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Doha Round talks collapse

Scott Jagow Jul 24, 2006


SCOTT JAGOW: You know how hard it is to get two people to agree on something. Like what movie to see, for example. Imagine trying to get 50 countries to agree. The US, European countries and developing nations have been trying for five years now to come up with a global free trade agreement. Today, those talks — known as the Doha round — collapsed. Europe won’t reduce its subsidies to farmers enough to make the US happy. Joining us is British economist Sean Rickart. Sean, agriculture is a small part of the US and the EU economies, so why is this such a big problem?

SEAN RICKART: It is indeed but it has a political significance way above its small contribution to GDP. You’ve got to recognize that in Europe in particular, you don’t have to go back more than one generation for most people to have some link to the land and there is a very sentimental attachment to the idea that farmers deserve special treatment.

JAGOW: Who stands to gain the most from having a global free trade agreement?

RICKART: If we look at farming, there is no doubt that some parts of the European Union, some part of the farming industry, would suffer as a result of am agreement to allow more access to food products from the rest of the world to Europe. They would tend to be smaller-scale, less efficient family farms. I’m afraid there’s an awful lot of emotion around those farm structures. Europe has within its borders some highly-efficient, highly-effective, highly competitive farms and they, of course, would seek to gain.

JAGOW: What about the developing countries though that are losing out on the possibility of so much more trade?

RICKART: Well if we believe in globalization and if we believe that the route to greater prosperity is trade, then it’s absolutely important that we fall behind the WTO and get people to agree to reduce their barriers. But this is where political reality runs up against economic logic. As soon as you begin to say ‘well it’s good for most people, but I’m afraid you group of farmers you’re not going to do quite so well out of it,’ at that point, that’s hewn politicians get very, very nervous and begin to try and find an alternative route.

JAGOW: By why isn’t it better to just have a bunch of bilateral deals as opposed, like I said earlier, trying to get two people to agree rather than 50?

RICKART: Oh I think that the whole basis of the WTO is based on the idea of multilateral trade negotiations. Otherwise, if we are frank about it, a powerful country like the United States could impose its will on a weaker country and that wouldn’t be perceived as fair. I think any slipping back to the old days of bilateral deals were done, would be a very retrogressive step indeed.

JAGOW: Well I don’t get the sense that you’re hopeless about this though?

RICKART: Well it’s getting pretty hopeless. I think in two or three years’ time we will be back here again and then there will be a greater sense of urgency.

JAGOW: Sean thanks a lot.

RICKART: Thanks very much.

JAGOW: Sean Rickart is an economist at the Cranfield Business School. In Los Angeles, I’m Scott Jagow. Thanks for listening.

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