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Doha: Agricultural negotiations and the Hippocratic oath

Agriculture.com Staff 02/12/2016 @ 10:39pm

Like the figure of speech concerning cats, the Doha round of trade negotiations seems to have many lives. We have heard so many declarations that if deadline X (you name the date) is not met, the current round of World Trade Organization negotiations is over.

A month ago Doha was declared deader than a doornail over the issue of "special safeguard mechanisms" that would allow countries to protect themselves from a flood of low priced agricultural imports. In the last week or two, WTO Director-General Pascal Lamy has visited both India and the U.S. in an attempt to revive the trade talks.

When talks failed a month ago, many commentators suggested that given the coming elections in the U.S., achieving an agreement at this late date would be futile. It is expected that Congressional Democrats would be unlikely to accept a deal negotiated by an unpopular Republican administration.

From our perspective it makes little sense to restart the agricultural portion of the negotiations and the reason has little to do with politics. It has more to do with the Hippocratic oath.

If agricultural producers and food consumers, especially the poorest ones, are really a central concern of the Doha round, the likelihood of WTO practitioners doing harm is so great that even Lloyd's of London could not compute a premium large enough to offer malpractice insurance.

This failure to understand the differences between the needs of agriculture and other sectors was made clear to us a month ago in a conversation we had on a flight to a meeting we were attending. On this particular flight our seatmate turned out to be an MBA student from a major university. As a part of the usual chitchat, he asked what we do and we told him about our work in agricultural policy.

The discussion turned to high grain and oilseed prices and we explained that if the US or some other country had maintained reserve stocks of grains and oilseeds, the release of these stocks would have moderated the level of price increases we are seeing in the markets.

His response was "But, with world trade we don't need to maintain reserves. If a country runs short, it can just import it from somewhere else in the world." In a perfect world, he might be right about the balancing role of trade.

This perfect world would need to have a significant number of countries involved in the production of exportable surpluses of the various grains and oilseeds. In addition the carryover stocks would need to be balanced among a number of countries as well. As some Enron employees found out, when you have all of your eggs in one basket, your risk rises dramatically.

For six grains (barley, corn, oats, rice, sorghum, and wheat), just two countries, the U.S. and China, have held an average of nearly 58% of the world's ending stocks over the last ten years (1998-2007).

To make things more risky, the difference between the high and low stocks of these two countries, 239 million tonnes, is greater than the highest level of carryover of the rest of the countries in the world, 217 million tonnes in 2001. Most of the world's carryover stocks are in two baskets -- the U.S. and China.

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