Free Trade Optimism: Lessons From the Battle in Seattle

To see why this was important and what problems it solved, we need to go back to Seattle. Moore knew that the collapse of the talks there had less to do with the demonstrations outside the conference center than with the intransigence of the governments inside. Their clashes revolved around two main axes of conflict. First, the United States -- backed by the Cairns Group of 17 agricultural exporters, which it leads -- locked horns with the EU and Japan over agricultural liberalization. The United States demanded significant improvements in market access and a phasing out of export subsidies for farm products, which the EU rejected. Second, developing countries felt that the previous Uruguay Round of trade negotiations had left them saddled with costly obligations, that the trips (trade-related aspects of intellectual property rights) agreement worked against them, and that the rich countries had failed to live up to their commitments (with respect to, for example, liberalization of textiles trade and increased financial assistance). The developing countries were opposed to the push by advanced countries to expand the negotiating agenda to include new issues such as investment, government procurement, competition policy, environment, and labor standards, which the developing countries felt would impose costs and obligations predominantly on them.

Agriculture thus became, in Moore's words, the "deal-maker or deal-breaker," since without enthusiastic U.S. support the new round would have gone nowhere. Much of Moore's hard work between Seattle and Doha was directed at putting agriculture at the center of a "development" agenda that would not only capture

the moral high ground but also make the momentum for agricultural liberalization unstoppable by enlisting developing-country support on the issue. "By making agriculture a development issue," Moore writes in a revealing passage, "we brought Africa, most of Asia and Latin America together on a common agenda." This brilliant tactic bridged both of the divides that had led to the collapse of the Seattle ministerial meeting. The EU could not have blocked an agreement at Doha without appearing to undermine development, and developing countries could walk away with a document that claimed to put their interests at the center.

Unfortunately, Moore does not tell us how he managed to convince developing countries that an agenda little changed from Seattle could now serve as the blueprint for a development round. As the locution of the quote above suggests, it was hardly evident that an agenda centered on agriculture would amount to a development round. The developing countries' interest in agricultural liberalization had always been ambiguous. Aside from a few middle-income members of the Cairns Group such as Argentina, Brazil, Chile, and Thailand, which are important agricultural exporters, few developing countries looked at this area as a major source of gain. Research done at the World Bank during the Uruguay Round had highlighted the possibility that most sub-Saharan African nations could actually end up worse off as a result of a rise in world food prices produced by a reduction in European export subsidies. As Arvind Panagariya, an economist at the University of Maryland and a strong supporter of trade liberalization, has noted, the vast majority of the world's poorest nations are net importers of agricultural products and will end up paying higher prices for their imports if agricultural export subsidies in the rich countries are phased out. For the most part, developing countries' interests lie not in deep liberalization in agriculture, but in restricting the agenda to a narrow set of issues and in fixing the perceived shortcomings of the Uruguay Round.

There were ways in which the negotiating agenda could have been broadened in a truly development-oriented way. To take the most glaring omission, developing nations would have benefited most from reform in an area in which the Doha framework makes no commitments at all: the liberalization of temporary international labor flows. It is hard to identify any other issue in the global economy with comparable potential for raising income levels in poor countries while enhancing the efficiency of global resource allocation. Even a relatively small program of temporary work visas in rich countries could generate greater income gains for workers from poor countries than all of the Doha proposals put together.

Instead, developing nations were saddled with negotiations on ill-fitting issues such as the environment, investment, government procurement, competition policy, and trade facilitation. This was the price of leaning so heavily on agriculture. These new areas were of particular interest to the EU (and, in some cases, to Japan), and their inclusion on the agenda was the quid pro quo for the EU's acquiescence on agriculture. The irony is that the costs of this particular tradeoff will be borne almost exclusively by developing countries, in effect adding injury to insult. Moore devotes a chapter to these new issues, making the case that the developing nations will eventually benefit by undertaking reforms in these areas. But he is not very convincing, and ultimately one gets the feeling that his heart is not quite in it.

IDEALS VS. BUREAUCRACIES

Moore's strategy did pay off, and the world's trade officialdom was spared another embarrassment in Doha. But the eventual outcome remains very much in doubt. Negotiations are practically deadlocked over agriculture, as they are over trips. Few knowledgeable observers believe that much progress will be made before trade ministers next meet in Cancún, Mexico, in September of this year. And even if there is progress, it will be difficult to hail it as a great success for development, no matter what the official appellation of the round.