Open Letter to Prime and Trade Ministers:

Reconsider your negotiating positions for the Doha Round.

(Responses and replies are appended to this page below)

3rd October, 2006

On the eve of the next WTO General Council (October 10th – 11th, 2006) we write to express our deep concern about the Doha Round. We deplore the suspension of Doha Development Round Negotiations, and entirely agree with WTO Director General Pascal Lamy that this suspension creates no winners.  As the Economist wrote, this suspension is ‘senseless and short-sighted’. We fully endorse the International Food and Agricultural Trade Policy Council position on this suspension. We also fully endorse the statement issued at the recent Conference of the International Association of Agricultural Economists (David Orden, 16.08.06), which makes two practical proposals. The first is to provide the poorest countries with full and free access to the wealthiest countries’ markets, as proposed by the European Union. The second is that all nations, rich and poor, should substantially reduce the number of ’sensitive and special’ products. Research from a number of institutions devoted to serious policy analysis, including the FAO and the World Bank, shows that these proposals would especially benefit both low- and middle-income developing countries, where agriculture is an important source of employment and export earnings.

We urge you to use this pause in formal negotiations to agree on mutually advantageous policy reforms that lead to less-protected and less-subsidized agricultural and food trade.  Further delay condemns many to a continuing cycle of poverty, denying them the opportunities for further development and economic growth. Delay also condemns those in advanced and large countries to continue their own cycle of inefficient and costly interventions to address rural development and farm restructuring. We echo Lamy’s plea (17. July, 2006) to the leaders of the major economies: to give ministers more room to negotiate. Please, consider that your current positions may be partisan and parochial from a world perspective. Further delay to the Doha Round provides few with merely temporary benefit. You have immense responsibilities for the external effects of your domestic policies. We wish you wisdom and courage in your decisions, and look forward to an early resumption of negotiations and a progressive conclusion to the Doha Round.

Signed:
David Harvey, UK
Secondo Tarditi, Italy
Ulrich Koester, Germany
Alberto Valdes, Chile
Giovanni Anania, Italy
Gervasio Antonelli, Italy
Ousmane Badiane, USA
Richard Barichello, Canada
David Blandford, USA
Gunnar Breusted, Germany
Martina Brockmeier, Germany
Bernhard Brümmer, Germany
David Bullock, USA
Carlo Bernini Carri, Italy
Gabriele Canali, Italy
Csaba Csaki, Hungary
Maurizio Castelli, Italy
Giacomo Corazza, Italy
Giuseppe Cucuzza, Italy
Sophia Davidova, UK
Bruno Henry de Frahan, Belgium
Fabrizio De Filippis, Italy
Harry de Gorter, USA
Fatmir Guri, Albania
Emil Erjavec, Slovenija
Szczepan Figiel, Poland
Klaus Frohberg, Germany
Bruce Gardner, USA
Paolo Giacomelli, Italy
Thomas Glauben, Germany
Richard Gray, Canada
Fatmir Guri, France
Monika Hartmann, Germany
Thomas Heckelei, Germany
Douglas Hedley, Canada
Thomas Herzfeld, Germany
Jimmye Hillman, USA
Heinrich Hockmann, Germany
Bruce Huff, Canada
Tim Josling, USA/UK
Dieter Kirschke, Germany
Arie Kuyvenhoven, Netherlands
Rolf Langhammer, Germany
Francesco Lechi, Italy
J P Loy, Germany
Tim Lloyd, UK
Gordon MacAulay, Australia
Donald MacLaren, Australia
Andrea Marchini, Italy
William A. Masters, USA
Karl Meilke, Canada
William H. Meyers, USA
Dragan Miljkovic, USA
Bill Miner, Canada
Rosa Misso, Italy
Henk Moll, Netherlands
Knud Jørgen Munk, Denmark
Gerald Nelson, USA
Alessandro Olper, Italy
David Orden, USA
Carlo Perone Pacifico, Italy
Rossella Pampanini, Italy
Davide Pettenella, Italy
Kevin Parton, Australia
Michel Petit, France
Renato Pieri, Italy
Per Pinstrup-Andersen, USA
Kay Poggensee, Germany
Colin Poulton, UK
Mario Prestamburgo, Italy
Valentina Raimondi, Italy
Tony Rayner, UK
Brian Revell, UK
Matt Ridley, UK
Donato Romano, Italy
Franco Rosa, Italy
C. Ford Runge, USA
Robert St-Louis, Canada
Derek Shepherd, UK
Erich Schmidt, Germany
Michael Schmitz, Germany
Susan Senior, Italy
Valeria Sodano, Italy
Jörg-Volker     Schrader, Germany
G. Edward Schuh, USA
Paolo Sckokai, Italy
Eugenia Serova, Russia
Ian Sheldon, USA
Rüdiger Soltwedel, Germany
Daniel A. Sumner, USA
Jo Swinnen, Belgium
Robert L. Thompson, USA
Ken Thomson, UK
Bruce Traill, UK
Michele Veeman, Canada
Roberto Volpi, Italy
Joachim von Braun, USA
Harald von Witzke, Germany
Sandy Warley, Canada
Enno-Bughard Weitzel, Germany
Linda M. Young, USA
Vlade Zaric, Serbia
Bruna Zolin, Italy

