Saturday, December 17, 2005

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Is there a deal or not?

After a long night, the Associated Press is prematurely reporting that a trade deal has been reached:

Negotiators at the World Trade Organization have agreed on a sweeping trade deal dismantling barriers to trade in agriculture, manufacturing and services, India's trade minister said Sunday....

Delegates met overnight into Sunday and managed to overcome differences on a draft text. A final agreement on an exact date was expected later in the day, Indian Trade Minister Kamal Nath said.

"We'll have a definite date," he said. "We have a deal."

Nath said that ending agricultural export subsidies by 2013 would be acceptable to India, one of the leading developing nations and a key player in the rules-setting WTO.

CNN reports that there's just one sticking point remaining:
Just one issue remained unresolved as World Trade Organization negotiators worked to reach a series of agreements to end agricultural, manufacturing and service trade barriers, according to a WTO official Sunday.

The issue yet to be settled is the date for ending export subsidies, WTO press officer Emmanuelle Ganne told CNN.

This sounds great... except I just talked to an EU official who's making the rounds in the press room and apparently that sticking point ain't going anywhere for a while. The sticking point remains ending agricultural export subsidies, and that the EU did put forward 2013 as the end date. The problem was that at the last minute Brazil pushed for an earlier date -- and it all fell apart.

My hunch is that Humpty Dumpty has a decent chance of being put together again -- I think the EU is trying to tell the Brazilians and others it's either 2013 or no deal, and I suspect the Brazilians will take what they can get. One possible explanation for Nath's statement is that the Indians are trying to publicly signal to the Brazilians to accept the deal on the table. That said, the EU folks are exceedingly grumpy right now, so I wouldn't place a great deal of faith in that hunch.

The hard deck for the Ministerial will be 5 AM Hong Kong time on Monday (4 PM Sunday EDT). That's when the Convention Center here has to prep for its next booking.

A side note: one of the amusing features of being in the press room is seeing the pack mentalityof journalism in action. If a sufficient number of journalists are congregating around person A, then that group starts acting like a powerful magnet attracting the individual iron fillings of other journalists. Sometimes this makes a great deal of sense -- as when the EU tspokesman contradicts the India statement. Sometimes it makes no sense -- as when a great throng materialized to get their hands on... a schedule of the Ministerial's closing ceremonies. No one gives a flying fig about that.

UPDATE: Both the AP and Reuters are reporting that there's a deal. The AP story has more details:

WTO negotiators reached a breakthrough on the most contentious issue of their six-day talks, agreeing that wealthy countries would eliminate farm export subsidies by 2013, according to a final draft of the accord. The deal paves the way for a broader agreement to cut trade barriers across various sectors.

The breakthrough, coming after all-night negotiations, appeared to save the World Trade Organization meeting from an embarrassing collapse provided the final draft is approved by all 149 member nations and territories who are meeting later Sunday.

The 2013 date was a key demand of the European Union, which held out against intense pressure from Brazil and other developing nations to phase out a significant proportion of its farm export subsidies by 2010. Developing nations say the government farm payments to promote exports undercuts the competitive advantage of poor farmers.

The revised text also sets April 30, 2006, as a new deadline to work out formulas for cutting farm and industrial tariffs and subsidies - a key step toward forging a sweeping global free trade treaty by the end of next year....

The final draft also calls on wealthy nations to allow duty-free and quota-free privileges to at least 97 percent of products exported by the so-called least developed countries by 2008.

In addition, the draft retained an earlier proposal that rich countries to eliminate all export subsidies on cotton in 2006.

posted by Dan on 12.17.05 at 09:15 PM


How many American jobs will this destroy?

posted by: save_the_rustbelt on 12.17.05 at 09:15 PM [permalink]

what do we get in return?

posted by: cubanbob on 12.17.05 at 09:15 PM [permalink]

2013 v. 2010, who gives a damn? The important point is they'll be gone.


posted by: Greg D on 12.17.05 at 09:15 PM [permalink]

Well, I, for one, expect this to devastate jobs in the buggywhip industry.

C'mon. The world is up to its ears in sugar, and even an old farmboy like me knows about the serious distortions in farming caused by subsidies. Besides, most subsidiesgo to very large corps and 'farmers' like Ted Turner.

Losing the subsidies will maybe bring a little much-needed rationality to US agri-business.

posted by: JorgXMckie on 12.17.05 at 09:15 PM [permalink]

Great news. Thanks for the post Dan. Maybe I'll live to see the day that grocery prices fall! I have 4 kids - it means a lot to me. Doesn't Congress have to sign off on this though?

posted by: hickboob on 12.17.05 at 09:15 PM [permalink]

Congress does have to sign off on it, yes. But that’s what is actually creating the time limit on the talks.
GW Bush has, at present, what is called "fast-track" authority. That means that he can bring any deal to Congress as a whole and get a simple yes or no vote.
If the treaty is brought to Congress after the end of that authority (2007 sometime I think) then they can go over it line by line, modifying what they want. Obviously, that ain’t gonna work in a deal constructed between 160 odd countries.

