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The American Way
By MARK VAILE
October 28, 2005; Wall Street Journal

CANBERRA -- The Doha round of world trade negotiations presents a historical opportunity to lift millions of people out of poverty.

But with only seven weeks to go before the critical Hong Kong Ministerial Conference in December, the negotiations are in crisis. The reluctance of some of the world's richest countries, particularly those in the European Union such as France, to substantially reduce high farm tariff barriers is again putting at risk the opportunity to secure reforms that would deliver huge benefits to us all. Without movement on agriculture, we will not make progress on other critical issues, including opening markets for services and for manufactured goods, areas that are also of interest to Australia. We recognize that movement in these areas will form an important part of the overall balance of the round.

As the most distorted sector in world trade, agriculture is rightly at the center of the Doha round negotiations. The mandate we agreed to in Doha put agriculture front and center. The failed Cancun ministerial meeting underlined that agriculture must be reformed if the round is to succeed and to deliver on its development objective.

Agricultural tariffs are five times higher on average than those for industrial products. High tariffs undermine the ability of developing countries to trade their way out of poverty -- it is estimated that two-thirds of the world's poorest people are dependent on agriculture. Yet some wealthy countries are prepared to allow their pampered agricultural interests to block progress in the negotiations.

Agricultural reform would lead to better resource allocation, higher incomes and increased purchasing power in developing countries and globally. More so than aid, agricultural trade reform is essential to help developing countries escape poverty. It is scarcely surprising that many developing countries insist there must be progress on agriculture before they move on services and manufactured goods.

The U.S. has shown leadership through its recent proposal to cut farm subsidies. This is an important first step in reducing the large-scale distortions which skew global agricultural trade and one we should build on in the lead up to Hong Kong. The U.S. proposal presents us with a unique opportunity to lock in a package at Hong Kong that will result in deep reform of global farm subsidies.

But this will not be possible unless we can make progress on agricultural market access, in the same way that we are now making progress on farm subsidies.

The EU, Japan and others will need to show the same courage on market access as the U.S. has shown on farm subsidies. An ambitious outcome on market access is the single most important step we can take to create new opportunities for the developing world, as the World Bank has demonstrated so convincingly. What we need are reforms that will open new commercial opportunities, particularly in major developed country markets that have been effectively closed to date to key agricultural products. This is crucial to the success of the round.

In this light, the EU's recent proposal on market access is deeply disappointing. It would cut the highest tariffs by 50%, but this would not lead to increased commercial opportunities for many of the key traded farm products. A 50% cut to tariffs that are 80%, 90% or even over 100% will not deliver new trade opportunities for key products.

The EU also proposed that around 8% of its tariff lines be designated as "sensitive products" for which the cuts would be lower. Eight percent of tariff lines could account for most of the EU's agricultural imports. For these products there would be virtually no new trade opportunities created by tariff cuts. World Trade Organization members agreed last year to provide some flexibility for sensitive products, but only if market-access improvements were provided by expanding the quotas for such products. The EU proposes to expand the quotas by a tiny fraction.

Let's compare the approach on agriculture with the position of the EU and Japan on industrial tariffs. There they want a tariff ceiling of 10% for developed countries. No exceptions, no special products, no special safeguards. In agriculture, the EU, Japan and some others want minimal cuts for most tariffs, even smaller cuts for sensitive products (i.e., the tariff lines that count), and an array of other mechanisms (including safeguards) to maintain protection.

The EU's agricultural market access proposal is simply not credible. It does not even go as far as the Uruguay round tariff cuts, now widely seen as having been insufficient.

The EU has said it will develop a new offer on agricultural market access. We look forward to this being a serious negotiating proposal -- that is, one that would genuinely open markets. The yardstick will be whether it delivers real new market-access opportunities. Such a proposal would allow us all to make progress on other important areas such as liberalization in services and manufactures. But only deep farm-tariff cuts will deliver on the Doha mandate, and help developing countries to expand their economies and eradicate poverty.

Mr. Vaile is Australia's deputy prime minister and minister for trade.

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