Business | Economy
Trade deal would not ease global food costs
A new world trade deal, more than six years in the making, finally appears to be within reach, but it may not ease raging global food costs that have protesters pouring into the streets from Egypt to Haiti.
- Reuters
- Published: 00:14 April 13, 2008
Washington: A new world trade deal, more than six years in the making, finally appears to be within reach, but it may not ease raging global food costs that have protesters pouring into the streets from Egypt to Haiti.
On the contrary, many experts expect a new global pact would actually lift food prices slightly, at least at first.
Policymakers plugging the World Trade Organisation's (WTO) Doha round have said closing a deal on the plan to lower farm subsidies and tariffs the world over would stabilise food markets, lock in lower tariffs and spur food production.
If negotiators in Geneva can break a long-standing impasse over subsidies and market access for farm goods, the WTO may call together ministers to seal a deal before President George W. Bush leaves office next January.
"The poor need lower food prices now," Robert Zoellick, president of the World Bank, said recently as he called for a "new deal" to respond to the commodity revolution that has pushed up global food prices by over 80 per cent since 2005.
"If ever there is a time to cut distorting agricultural subsidies and open markets for food imports, it must be now. If not now, when?" asked the former US trade negotiator.
Arguing a deal may ease the price crunch is a novel approach for advocates of the Doha round. For years, they said freer trade would help developing nations boost prices for farm exports, in part by cutting price-depressing subsidies in wealthy nations.
"Wait a second," Harvard professor Dani Rodrik said in a recent blog posting. "Aren't these price effects the main channel through which agricultural trade liberalisation in the North is supposed to benefit the South?" he asked.
Economists have long predicted that a new world trade deal would lift commodity and food prices by a small increment - a couple of percentage points globally for most products, and a bit more for milk, oilseeds or paddy rice.
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