So that’s why people are saying that time is running out. If the deal doesn’t get through Congress before the fast track authority runs out then it never will.

posted by: Tim Worstall on 12.17.05 at 09:15 PM [permalink]

If the deal doesn't get through Congress before the fast track authority runs out then it never will.

Unless the fast track authority is extended, which it has been a couple of times IIRC.

It's a good bet that it will be. It allows Congress to duck its responsibilities, then snipe and grouse afterward when the results aren't to its pleasure.


posted by: Ric Locke on 12.17.05 at 09:15 PM [permalink]

Is it just me? This seems like huge, huge, momentous news - a historical turning point.

I'm one of those who believes that it's been the ag-subsidies that have been most responsible for holding Africa down. With those gone (eventually - 2013 is a long way away), then I think we'll finally make some significant progress in global poverty etc.

BIG news, IMO.

posted by: equitus on 12.17.05 at 09:15 PM [permalink]

How many American jobs will this destroy?

How many craftsman jobs were lost in the industrial revolution? How many new jobs were created by lower cost of goods?

Do you want to go back, or do you want to repeat the success?

posted by: Ursus on 12.17.05 at 09:15 PM [permalink]

Whenever you can't make a deal, make a deal to make a deal. That can always be unmade.

posted by: Lord on 12.17.05 at 09:15 PM [permalink]

"Do you want to go back, or do you want to repeat the success?"

Problem is, this time around, blue collar workers are not advancing into better jobs, they are advancing into bankruptcy and foreclosure, and then getting $9-00-an-hour jobs selling paint brushes at Wal-Mart.

Make fun if you will, but these economic changes are splitting the country into more have and more have-nots (I'm a conservative GOP, not some fruit loop socialist). We are pushing trade deals faster than we are comprehending the changes we are creating. A backlash is coming.

posted by: save_the_rustbelt on 12.17.05 at 09:15 PM [permalink]

Nonsense. New opportunities will be created from lower costs. It happens every time.

posted by: Ursus on 12.17.05 at 09:15 PM [permalink]

"Nonsense. New opportunities will be created from lower costs. It happens every time."

Stop by the Rustbelt, I will give you a tour, take you to fine restaurants, and show you why your new opportunity theory is not working, or if it is certainly not in time.

We can stop by a bankruptcy court and look at piles of petitions, or go to a foreclosure auction.

Have a nice day.

posted by: save_the_rustbelt on 12.17.05 at 09:15 PM [permalink]

"How many American jobs will this destroy?"

None worth keeping.

posted by: Don Mynack on 12.17.05 at 09:15 PM [permalink]

Meanwhile, the ignorant, the Luddites, and the ignorant Luddites keep going:

posted by: Disgusted on 12.17.05 at 09:15 PM [permalink]

"None worth keeping."

Don: I hope you never have to associate with the blue collar rabble who make things and build things.

If you do you may find them at your local federal courthouse, filing bankruptcy petitions.

Throw a few dimes on the ground as you walk by.

posted by: save_the_rustbelt on 12.17.05 at 09:15 PM [permalink]

Rustbelt - I know Ohio and Michigan have been hit really hard lately, but technology is more to blame for the lost manufacturing jobs in the last 30 years than free trade. Trade is just improved "technology of location" - but opposing it is equivalent to opposing technology generally, except that it won't make as much of a difference if you actually succeed in stopping it.

China has lost manufacturing jobs, too. The whole world has.

posted by: Matt on 12.17.05 at 09:15 PM [permalink]

No one is opposing progress.

I am opposed to dumping blue collar workers in the garbage while Wall Street and Wash DC are drowning in lobster and fine wine.

Bill Clinton started the "more trade at all costs" program and the Bushies made it worse.

By the way, I can follow the Ohio map of closed factories and tell you which country now has the jobs. Free trade has hurt, but we can buy cheap stuff at Wal-Mart.

Real people are getting hurt real bad.

posted by: save_the_rustbelt on 12.17.05 at 09:15 PM [permalink]

The armed forces are offering a signing bonus. Bombs, porn and care for the elderly seem to be the growth industries

posted by: 5deferdick on 12.17.05 at 09:15 PM [permalink]

Portman seems to be getting a lot of flack for giving too much and getting too little in return.

I think Congress is starting to see the down side of "trade at all costs."

posted by: save_the_rustbelt on 12.17.05 at 09:15 PM [permalink]

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