Food fears frustrate global trade

A disagreement pitting the U.S. against China and India over agricultural subsidies remains unresolved as the so-called Doha Round of World Trade Organization talks, which has been dragging on since 2001, has ended as a dud.


From a BBC report:


The main stumbling block was farm import rules, which allow countries to protect poor farmers by imposing a tariff on certain goods in the event of a drop in prices or a surge in imports. India, China and the US could not agree on the tariff threshold for such an event. Washington said that the "safeguard clause" protecting developing nations from unrestricted imports had been set too low.


An earlier Associated Press article detailed how rising food prices worldwide and concerns about food security, particularly among poor nations, were at issue:


China and India were not alone. Faced with rising food prices, a number of developing nations have sought wide loopholes against opening up their farm markets — either by blocking certain strategic products such as rice or grains or through rules that would allow them to raise tariffs sharply if faced with a sudden flood of imports. Farming in the developing world is "not like manufacturing," said Trade Minister Mari Pangestu of Indonesia, the world's fourth most populous country. "It's not a machine you can just turn on or off." Rich and poor countries have clashed repeatedly in the round that was once billed as a recipe for lifting millions of people out of poverty. The trade body is hoping for agreement this week on lowering farm subsidies and industrial tariffs, setting the stage for an overall trade accord by the end of the year. Signs of a breakthrough last Friday were followed by more entrenchment over the weekend."

Cotton, sugar and rice are among commodities China wants to protect with tariffs, no mention of fresh produce.


Finding common ground among nearly 140 WTO member nations is challenging even during times of stability and growth, such as the 1990s, when China's rise as a manufacturing and export power pulled globalization into the mainstream of economic and political debate. (U.S. produce firms in the apple or garlic trade surely remember well in the '90s when Chinese exports pulled down floor prices for their respective products.)


The past decade has seen the rise of resource nationalism, as energy prices have jumped nearly 15-fold since oil bottomed out at $10/barrel in the late '90s. Poorer nations have felt the bite of fuel costs more than developed nations, and no doubt have seen how Russia and Venezuela purged foreign control of their oil resources and boast cash reserves equivalent to hundreds of billions of dollars to show for it.

In a time of economic uncertainty worldwide, nations' inclination to circle the wagons to protect domestic markets is understandable.
But the advance of global trade is a marathon, not a sprint. As trade negotiators plan their next move, the smart money will bet on growing reliance among nations for products and services -- including food.