By Roy Frederick
Public Policy Specialist
Department of Agricultural Economics
University of Nebraska-Lincoln
Doha, Qatar. For most of us, this capital city does not have the familiar ring of, say, London or Paris. Yet in mid-November, Doha made headlines all over the world as it hosted a 144-nation conference that launched a new round of worldwide trade negotiations.
For the record, Qatar is a tiny (slightly smaller than Connecticut) oil-rich peninsula on the Persian Gulf. Compared to Saudi Arabia, its much larger neighbor to the west, Qatar is a mere speck on the map. Its population is about 600,000.
Qatar's opportunity to host this important meeting was not by happenstance. Two years ago the World Trade Organization attempted to initiate new trade negotiations in Seattle. However, demonstrations and disruptions on the streets outside the conference center forced early adjournment. Little was accomplished.
Doha, on the other hand, offered relative isolation. Moreover, the incentive to work toward reductions in trade barriers probably has increased since 1999. A number of countries, including the United States, are in the midst of a recession. Enhancing trade may be an important step toward returning to economic growth.
The United States was not shy about putting agriculture at the top of its list of areas where trade barriers need to be reduced. Our negotiators have concerns primarily in two areas.
The first is tariffs. A recent U.S. Department of Agriculture analysis indicates tariffs on U.S. agricultural and food exports average 62%. In other words, foreign consumers pay 62% more than they would without tariffs. Most are imposed by the 15-nation European Union, Japan and Korea. In contrast, the average tariff on U.S. agricultural imports is less than 10%.
Second, U.S. negotiators are focusing on export subsidies. They occur when a government agency makes up the difference between a relatively high price paid to its farmers and a relatively low price paid by foreign customers. It is a way of avoiding price signals in the market. Over the past three decades, the EU has used export subsidies extensively. They seem unfair because of distortions they cause in production and buying behavior.
Admittedly, a third agricultural trade issue is of less concern to the United States. It relates to domestic price and income supports. Other countries--including the EU--frequently say that our support system provides an incentive for excess production. Even though we have worked hard to decouple supports from current production and prices, the rest of the world is not necessarily convinced. We may have to make concessions in this area if we want to make real progress on tariffs and export subsidies.