Corn Politics

"Tens of thousands of people have marched through Mexico City in a protest against the rising price of tortillas."

Maybe it is not ethanol, after all, but the Mexican corn monopoly.

Meanwhile, this ethanol windfall might relax the political constraints on reducing agricultural subsidies and make it possible to conclude the Doha Round.

Former USTR on the Doha Round

Charlene Barshefsky, who served as the USTR under the Clinton administration, discusses the prospects for the Doha Round and offers a few criticisms of the WTO process.

The most interesting bit: "If I might quote former Mexican president Ernesto Zedillo, who now heads the Yale Center for the Study of Globalization, what the world ought to do is “save the WTO from Doha” and rounds like it. The biggest risk, in my view, to the WTO is actually not in a failure of Doha. It is in the irrelevance of the WTO as globalization proceeds at breakneck speed, followed only slowly by the WTO. It’s not leading. It does, as I said, provide the baseline, but not the genuine impetus toward globalization. The longer the time-spread between global developments and WTO agreements, the less relevant the WTO will become."

As a corrective, she proposes shifting away from discrete bargaining rounds to a continuous bargaining process in which governments negotiate single sector (single dimension bargaining in the language we used in class). It is not obvious to me how shifting from integrative bargaining to distributive bargaining is more likely to yield results.

The Evolution of Global Income Inequality

This is one of the coolest things I have seen in a while. If you prefer, you can watch Professor Rosling lecturing on the same.

"Too Many Concessions"...and Now New Issues Too

The Financial Times reports that "Peter Mandelson, the EU trade commissioner, was rebuked on Monday by a majority of the bloc’s agriculture ministers for offering big farm tariff cuts as part of renewed push to conclude global trade talks. Mr Mandelson, anxious to kick-start the Doha round of negotiations before US president George W. Bush loses his power to make deals in July, said the EU could offer cuts close to the 54 per cent demanded by developing countries if the US slashed its agricultural subsidies. However, a majority of the EU’s 27 farm ministers in Brussels said Mr Mandelson had offered too many concessions." The French seem particularly unhappy.

Meanwhile, Bush is supposed to make an economic policy speech tomorrow asking Congress to renew Trade Promotion Authority (TPA). "The Democrats appear poised to condition renewal of TPA (or Fast Track) on labor and environmental standards. "Language on such standards as the right to associate and to bargain collectively, prohibitions on child labor and forced labor, and employment nondiscrimination, they say, is likely to be included in any legislation to renew Trade Promotion Authority (TPA)." It seems unlikely that such linkage could be incorporated in Doha.

The Politics of Ethanol (and corn)

Current discussion of ethanol and alternative fuels (invigorated by last week's SOTU) has had me wondering how the push for alternative fuel would fit into existing WTO rules and regulations. Is corn grown for ethanol production an agricultural subsidy? Is a tariff on ethanol a tariff on corn, too? Here are some initial and somewhat rambling thoughts.

1. The U.S. does not grow enough corn to produce the amount of ethanol the Bush proposal requires.
2. Perhaps production subsidies would encourage more corn production? Or high tariffs on imported ethanol would raise the price of ethanol and induce more corn production?
3. If the corn is then used to produce fuel for cars (rather than for humans), is the subsidy technically an agricultural subsidy?
4. Brazil seems eager for the WTO to begin thinking about this issue. No surprise, as Brazil produces ethanol with sugar cane more cheaply than the US can from corn.

More broadly, one might usefully wonder whether current ethanol enthusiasm is driven by broad concerns about energy independence, or whether instead it reflects politics--how can politicians maintain the support of the corn belt as they reduce agricultural subsidies? Mandating ethanol raises the demand for corn, greater demand raises corn prices (and thus farm incomes). Of course, we all pay more for our food. And Americans are not the only ones affected--the great tortilla crisis

Many argue that a tax on gasoline is a more direct approach to the energy dependence/climate change question. But it is much harder to sell politically...

The Doha Round Resumes

Governments agreed to resume trade negotiations. The approach strives to work out specific details on agriculture, NAMA, and services over the next couple of months and then try to pull together a full agreement by April or so.

If you wish to listen to the World Economic Forum WTO panel (see previous post), a podcast is available. They also promise a video, but that would be too much to hope for.

WEF Webcast on the Doha Round

The WTO Director-General Pascal Lamy will take part in a live webcast entitled "Frozen Trade Talks and the Need for Progress" at the World Economic Forum on 27 January 2007 at 16.45 Central European Time. Which I believe is 10:45 Eastern Standard Time.

Many of the big players will participate:

• Akira Amari, Minister of Economy, Trade and Industry of Japan
• Celso Amorim, Minister of Foreign Relations of Brazil
• Pascal Lamy, Director-General, World Trade Organization (WTO), Geneva
• Doris Leuthard, Federal Councillor of Economic Affairs of the Swiss Confederation
• Peter Mandelson, Commissioner, Trade, European Commission, Brussels
• Kamal Nath, Minister of Commerce and Industry of India
• Susan Schwab, US Trade Representative