Pascal Lamy says that Africa needs to give ground in the Doha negotiations:

“If we conclude this round, there will be many winners. If the negotiations fail, no doubt who will be the biggest loser: Africa. We all know that. This is the reality,” said Lamy. Africa states must “alter their position in negotiations to avoid a return to deadlock,” added Lamy during a visit to the African Union’s headquarters in Addis Ababa for talks with trade ministers from the continent.

A June 2006 Focus on the Global South brief by Aileen Kwa summarizes research skeptical of this position:

Contrary to these expectations, however, research from the World Bank, the Carnegie Endowment, the European Commission, and also the FAO, reveal that the majority in Africa will be faced with losses in both agriculture and industrial goods liberalisation. Even if agricultural export markets were open to Africa, the majority of African farmers – subsistence farmers – will not be in a position to compete. In addition, they will lose through having to open their domestic markets in the negotiations. The poorest countries in Africa will be worst hit – many are LDC countries in Sub- Saharan or East Africa.

Here’s a summary of the Carnegie research done by Sandra Polaski:

Ms. Polaski enumerated three reasons why agricultural liberalization could actually harm many developing countries.  First, many poor countries are net food importers.  Eliminating agricultural subsidies would reduce production and increase the price of agricultural goods to the detriment of net food importers.  Second, many rich countries apply lower tariffs to exports from developing countries.  Reducing overall tariff levels would narrow the margins of these preferences.  Finally, due to the small scale of agricultural production in most developing countries, the prospects for competing on global markets are poor.  However lower tariffs could lead to cheaper imports of competing products, leading to a reduction of farmers’ incomes.  The Carnegie model showed that developing countries could shield certain crops essential to farmers’ incomes without significantly diminishing the benefits to other countries of agricultural liberalization. 

The World Bank research is less clear. Kwa writes that “the Bank concluded that the gains were expected for only a few large developing countries such as Argentina, Brazil, India. ‘Bangladesh and many African countries benefiting from preferences are likely to face losses.'” She cites Kym Anderson and Will Martin, Agricultural Trade Reform and the Doha Development Agenda (2005) as the source of the quotation, but the 2006 publication (full text available here) does not contain that sentence. Moreover, that quotation appears to be describing the impact of preference erosion, not the net impact of the Doha agenda. Anderson and Martin’s summary runs contrary to Kwa’s characterization:

Most developing countries gain in our Doha scenarios, and all would if they participated more fully in the reforms. Our simulations of alternative scenarios for possible outcomes of the Doha negotiations show that middle-income countries certainly stand to gain, but so too would poorer developing countries so long as they do not exercise their claims to special and differential treatment in the form of lesser requirements to reform. An important part of this result comes from the increases in market access—on a nondiscriminatory basis—by other developing countries.

Preference erosion may be less of an issue than commonly assumed. Some least developed countries in Sub-Saharan Africa and elsewhere appear to be slight losers in our Doha simulations when developed countries cut their tariffs and these poor countries choose not to reform at all. Our simulations overstate the benefits of tariff preferences for least developed countries, however, since they ignore the trade-dampening effect of complex rules of origin and the grabbing of much of the rents by developed-country importers.

So the World Bank work seems to support Lamy’s argument that African nations need to reform.

I don’t have time to dig into the EC and FAO research, but those interested in the skeptics’ arguments might use Kwa’s piece as a starting point. For another skeptical view of the DDA’s impact on poor countries, see Dani Rodrik’s take. And for skepticism regarding all these simulations (CGE models), check out the Economist‘s July piece (courtesy of Ben Muse).

France on Thursday warned Mandelson against making further concessions on
agriculture amid a global push to revive the stalled Doha round of trade negotiations. During a meeting with Mandelson in Paris, Foreign Minister Philippe Douste-Blazy ‘firmly reminded’ the top Brussels trade negotiator that his existing offer to cut tariffs on farm goods ‘constituted a red line and exhausted the EU’s room for negotiation,’ a ministry statement said. … France – which insists European concessions should not go beyond the reform of the EU’s Common Agriculture Policy agreed four years ago –
threatened previously to veto any final trade deal, accusing Mandelson of overstepping his mandate with an October 2005 offer of further farm-tariff cuts.

I’m not shocked.

We’re moving towards a test of the WTO’s institutional strength:

Canada has launched a dispute at the World Trade Organisation over the use of “trade-distorting” agricultural subsidies by the US.

