The Hindu Business Line : Market access key to WTO farm trade talks

Market access is key to successful culmination of agricultural negotiations under Doha Round as increasing market access by lowering tariffs would produce the greatest share of benefits from trade liberalisation, according to a report published by Economic Research Service (ERS) of the US Department of Agriculture (USDA).

Despite benefits of free trade, high agricultural tariffs remain a sticking point in suspended WTO trade talks. Trade liberalisation leads to economic gains for developed and developing countries through more efficient use of resources as well as productivity and investment growth that come with more open markets, the report pointed out.

Identifying import barriers — tariffs — as the largest source of global economic costs from agricultural policy distortions, the ERS said they accounted for over half of the estimated reduction in agricultural prices.

Price-distorting

Tariffs are more price-distorting than domestic support or export subsidies largely because they are more widely used. Theydirectly affect market prices, having an impact on producer and consumer decisions.

Despite their known impact, tariffs remain contentious in agricultural negotiations, because many agricultural tariffs are high and cuts will have to be ambitious to increase trade and secure a successful agreement.

More often than not, developed and developing countries face domestic pressures to maintain tariff barriers despite the mandate to reduce them in the Doha negotiations.

Doha Round

The report said Doha Round, while making some significant tentative progress, has stumbled over attempts to agree on `modalities' or formulas (including numerical targets) for cutting tariffs, domestic support and export subsidies. Agreement on these modalities missed deadlines and negotiations were suspended in July.

Interestingly, the Bush administration's trade promotion authority, deemed essential to negotiating trade agreements, expires in June 2007. With just about 10 months to go, there is pressure on negotiators to reach agreement soon if the Doha Round is to reach a successful conclusion. Without some major new efforts by WTO members, meeting that deadline may not be possible, the report asserted.