Business | Opinion
Gulf states stand to lose from Doha round collapse
The economies of Gulf Cooperation Council (GCC) stand to suffer from the possible collapse of Doha round.
- By Dr Jasim Ali, Special to Gulf News
- Published: 00:02 August 10, 2008
The economies of Gulf Cooperation Council (GCC) stand to suffer from the possible collapse of Doha round.
Launched in the Qatari capital in 2001, progress on the round remains deadlocked over differences related to the agricultural sector. The World Trade Organisation (WTO) comprises some 150 members, including the six-nation Gulf Cooperation Council (GCC) states.
In July, trade ministers from some 35 member countries failed to resolve differences over outstanding issues. On one hand, India and Brazil press the US and EU to limit subsidies granted to their farmers. On the other hand, the US and EU are pressuring emerging heavyweights to open up their economies and limit import duties.
By one account, Federal authorities extended a hefty $150 billion to American farmers from 1995 to 2005. Likewise, the 27-EU countries are noted for providing generous subsidies to their farmers.
Pressed by France, the EU is showing no sign of compromise. Still, Japan is accused of protecting its rice industry with extensive subsidies.
Support for the farm industry is largely a political matter. It is argued that politicians in the West fear being depicted as anti-farmers. Farm advocates and pressure groups tend to lobby for politicians noted for supporting farm issues, notably subsidies.
On the other hand, emerging heavyweights such as India and Brazil feel that they have no choice but to apply import duties on subsidised farm products in order to protect their farm businesses. The duties amount to some 65 per cent on certain agricultural products. The policy is partly meant to generate revenue for the treasury.
The trouble is that absence of global progress on agriculture sector could further complicate the food crisis. Prices of foodstuff had increased by some 75 per cent since 2000.
To be sure, rising food prices account for about 30 per cent of inflationary pressures encircling GCC economies. Inflation is a primary challenge facing GCC economies, as it undermines living conditions for locals and expatriates alike.
GCC states do not have the luxury of developing local farm businesses for numerous reasons including water scarcity and limited availability of farmlands.
For instance, a tonne of barley requires 1,212 cubic metres (42,801 cubic feet) of ground water reserves in Saudi Arabia, which in turn possesses the most fertile farm territories. Looking for innovative solutions, GCC countries are increasingly exploring buying farmlands abroad to produce output exclusively for local markets.
However, the solution is not cheap by any means. The UAE reportedly intends to acquire some 100,000 acres in Pakistan at the cost of $500 million.
The imminent failure of Doha round is particular painful for Saudi Arabia following years of painstaking efforts to join the WTO. The kingdom was acceded to the WTO in 2005, making it the last GCC state joining the world body.
The admission process required Saudi authorities agreeing to open up numerous sectors to foreign competition, notably the financial services sector.
Saudi Arabia officials were aiming high from WTO membership, notably having unrestricted access to some 150 member countries.
However, economic integration of WTO member countries has not been on the table over the last few years, or ever since the Saudi accession. In fact, WTO members could not find solution to the food crisis or a basic necessity, let alone liberalising service sectors.
The writer is a Member of Parliament in Bahrain.
Share this article
More from Business Opinion
More from Business
Popular in Business
-
General
Precious jump
Gold prices at new high as India's central bank buys $6.7b worth of gold
Business Editor's choice
-
UAE companies in full force at WTM
Seventy-eight participants are from Dubai and 50 from Abu Dhabi
-
DIFC committed to high standards
Ensures an efficient process to serve the business community
-
Sweet life in the Middle East
A sweet look at the confectionary industry in the UAE and Middle East