The dispute singles out payments to American corn farmers but also challenges the total level of US agricultural subsidies…

The timing of the challenge is aimed at influencing the formation of a new farm bill in the US Congress, where there is resistance to reform from Senators and Representatives from farm states.

The bicycle theory of trade negotiations says that in the absence of momentum towards further trade liberalization, protectionist influences are likely to induce policy backsliding (a bicycle can’t stand still very long – it falls over). The WTO’s rules-based framework could serve as a backstop against retreat from previous liberalization gains, but only if its dispute rulings are respected by members. As the world’s largest economy, the United States is in the best position to defy the WTO if it wishes.

Here’s the best possible outcome: The WTO rules against the US subsidies and the Bush administration complies with the decision. This means that (1) the WTO is institutionally sufficient to preserve the liberal trading system while the Doha negotiations are on pause, and (2) American negotiators may discount the value of holding onto their agricultural subsidy bargaining chips if they risk being struck down in the future and make a greater effort to get something in exchange for them by reinvigorating the Doha round rather than walking away empty-handed.

The world case scenario? That’s left as an exercise for the reader…

Andrew Leonard finds more reasons to think the DDA’s stall will last quite a while:

Buried at the very end of a Wall Street Journal article on the possibility that the U.S. might lead a new effort to restart the stalled Doha trade talks comes a tidbit too revealing to pass up.

The administration’s fresh focus on Doha hasn’t necessarily won the same level of attention from its chief executive. Joining visiting South African President Mbeki in the Oval Office Friday, President Bush told reporters that the two talked about “the necessity of trade.”

“We talked about, interestingly enough, the Darfur round,” Mr. Bush said, apparently confusing the Qatar city with the Sudanese region beset by violence.

Sure, sure, anyone can make an honest mistake. Why pick on the poor man, who clearly has much more important things to worry about than getting the details right about trade and genocide. Doha, Darfur — it’s a lot to ask, keeping these strangely named foreign cities straight. But it’s impossible to resist the feeling that Bush just doesn’t give a damn.

WTO online event:

On 18 December from 17:00-18:00 Geneva time WTO Director-General Pascal Lamy will host an on-line chat to discuss this suspension, the prospects for relaunching the talks and the future of the WTO and the global trading system… Please note that to keep the event manageable there is a limit of 500 participants, on a first-come first-served basis… To send advance questions that will be answered during the chat: dgchat@wto.org.

AP:

Ministers from the WTO’s most influential powers will meet early next year to make their first joint attempt at reviving global trade talks since their collapse last summer, officials said Monday.

Top representatives of the United States, the European Union, Japan, Australia, India and Brazil are among those expected to gather on the sidelines at the World Economic Forum’s annual four-day meeting of global leaders in Davos, Switzerland. Pascal Lamy, director-general of the World Trade Organization, also has been invited to attend the meeting at the end of January, officials said.

If the Bush administration wants to win renewal of its trade promotion authority, most analysts are now saying that it will depend upon the president’s willingness to make concessions to Democrats by including labor and environmental standards. The Democrats seeking these measures generally want them included in bilateral FTAs and aren’t nearly as critical of the WTO negotiations for ignoring these concerns.

If my previous analysis is wrong and there is a chance of TPA renewal, then a Doha-only extension has the best chance. But that depends upon the DDA being sufficiently vibrant so as to make TPA renewal worth it. And without TPA, Doha isn’t going far, hence our nasty catch-22. But some are suggesting that there’s a window of opportunity:

The WTO negotiations have been suspended since late July, when governments proved unable to agree on farm subsidy and tariff cuts. They are now starting to show signs of life, and Geneva-based trade diplomats believe that there is a window of opportunity until around March 2007 for Members to assemble a ‘blueprint’ for a Doha Round deal that would offer gains sufficient to entice Congress into extending TPA. However, many blame the impasse on the US’ refusal to offer deeper reductions to its farm subsidies, and have argued that Washington must make new overtures in order to revive the talks. The passing of the election may have relieved some of the pressure to not announce subsidy cuts. The Bush administration has maintained in recent months that the US would not budge unless other countries modified their negotiating stances too.

Unlike the Reuters story I criticized a week ago, the ICTSD story contains details that make the window plausible. WTO Director-General Pascal Lamy called an informal meeting of the Trade Negotiations Committee on Friday morning. But I doubt the “blueprint” will include labor and environmental provisions, which may be necessary for even a Doha-only TPA renewal to be feasible:

According to the Washington Post, Montana Senator Max Baucus, who is likely to take over the Senate Finance Committee, has said that any legislation prolonging the president’s fast-track powers would have to “strengthen labour and environmental provisions in some way to win broader Democratic support.” Washington publication Inside US Trade reported on 10 November that he would also want TPA extension to be contingent on expanded support for trade adjustment, better enforcement of existing trade agreements, and increased export promotion efforts. Baucus has been a vocal supporter of providing extra unemployment benefits and retraining funds for people who have lost their jobs due to trade liberalisation.