This letter was sent to:  Economist, Financial Times, Wall Street Journal, New York Times, Toronto Globe and Mail, Sydney Morning Herald on Tuesday October 3rd, 1300, though a few of the names above arrived at this site too late to be included as signatories at that time. Only the FT responded, to the effect that it did not publish open letters as a matter of policy, but would pass the letter to their World Trade Editor, in case he could use it.   However, his response was that the Doha suspension was rather old news, and that there was no news of anything happening.  It was, therefore, also sent to the (London) Times, Guardian and Independent newspapers on October 6th.  The Independent and the Guardian both published the letter, the latter with the full list of names, as available on October 6th, and former with an accompanying story repeating the essence of the letter.

Responses & Replies:

13th October, 2006:  "I would like to thank you for your recent open letter signed by 100 economists and sent to Prime Ministers and Trade Ministers around the world urging a restart of the Doha Round.   The current stalemate in the negotiations requires signs of support from as many quarters as possible.  Yours is a valuable contribution to raising the stakes.
With my best regards,
Yours sincerely,
Pascal Lamy"  [DG, WTO]  See, for information: General Council report, Oct. 10th,  see also, e.g., Bridges (ICTSD), and for other references to the letter, e.g. Bloomberg (10th October)

Response 1:  I'm writing because I'm slightly puzzled by your signature appearing on the letter to the Guardian and also covered in the Independent today - and versions of which more widely distributed by the International Food and Agricultural Trade Policy Council.
The letter shows a peculiar lack of political awareness of the debates happening in Geneva - and in particular the pressure being exerted on developing countries to make further concessions in agricultural market access, with next to no movement from either the US or the EU on agricultural subsidies.
The letter also shows a rather glaring imbalance in the recommendations that it calls for - notably asking for all movement on market access, including from developing countries, but no movement on subsidies.
As developing countries only have market access to meet their concerns, whilst rich countries have both market access and subsidies, this is a very unbalanced approach to take - doubly so given the relative importance of agriculture in developed and developing countries and the current unequal state of global trade rules.
I work closely with the G33 group of developing countries who are extemely concerned that there proposals for Special and Differential Treatment are being singled out for attack - particuarly by USTR. 
You letter also aludes to "research from a number of institutions" that shows substantially reducing Special Products "would especially benefit both low and middle income countries".
If you could let me know which studies there are that examine these benefits from cutting Special Products. I'm only aware of a very bad hatchet job from Will Martin at the World Bank, which has since been withdrawn from publication after protests at it's misleading approach.  If this paper is the basis for the letter's claims this is worrying - see two critiques here. 
Given this context I would have hoped that you and the other 95 agricultural economists would have been able to take a more politically aware approach to public declarations of solutions to Doha impasses. Your proposals are unlikely to lead to a just and balanced outcome in Geneva - and in the current negotiating pressures may contribute to an unjust one.
This e-mail is meant in a constructive manner and hope is taken as such.

DRH Reply: Thanks for the references to the specific Ivanic & Martin paper (now withdrawn) and the two very able critiques. 
My short answer to your concerns is that any short letter is bound to over-simplify the complexities of actual negotiations, and this is clearly no exception.

The longer answer:  I'm afraid we rather took it for granted that we expect the developed countries to remove their export subsidies and equivalents, and to reduce and limit their domestic support, as well as reducing, if not eliminating their import protection.  This assumption was supposed to be implicit in the sentence: "Delay also condemns those in advanced and large countries to continue their own cycle of inefficient and costly interventions to address rural development and farm restructuring", but I admit that this might have been rather opaque. Sorry. 

