1. Doha Negotiations – obstacles and alternatives to a successful Doha Round outcome Lecture 26 Economics of Food Markets Alan Matthews

2. Lecture objectives To evaluate Chair’s revised draft modalities February 2008 –How much convergence, how much divergence? Role of WTO litigation Alternatives to Doha? –Regionalism, protectionism

3. Reading Falconer Revised draft modalities February 2008 Josling on litigation Schott, Neary on alternatives

4. Revised draft modalities Feb 2008 Export subsidies –Elimination agreed by end-2013, but phasing of phase out still contested Domestic support –OTDS and AMS limits –AMS cuts –Blue Box ceilings –De minimis cuts –Green Box changes

5. Revised draft modalities Feb 2008 Market access – broad outlines –Tiered reductions –Minimum average cut in tariff commitment –Future of Special Agricultural Safeguard –Sensitive Products –Tariff escalation –Tropical products –Preference erosion –Tariff simplification

6. Outlook for a deal US commitment to successful outcome doubtful despite Bush rhetoric –Farm lobby and Congress deeply suspicious (e.g. CAFTA vote) –Trade Promotion Authority ran out mid 2007 EU the champion of a Development Round –Has invested much in a successful Round –But agriculture ministers (i.e. France) keeping tight rein on the negotiators Developing countries (G20) may feel no deal is better than a bad deal –Concerns of weakest developing countries must be addressed (e.g. cotton)

7. Politics of the endgame - EU Mandelson and the mandate –Can the French/Irish block a deal? Timing –Incentives for an early deal –German presidency The shape of its acceptable deal –Looking for concessions on NAMA, services and rules (anti-dumping, trade facilitation and Geographical Indications)

8. Politics of the endgame - US The US position –Bush and political will –Timing - Trade Promotion Authority Attitudes of the new US Congress –The new Farm Bill –The biofuels factor –Aftermath of Presidential election –The shape of its acceptable deal (limited offensive gains, adjustment issues)

9. Politics of the endgame – G20 Brazil – now experiencing exchange rate appreciation China – accepted tight restraints on trade policy on accession in 2001 India – concerned to protect its defensive interests But…context of strengthening world market prices

10. Doha fails to conclude? URAA continues It would be wrong to conclude that the mosaic of agricultural policies across the world, post-1995, is a stable set –policies are being challenged, and changed This would continue even if there was no conclusion to the Doha Round But would it survive….?

11. Litigation as a source of pressure for changes in rules The significance of the WTO Dispute Settlement Understanding The WTO panel process Some important agricultural cases –EU sugar –EU bananas –US cotton –EU GSP

12. Panel Findings on Sugar and Cotton US Upland Cotton (Brazil) –Production flexibility contract payments (1996 Farm Bill) and Direct payments (2002 Farm Bill) are not eligible for the green box because fruit & vegetables cannot be grown on the land EU Sugar (Australia, Brazil, Thailand) –C sugar exports are subsidised –ACP and Indian re-exports are wrongly excluded from EU totals

13. Regional integration Regional integration agreements –e.g. Mercosur Trade creation… but also trade diversion effects Stepping stone or stumbling block to more open trade?

14. Dangers of growth in protection? Continuing global economic imbalances....as well as shifts in geo-political power Many of the new protectionist demands rally consumer as well as producer interests (environmental standards, labour standards, food safety standards) Rising trends in income inequality linked to trade (outsourcing..) Nationalistic trends (energy, sovereign wealth funds,…)