Here are the relevant provisions in the 2002 Trade Act:

OVERALL TRADE NEGOTIATING OBJECTIVES.—The overall trade negotiating objectives of the United States for agreements subject to the provisions of section 2103 are—…

(5) to ensure that trade and environmental policies are mutually supportive and to seek to protect and preserve the environment and enhance the international means of doing so, while optimizing the use of the world’s resources;
(6) to promote respect for worker rights and the rights of children consistent with core labor standards of the ILO (as defined in section 2113(6)) and an understanding of the relationship between trade and worker rights;
(7) to seek provisions in trade agreements under which parties to those agreements strive to ensure that they do not weaken or reduce the protections afforded in domestic environmental and labor laws as an encouragement for trade;

The current provisions seem compatible with the Doha negotiations, and it may be possible to strengthen the labor and environmental provisions of the TPA legislation without negatively impacting the WTO negotiations. That means that we can’t rule out the possibility of TPA being renewed and Doha regaining momentum in 2007.

But that likelihood is small. The murmurs emanating from Geneva are merely low-level informal discussions without ministers, and there doesn’t seem to have been a shift in negotiating stances:

Although no attempts had been made to address the specific issues that have proved so intractable in the negotiations, the agriculture chair has taken the necessary initial steps to ensure that talks can begin more easily once the political will to do so has been established. “Crawford has turned on the engine to warm up the car a bit, but it’s not yet in gear,” said one delegate.

There were no cases of a “trade-sceptic” being replaced a “trade-friendly” member in either chamber.

Simon Evenett and Michael Meier have produced the race-by-race analysis that I briefly considered while writing this post before I set aside the project as too laborious.

Executive summary:

Tuesday’s U.S. Congressional elections assumed considerable importance for trade negotiators because it is thought that, even if significant progress were made on the Doha Round negotiations in early 2007, Congress would need to extend the U.S. President’s Trade Promotion Authority (TPA) to allow the Round to be completed. Much turns on how the newcomers to the U.S. House and Senate are expected to vote. In this note we examine the stance taken by the 62 individuals who won their elections to the House or Senate for the first time. We compared their stance on trade policy matters during their election campaigns with the incumbents that they will soon replace. Our analysis, therefore, takes account of every known case where a seat changed hands and not just the cases where a Democrat replaced a Republican office.

The degree of importance assigned to this increase in congressional hostility to trade liberalization depends upon one’s assessment of TPA renewal’s chances prior to the election. My Thursday post arguing that the electoral impact on trade liberalization would be small reflects my belief that TPA renewal has been out of the question for a while. Of course, we should be afraid that this increases the risk of protectionism.

In June 2004, I wrote a criticism of Bush’s “competitive liberalization” strategy that included the following paragraph:

The administration’s political capital is not only limited in regards to foreign trading partners – the US populace is likely to be unwilling to sign off on a large number of trade agreements. Congress will only pass a limited number of trade agreements before it becomes uncooperative, out of fear that it will be perceived as liberalizing too quickly. Pressure from protectionist constituents like steel workers has a significant impact upon political calculations. I perceive it as unlikely that free traders will have enough expendable political capital to win the swing votes required to pass both FTAA and Doha agreements in the same congressional session. The problems of domestic political capital also hint at another trouble feature of bilateral trade deals – they expose free trade advocates to lobbying and criticism from anti-trade organizations.

Evenett & Meier write:

This constitutes a major blow to the U.S. Administration’s trade strategy of “Competitive Liberalization.” Far from building a domestic political consensus behind trade reform, as USTR Zeollick had originally hoped, this strategy has probably created the seeds of its own destruction.

I am happy that I was right, but not really.

(To be fair to Zoellick, the strategy was sold as a means to stimulate international movement towards liberalization, not build a domestic political consensus.)

[Massive hat tip to Ben Muse]

Reuters carries the headline “Global free trade talks back on agenda,” but the only support within the article for that claim is “WTO chief Pascal Lamy… says that negotiators now have a brief ‘window of opportunity’ to resume talks.” Lamy’s job is to play the role of optimist, so that’s unsurprising. More insightful is this paragraph:

Three months on, nothing fundamental seems to have changed, and trade diplomats are pessimistic about concluding a deal that was supposed to rebalance trade rules in favour of the poor and boost business worldwide.