Of course, many developing countries are arguing for their own Special and Differential Treatment, and I [and my cosignatories, no doubt] recognise that the G33 countries are standing firm on their requirements for widespread exemptions, despite the inclusion in the letter of the key focus of your concerns: "all nations, rich and poor".  The brutal answer to this stance is that neither the EU nor the US has any special or forceful domestic reasons for achieving any rapid or far-reaching agreement, unlike last time (when their own domestic policies were themselves unsustainable without some fairly radical reform, best pursued within the context of an international agreement). So, in terms of political realities, any Doha agreement must appeal to whatever sense of international responsibility and genuine altruism (inevitably coupled with some paternalism) the developed world (EU and US) care to exhibit and deploy.  My political antennae (which may well be deficient) tell me that the G33 and others are deluding themselves to think that this altruism is likely to extend to any very extensive special treatments - especially if these are to be accompanied by meaningful reductions in developed country support and protection (especially for their own 'sensitive & special' products). In terms of specific research supporting the claims that special treatments are bad news - I (at least) did not rely on any specific bit of research, simply the basic economics that trade restrictions are generally second-best solutions to market failures, and that they are otherwise bad news, and that preserving second best solutions on the grounds of political realities is precisely the nihilistic argument that got us into this mess in the first place - continued acceptance of second best cannot but help to lead to a race to the bottom.

In summary:  of course, the specific proposals in our letter would be an unjust and unbalanced outcome, if they were the only features of a settlement.  But 1, they are not the only features we are arguing for. We also argue for extensive rolling back, if not elimination of developed country support and protection (though perhaps did not make this clear enough).  But 2, development is not enhanced by trade protection, even when it is practiced by developing countries (and any analysis which suggests that it is, relative to a first-best treatment of market failures, is questionable, to say the least). But 3, political reality demands that the EU and US, in particular, be persuaded to live up to their international responsibilities, since they have very limited domestic self-interest reasons for making much concession on the agricultural front. Continual bleating (to be excessively blunt) about special treatments is hardly likely, I suggest, to encourage such statesmanlike behaviour from the rich - but then my political awareness may well be lacking.  Perhaps an alternative is to consider the sorts of market and development assistance which would be necessary to solve the problems which appear to require special protection, and seek commitments to this assistance as a concomitant of the Doha Deal - a genuine development round.

Thanks again for the response - it is encouraging that someone out there is still worrying about the round.

Alberto Valdes, Chile, replies:  just two simple points in reaction to these valuable remarks
Market access vis-à-vis domestic subsidies.  The empirical evidence does show the importance of the displacement effect on agricultural imports from nontariff support on domestic output in developed countries, but the negative effect on import demand of the tariffs is much greater. For example, the estimates by Bianchi, Rozada and Sanguinetti  2004 found that the point estimate of the elasticity of US import demand with respect to tariffs is six times that of the elasticity with respect to the tariff equivalent of subsidies. Similar findings were report by Hoekman, Ng and Olearraga in 2002. These studies are reviewed in Ch 6 in “Beyond the City: the Rural Contribution to Development”, World Bank 2005, by de Ferranti, Perry, Foster, Lederman and Valdes. So, the point here is that reduction in domestic subsidies and tariffs would be optimal for developing country producers and taxpayers in developed countries, but, if we had to emphasise one, we should reduce border protection.
 
Sensitive and special products (SPP). In the letter we say “rich and poor countries should substantially reduce the number of sensitive and special products”. We say ‘reduce’, not  eliminate and in any event the least developed do not have to do any reduction.  This may hurt existing producers in some, but not all developing countries. However, we should also consider the impact that reducing import barriers can have on consumer prices,  which would result in a substantial real income gain for consumers. For example, an  FAO study on rice  entitled ‘Sensitive and Special products – a rice perspective”, by C. Cascalpe and A. Prakash (Commodity market review 2005-2006), compares rice under a SPP regime vs freer trade in rice and  shows substantial net  real income gains from trade liberalization in rice for developing countries, which is reduced substantially if rice is included among the special product list.   Rice is important, since the world price is depressed by dumping from developed countries, but one should remember that there are several developing countries which are net exporters of rice, and which would benefit from market access while helping developing country’s consumers maintain lower prices. Net exporters of rice include Vietnam, Thailand, China, Myramar, Egypt, Brazil, India some years, Uruguay and some others.
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