Karl Meilke is in the News!

Posted on Monday, January 12, 2009

WTO talks collapse over minor item: With billions at stake, differences came down to a few million in special safeguard measures

The collapse of the trade talks this past year appears to hinge on minor details in special safeguard measures sought by developing nations. Economists Jason Grant of Virginia Polytechnical Institute and State University and Karl Meilke of the University of Guelph analyzed how the deal would have applied to international wheat trade and conclude that the difference between what was offered and what the group of 33 developing countries wanted amounted to $19 million a year. They calculated that the farmers in the developing countries would have gained $204 million in protection under the proposal on the table and $223 million from what they wanted. This is a debate over relatively miniscule amounts of protection in a set of proposals that called for multi-billion-dollar cuts to domestic farm subsidies, export subsidies and trade barriers for European, U.S. and Japanese farmers. Grant and Meilke say the collapse of the talks over such a minor "technical detail . . . came as quite a shock to international trade economists and policy makers alike." They note that the Special Safeguard Measure in dispute is far from the most important concessions to developing countries, such as: - Allowing them to cut tariffs be one-third less than the richer countries. - Allowing Small Vulnerable Economies and recent additions to the World Trade Organization (eg. China) to cut by even less. - Exempting the Least Developed countries from any tariff cuts. The nub of the disagreement was whether the developing nations would be able to apply new formulas to increase their tariffs even higher than they are under the existing Uruguay-round agreement. There was an attempt to hold another meeting of political leaders in early December, but that was scrapped. Canada refused to bend on protection for dairy and poultry farmers and there were doubts that the U.S. could deliver acceptance of a deal because a new president, senators and congressmen take office in late January.
Source: Ontario Farmer, December 29, 2008