[HT: GI]

What will Democratic control of the US Congress mean for trade policy? Opinions vary. In short, I don’t think the legislative shift implies much for the WTO negotiations, which were going to be quiet for a while regardless.

Even prior to Tuesday, the majority of analysts expected the Doha Round to lay dormant for some time. The most notable dissident is Jagdish Bhagwati, who wrote last week:

But Doha is far from dead. Pascal Lamy, World Trade Organisation director-general, has only “suspended” the talks… George W. Bush is deeply committed to the success of Doha: it would be a rare multilateral triumph for a US president who never wavered in his support for free trade, even as John Kerry, his opponent in the last presidential election, was condemning US companies that outsource as traitors. With the elections to the US Congress pending, and with Democrats out to exploit every opportunity, he simply could not make the necessary concessions in agriculture and risk losing his own “farm belt” support. But with the elections behind him, he can return to act forcefully on his convictions.

In contrast, Brad DeLong says that “free trade does not appear to be a priority for the types of Republicans who get elected president–and definitely not for their staffs.” Nonetheless, so that we can focus on the legislative branch, let’s assume that Bush would like to renew trade promotion authority (TPA) and use it to achieve a meaningful Doha round outcome. What do the mid-terms spell for the US in the WTO negotiations?

Pat Buchanan welcomes the election results as hailing a “new era of economic nationalism”:

Among the more dramatic events of this election year was one that has been little debated: The return of the trade-and-jobs issue, front and center, to American politics. Note: Almost no embattled Republican could be found taking the Bush line that NAFTA, or CAFTA with Central America, or MFN for China, or globalization was good for America and a reason he or she should be re-elected. But in Ohio, Pennsylvania and Michigan, attacks on free trade were central elements of Democratic strategy…

With the 2006 election, America appears to have reached the tipping point on free trade, as it has on immigration and military intervention to promote democracy. Anxiety, and fear of jobs lost to India and China, seems a more powerful emotion than gratitude for the inexpensive goods at Wal-Mart.

While I dissent from Buchanan’s enthusiasm, it’s true that free trade was not a platform plank likely to attract many swing voters on Tuesday. But if public opinion of trade liberalization is so low, would Republican victories have made a difference? Sen. Charles Grassley recently noted that “even if the Republicans continue to control the Congress we’ve already moved into a more protectionist atmosphere.”

President Bush imposed steel tariffs a few months before the 2002 mid-terms in order to win TPA and the election, and free traders were told that a bit of protectionism up-front would buy them much greater liberalization in the future. It didn’t pan out. Then, in 2004, we were told that the Doha round needed to wait until after the presidential election so that Republicans wouldn’t lose critical farm state votes. But the administration didn’t make any serious push at the WTO in 2005, and by the Hong Kong ministerial in December, you could look ahead to Tuesday’s mid-terms. Moreover, the July 2005 pork-laden passage of CAFTA exposed the President’s limited ability to pressure Congress on even the most watered-down trade deals and made me pessimistic about the future of trade liberalization long before a Democratic takeover of Congress seemed likely.

That’s why I disagree with Bronwen Maddox, who wrote that “if the Democrats win back the House of Representatives today, that is the end of the enthusiasm in the US for free-trade deals.” There never was any enthusiasm. Congressional staffers tell me that no one in Washington has considered TPA renewal to be feasible for a couple of years, and Chuck Grassley told Pascal Lamy that it had no chance back in February. While the Democratic Congress will “probably be marginally more protectionist than the current one,” I don’t think that means much difference in terms of further liberalization. The WTO talks were dormant already, Bhagwati’s “far from dead” optimism notwithstanding, and no one expects them to go anywhere without TPA after it expires on July 1.

When might the Doha round resume? Richard Baldwin previously commented that EU CAP reform in 2008/2009 may revive the round. Last Friday, Alan Beattie described the negotiations as in a “deep freeze.” He said they wouldn’t have a chance until after the next US presidential election, and some analysts have even said 2012. I haven’t seen anyone predicting substantive action prior to 2008.

So don’t blame Democrats for hurting Doha, which had already collapsed and wasn’t going anywhere soon even if Republicans kept control of Congress. The interesting question: do the election results increase the risk of protectionist backsliding that we’ve managed to avoid thus far?