The Great Divide

By Daniel T. Griswold

Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute in Washington.

December 13, 2005

Central Hong Kong was swarming today with thousands of delegates, reporters, advisers, and representatives of non-governmental organizations, all drawn by the opening of the Sixth Ministerial Conference of the World Trade Organization. The next five days will determine whether the conference can advance the cause of a more open and prosperous world, or whether it was a grand waste of time.

Expectations are not high for a major breakthrough in negotiations here in Hong Kong. The main hang up is agriculture, and more specifically the European Union's unwillingness to discuss deep cuts in agricultural tariffs. At a briefing I attended Tuesday morning, U.S. trade officials came out swinging. They noted, correctly in my view, that the bold proposal by the U.S. government in October to sharply reduce global farm subsidies and tariffs has, for the past two months, been met with "squirming and wiggling" by European Union negotiators.

Of course, Americans also remain conflicted on the subject of trade and agriculture. At another briefing, I heard representatives of major U.S. agricultural groups endorse farm-trade liberalization -- but only under certain conditions. One speaker said it "is only just that countries with higher trade barriers make proportionately larger cuts in their tariffs." He also called for "free and balanced" trade and warned that "the next farm bill should not be written in Hong Kong."

If I had been on the panel, I would have replied that the main injustice of high tariffs is not the impact they have on producers in other countries, but the negative impact they have on consumers at home. We should reduce our farm subsidies and tariffs primarily for our own benefit, regardless of what other countries decide to do. (Check out our recent study on the high cost to Americans of U.S. farm policies.) And if we can achieve that through international negotiations that encourage other countries to reduce their own farm tariffs at the same time, all the better.

As I made the rounds of briefings and hotel-lobby chatter Tuesday, the consensus seems to be that the main parties are too far apart on market access for agricultural and non-agricultural products for there to even be an agreement this week on how they might proceed after leaving Hong Kong. A representative of the U.S. service industry told me the discussions are further along and would advance even more rapidly if real progress were made in the farm talks.

While expectations are low in Hong Kong, I do sense a business-like determination to make progress. The next few days will reveal if even a cautious optimism is justified.