Agricultural Trade Liberalisation after Doha

The Doha Round of global trade negotiations was established in Doha, Qatar, in 2001 to seek agreement on a new set of global trade rules, particularly with regard to agriculture and services. Initially, there were high hopes of brokering important changes to world agricultural trade in order to remove inefficient trade barriers and distortions to market prices in a range of internationally traded agricultural products. However, there has been little significant agreement as to the terms and conditions for global agricultural trade liberalisation. Given that the United States needs to ratify any agreement for it to have meaningful effect, a further delay is looming. If a deal is not brokered in the next few months, negotiations may have to await the outcome of the US presidential elections.

The key stumbling blocks to an effective agreement on agricultural trade have been the European Union (EU) and the US. Both the EU and the US have strong domestic farm lobbies that support government payments to farmers as well as the protection of domestic markets from agricultural imports. Both have been unable to agree on measures to substantially reduce such payments and protections.

The Doha Round is important to Australia. Australia supports global agricultural trade liberalisation because it has much to gain from having greater access to agricultural markets, particularly in Japan, the EU, and the US. Australia, as a net exporter of agricultural produce, would benefit from a more market-oriented approach to agricultural trade. However, a successful conclusion of the Doha Round in 2008 would require important concessions to agricultural trade, and this seems unlikely given the impasse to date.

Australia will continue to negotiate at the multilateral level, but will also continue to pursue a range of bilateral trade deals with other regions and countries. Negotiations are underway for a range of trade deals with the Association of South-East Asian Nations and New Zealand, the Gulf Cooperation Council states, China, Chile, India, Japan, South Korea, Malaysia, Mexico, and Indonesia.

A failure of the Doha Round will indicate that the key players have a lack of political will for trade reform, and will delay agricultural trade liberalisation for some time. The potential benefits for Australian agricultural trade will thus fail to materialise. Australian trade policy may shift to place greater attention on regional and bilateral deals. Other leading agricultural trading nations may follow the same path. The result may be a mosaic of regional deals, rather than a global system of liberalised agricultural trade. Such a mosaic may not provide significant advantage to Australia’s agricultural exporters, but will be acceptable as a second-best option.

Documentation
Organisation for Economic Co-operation and Development, Agricultural policy and trade reform, OECD, Paris, 2007.
National Farmers’ Federation, Trade policy brief, 2007.