stick together and fight another day. Brazil, in particular, is convinced that sooner or later rich countries will be forced to reform their outrageous farm policies. One weapon it points to is the expiration of the “peace clause”.

As part of the trade round before Doha, the Uruguay round, countries pledged not to file formal WTO complaints over the dumping of farm products as long as each country stuck to its (limited) farm-trade commitments. That peace clause runs out at the end of this year. The ensuing flood of disputes, claim some Brazilians, will at last force the Americans and Europeans to negotiate seriously on farm trade.
Source: The Economist

Indian agriculture Rajnath Singh seems to follow this interpretation:

Speaking to mediapersons at his office, Singh, however, ruled out any review of the move to phase out quantitative restrictions on imports. Other means were available to the country to curb the import of any item hurting domestic interests, he pointed out. The minister said the peace clause was slated to lapse in December this year and there was little chance of its revival after the collapse of the Cancun negotiations. "This, in a way, will benefit India", he maintained. Elaborating on the provision, he explained that in case any country tried to export its goods to India below domestic prices, it would be possible to impose counter-veiling duty to offset the price advantage. Singh expressed doubts over the true intentions of developed countries such as the US and the European Union (EU) in pushing their trade agenda. "It seems the US did not want any progress at the (Cancun) talks in view of the Presidential elections due in November 2004. It wanted a holiday from reforms to continue with its high farm subsidies till the polls", he said.
Source: Business Standard

My big worry is that, while Singh is probably right that the initial US horizon is the 2004 election, things can change and move so much during the next year that what began as a tactical retreat can turn into a wholesale rejection of the multilateral process. In this sense, let's hope the ending of the truce doesn't turn into the declaration of the war. My feeling, for what it's worth, is that here in Europe while the issue of agricultural dumping is no great deal, the issue of subsidies to the farmers is. The possibility of anyone outside the EU being systematically able to sell to us at competitive prices anytime soon seems just about zero.

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