Farm goods main threat to WTO talks

By Alex Frew McMillan CNN Hong Kong

HONG KONG, China (CNN) -- Agriculture threatens to be the issue that scuppers the World Trade Organization meeting in Qatar.

The WTO's members are gathering in the Arabian Gulf city of Doha for talks that start Friday and run through Tuesday.

A wave of momentum is cresting for the WTO to launch a new round of free-trade talks. Many countries are keen to show that globalization and free markets are alive, despite the September 11 attacks.

The WTO is also desperate to prove it still means something. Members admit the last WTO gathering was an abject failure. Another collapse could condemn the WTO to obscurity.

Talks in Seattle in 1999 broke without anything to show. The most enduring image was of rioters looting stores and fighting running battles with police.

Hong Kong's commerce secretary, Chau Tak Hay, says members have learned from Seattle. The group tried to cram in too much, and the European Union and the United States disagreed, instead pushing pet causes like the environment and labor law.

In Doha, "we need to restore faith in the WTO and the globalization process," Chau said.

Rich-poor divide back in focus

Agriculture is the thorn on that rosy outlook. The issue crystallizes the divide between rich and poor WTO members that will dominate Doha.

Any free-trade initiative requires the backing of its two most-powerful blocs, the United States and the European Union. That has led to it being something of a "rich boys club."


U.S. Trade Representative Robert Zoellick (left) says Japan could stall the WTO's progress by refusing to give ground

But it's also a fact of life. Although two-thirds of the WTO's members are developing countries, they have little clout independently. Their issues are normally too diverse for them to present a united front.

Promoting farm goods is the issue that binds them together. Most smaller countries see agriculture as one industry where they can compete with, and generally outdo, developed nations.

They are demanding greater access for their produce, in return for opening up their own markets to overseas companies.

Crushed hopes

Farming forms powerful allies. The world's two most-populous nations, India and China, are pushing for greater access.

Farming has also produced a significant bloc in the 18-nation Cairns Group. The lobby of agriculture-exporting countries include Brazil, Argentina, South Africa, Canada, Indonesia and Australia.

But developed markets such as the United States, Japan, the European Union and South Korea all have vociferous farm lobbies.

Poorer nations feel those countries have not stuck by past agreements, particularly the WTO's Uruguay Round, to lower tariffs.

"Hopes that the World Trade Organization agreements raised of the rural world have been dashed," Patricio Aylwin, the former president of Chile, said earlier this month. "The agreements have enabled the developed countries to maintain their high levels of agricultural protection, and to substantial increase support to the domestic agricultural sector."

$1 billion a day

Often citing environmental rules, developed countries prop up farm industries that are typically uncompetitive.

The United States, the EU and Japan spend $1 billion a day subsidizing farmers, according to Lyall Howard, deputy CEO of Australia's National Farmers' Federation. To make matters worse, they then offload the cheap surplus on the rest of the world.

"This is the rich, bully countries bullying the rest of the world," Howard said. "Agriculture is discriminated against, and that's not acceptable."

He and his colleague Graham Blight are headed to Doha. They say Australian farmers simply want to see farm goods treated like any other product.

Blight, a former NFF head and a rice farmer, concedes that Japan has opened its market to his rice, as it had to under WTO rules. But he now faces the highest tariffs in the world there, at 390 percent.

"It's only in agriculture that this happens," Blight said. " To use a corny word we want some fairness, and some equity. … People have not honored the intent of the last Uruguay round."

Resistance still strong

There are reasons the farm lobby is ready to push hard in Doha. China is set to join the WTO on November 10, and will bring a hefty farming market to the table.

Countries like Indonesia also want greater farm-goods access, and the United States wants to keep the support of the world's biggest Muslim state in the fight against terrorism.

Most of all, the stakes may be too great after the failure in Seattle and given the poor state of the world economy.

"If they really want that round launched, they will have to give us what we want on agriculture," Howard said.

Still, though, countries like Japan won't budge. The ruling Liberal Democratic Party gets much of its support from rural areas and counts on the farm vote.

Japan refuses to give ground in a trade spat with China, stemming from Japanese quotas on Chinese produce. It slapped quotas on mushrooms, spring onions and tatami rushes in April.

A third set of talks failed to lead anywhere in Tokyo on Thursday. China promises to keep fighting the quotas, which it says run against WTO rules.

Japan's intransigence could again condemn the WTO talks to failure. It will take the participation of all 142 members, as well as newbies China, Taiwan and Vanuatu, to get a new round off the ground.

"Japan has just said no to everything in this process," U.S. Trade Representative Robert Zoellick noted recently. "If other countries refuse to cooperate and compromise, we cannot compel a result."