Davos, Switzerland -- For the World Trade Organization’s Doha round to benefit the poor, action is needed in three areas in 2005:

Access to OECD countries’ markets is central for developing countries to grow economically and reduce poverty. Export subsidies must end and domestic support must decline. Regulations and standards must not be used as unnecessary barriers to imports from the developing world. Re-shuffling of domestic support in OECD countries from one box to another under the garb of income support must come down substantially, under a time bound program. Only deep cuts in agricultural subsidy regimes will make a difference for the poor.

Developing counties have a critical role to play as well. They should avoid resorting to a “defensive strategy” of maintaining protection for their own markets at a cost of not gaining access to the industrialized country markets. Developing countries must be willing to let go of protectionism, hand-in-hand with the industrialized countries, so that both sides mutually disarm.

Wealthy nations should provide more assistance to developing countries that lose preferences or suffer from higher world agricultural prices brought about because of a new trade agreement. Targeted assistance should focus primarily on infrastructure investments in rural areas where millions of small farmers remain disconnected from market opportunities.

The positions of the world’s big players are currently changing, and that has implications for the rest of the world. The United States is heading to become a net importer of food and agricultural products in 2005. China and India have drawn down rapidly on their grain reserves in 2004. These developments reflect major opportunities for agricultural producing nations, especially poor countries for which agriculture is – or could be – an important source of foreign exchange earnings.

The rules of the game are also bound to change. The Doha round is supposed to be different from previous rounds. It is intended to emphasize both trade and development. Doha offers an opportunity to create a level playing field on which the world’s poor farmers can compete. But will it really be successful in improving the lives of poor people in developing countries?

Not all developing countries will gain from liberalization. Some poor food-importing countries are concerned about an increase in world prices; others are concerned about loss of preferences in developed country markets. It would be naïve to believe that global agricultural trade liberalization alone can cure poverty quickly.

Trade is most beneficial when it is associated with sound investment, and for that reason, there is need for complementary investments and reform. Enhanced market access for developing countries requires both moving forward on liberalization and bolstering investment at home. Investment is especially needed to build the capacity of developing countries to trade domestically (information and infrastructure) and internationally (compliance with high quality and safety standards).

The July 2004 WTO framework agreement on agriculture came at the last possible hour to avoid a collapse of the Doha round. It offers promises, as it narrows the negotiating field. But it also entails risks, as it leaves wide latitude about how much agricultural trade will be opened under a final agreement. An empty agreement in 2005 is a strong possibility. The poor cannot afford such a lost opportunity.

The battle is on to see whether a coalition for protection and subsidies comes together to oppose a strong Doha outcome, or whether a different coalition prevails to achieve real trade liberalization. The well-being of many of the world’s poor - who are farmers - depends on the outcome of this struggle.

The potential coalition that would push for liberalization has new actors, as well as new distractions, with many ongoing bilateral negotiations. So far, the countries with export potential to lead (for example, Brazil) and the countries that cannot participate in subsidy competition (many low income countries, including some large ones, such as India) are not yet showing a sufficiently strong alliance. Thus, from the important agricultural angle, the signals for a successful Doha round are becoming weaker and weaker as the negotiations lag on. That puts other non-agriculture trade issues and business opportunities at risk.

Time is of the essence. To achieve benefits for the poor this year, we need a more specific road map and calendar for the agriculture trade negotiations leading up to the Ministerial meeting in Hong Kong in December 2005.

For more information, contact:

• Michael Rubinstein, 202/862.5670
  m.rubinstein@cgiar.org