USA what's behind recent Doha initiatives?

By convening the first meeting of the G8 and taking a bold step on proposed agriculture subsidies cuts, U.S. trade officials showed a level of engagement that few were expecting from them at this point in the negotiations. Most observers, indeed, pointed at the constraints faced by the Bush Administration at home, which seemed to make new efforts on trade before a new President assumes office in January 2009 unlikely. Has something suddenly changed in the domestic situation of the United States that explains this renewed engagement?

The first recent development in the U.S. of importance to the Doha agriculture negotiations was the passage, at the end of July, of a new Farm Bill by the House of Representatives (the lower chamber of legislators). With a few tweaks here and there, the House is proposing that U.S. agriculture policy remain the same as it has been since 2002. Lessons from the U.S. loss on the WTO cotton dispute with Brazil are not properly taken into account. And while higher global commodity prices have cut actual spending on domestic support dramatically, any change that brings prices back down will then trigger an automatic increase in public spending on various support programs. The House version of the Farm Bill also leaves out efforts to regulate competition in agricultural markets, which means that major U.S-based agri-food companies continue to exercise undue market power, distorting competition in both domestic and global markets.

The Senate still has to discuss and pass its own version of the Farm Bill (which should happen sooner rather than later in the month of October), before both Houses meet and adopt a final version of the Bill. Changes can still happen, and a variety of stakeholders in the U.S. are still trying to influence the final contents of the legislation. But for now, there is no sign from Congressional leaders that they are prepared to accept multilateral constraints on their farming policy. Certainly, this is not where the new acceptance by U.S. trade officials of lower domestic support spending limits has come from!

In the meantime, Congressional activity on trade has been minimal. Bilateral free trade agreements signed before the expiration of Fast Track authority are still waiting to be finalized. Heated debates on the safety of imported products, unfair currency competition, and poor working conditions in developing countries have hit the headlines, reflecting a popular lack of enthusiasm for more trade deals. Lately, the Democratic leadership conditioned action on free trade agreements (FTAs) to the prior examination of a renewed Trade Adjustment Act (TAA), which should provide measures to cope with adjustment costs in the United States. Concerns over the effects of more trade opening on the U.S. economy have been growing and are expected to remain high on presidential candidates' agendas in the next few months.

It should thus come as no surprise that alleged U.S. "moves" in Geneva were received with caution, if not outright criticism, in Washington. The most vocal group was the cotton industry, for whom the prospect of cutting subsidies to the extent proposed by the WTO is simply not an option. They had the message conveyed to African negotiators in Geneva by a delegation from Washington, and to the U.S. Trade Representative (USTR) by a group of influent senators through an aggressive letter stating their refusal to compromise.

Many other voices expressed skepticism at the USTR's initiatives. Charles Rangel, the Democrat who chairs the committee which regulates foreign trade in the House of Representatives, said, "At this point in time I don't think we have to deal with Doha, unfortunately . . . I think President Clinton is going to have to deal with it." (As a supporter of Hillary Clinton's bid for the presidency, he chose this way to say it will be up to President Bush's successor).

There is, undoubtedly, an ongoing battle between the Republican Administration and the Democratic-controlled Congress for leadership over trade policy. However, even the Republican leadership has most recently downplayed the U.S. ambitions for the Doha Agenda. In a news conference on September 27, the newly appointed U.S. Agriculture Secretary, Chuck Conner, stressed that the U.S. position on Doha "hasn't changed. I maintain it's not going to change going forward".

The signals from the U.S. are confused, and trade partners have to make their own assessment of where power really lies. Many WTO members are tired of negotiating with an ever-weakening Administration that lacks Congressional support for its positions. The ongoing electoral campaign is certainly not set to improve this situation in the coming weeks and months.

071004 IATP