: To the utter bafflement of the world, the World Trade Organisation has released drafts from another round of negotiations. This always happens. Trade talks jargon is fearsomely complicated. An executive summary in plain English of this round of talks could read something like this: India is unhappy because for non-agricultural products, the WTO draft suggests smaller cuts in rich country tariffs than emerging economies have been demanding. Also, for non-agricultural products emerging economies have been offered three tariff reduction options linked to three different sets of quid pro quos (under WTO rules non-rich countries are allowed tweaking of trade regimes in return for tariff cut commitments). India argues offering three options is a ploy to divide emerging economies. This is important for India because emerging economies are a power bloc in WTO now. Together they can and have blocked negotiations. India has objected to the text on farm trade as well. But, and this is the most interesting point about WTO now, rich country farm policies are no longer the deal breaker in trade talks. Proof of this comes in square brackets. Square brackets in WTO jargon are issues that require serious negotiations — they are put in square brackets in WTO drafts. In the farm trade text, the number of square brackets has dropped from 130 in the earlier draft to 30 now. That’s climactic, if you are a trade negotiator.
High global farm prices have a role to play in this. Farm subsidies are being seen as not so bad in that high food prices may get higher if subsidies are eliminated or reduced. More than 90 per cent of American farm subsidies go to crops like rice, wheat, corn, cotton and soybean, and these subsidies act as price depressants in global markets. Take out subsidies, the argument goes, and another source for price increase is created. But this is a short-termist argument and a dangerous one to use in global trade negotiations.
Farm subsidy reduction in rich countries remains the most important objective because Government handouts to Western farmers make developing country farm products price-unattractive. This is grossly regressive. Plus, let’s always remember that for all the talk about food crisis now, the point is not at all that the world can’t grow more food. It can. India, for example, can almost double its output with small increases in productivity. So batting for rich country farm subsidy because...
