Failure of Global Trade Talks Is Traced to the Power of Farmers
By STEVEN R. WEISMAN and ALEXEI BARRIONUEVO
Published: July 27, 2006
WASHINGTON, July 26 — For months, the Bush administration had tirelessly
warned farmers to prepare for the possibility of a global trade deal. At the
Indiana State Fair last year, Charles F. Conner, the deputy agriculture
secretary, told listeners not to expect “anything close” to the subsidies
they had been used to for decades.
But the collapse of world trade talks this week has again proved that a
small number of farmers in the United States — as well as Europe, Japan,
India and other trading partners — have the power to resist lower
agricultural tariffs and subsidies, even though a global trade deal might
ultimately benefit most of them.
In Congress and among farm lobbyists, though, the breakdown of the trade
talks was viewed as a dodged missile.
“We are proud that the U.S. stood up and held the line,” said Bob Stallman,
president of the American Farm Bureau Federation. “No deal is better than a
Trade officials now fear that in the wake of the failure this week, there
will be a proliferation of nasty disputes in the World Trade Organization
and that the momentum for growth of trade might slow from its period of
recent growth, expanding to $9.12 trillion in 2004 from $6.45 trillion in
At the same time, many experts say, the big multinational corporations that
have gained the most from globalization did not push all that hard for a
deal, apparently convinced that they would continue to prosper even if
further progress toward an open trading system faltered.
American and European officials say the real cost of the failure will be
borne by the poorest countries, in whose name the failed round of trade
talks was begun in Doha, the capital of the Persian Gulf emirate of Qatar,
after the attacks of Sept. 11, 2001.
The central idea behind the trade round was ostensibly to help poor farmers
in Asia, Africa and Latin America export their products to richer countries,
while also opening developing countries to more goods and services from the
Last October, the United States proposed a cut of more than 60 percent in
tariffs and subsidies by Europe and the United States, and something less
for poor countries. American officials say that their farm tariffs are
already half the levels of those in Europe and that American
trade-distorting farm subsidies are $12.5 billion compared with $33 billion
But led by Peter Mandelson, chief negotiator for the European Union, many
foreign trade officials asserted that the American offer was deceptive. The
real cuts, Mr. Mandelson said, were far less.
A senior British political figure close to Prime Minister Tony Blair, Mr.
Mandelson suggested that the Bush administration was loath to make a trade
deal in an election year with farmers’ votes crucial to Republicans. By
doing so, he angered American officials, who accused him of hypocrisy.
“I understand the politics of this situation,” Mr. Mandelson said in an
interview after the collapse of the talks. “Coming from Europe, I understand
agricultural politics quite well.”
In response, Susan C. Schwab, the United States trade representative, and
Agriculture Secretary Mike Johanns asserted that Mr. Mandelson and the
Europeans were themselves proposing cuts that contained loopholes and
exceptions for “sensitive” commodities like dairy and beef because of their
“The catch is it takes two to tango and 149 to reach a consensus,” Ms.
Schwab said. “Unfortunately, several key developed countries and developing
countries have not bellied up to the bar to play their role.” She said she
could not have gone along with further concessions, even though the United
States stood to gain more than most countries, without more flexibility from
At a time when the United States and the Europeans have come together on
diplomatic issues like Iran, this trans-Atlantic rift and the charges on
both sides of deliberate distortions of their proposals threaten to become
The seeming paradox is that in Europe, the United States and Japan, farmers
now account for only 1 or 2 percent of the work force and little more of the
overall economy. But they have become the pivot of global trade talks
because farmers everywhere exercise power beyond their numbers.
And among large developing nations like India, Brazil and Indonesia — which
have benefited from integration into the global economy — farmers are such a
large voting bloc that they can insist on being exempt from trade rules that
benefit manufacturers and outsourcing services in their countries.
“Agriculture has always had enormous influence in trade talks because of a
central truth,” said Stuart E. Eizenstat, a former under secretary of state
for economic affairs under President Bill Clinton. “Constituents who feel
disadvantaged by trade deals can always outmaneuver those constituents, or
the general public, that benefits from them.”
Another factor affecting the usual trade-offs on trade this year is that
American manufacturers of machinery, computer parts and the like, and the
banking and insurance industries that have spread throughout the world,
stood back from the Doha round, many experts say.
In the 1990’s, trade deals that stirred opposition in the American textile
industry and other areas hurt by imports were countered by those benefiting
from trade. But since big banks, insurers and manufacturers are already
enjoying the benefits of globalization, there are signs that they have
“The dynamics of trade have changed,” said Mickey Kantor, a top trade envoy
under President Clinton. “The least developed countries like India are
asserting themselves like never before. Second, if industrial and service
don’t have as much a stake, they’re not going to put the pressure on to
counter agriculture or textiles.”
Though the Europeans say that the United States had to improve on its offer
of last October to keep the talks going, there was no political support for
Indeed, last month 57 Republican and Democratic senators urged President
Bush not to make further concessions in agriculture to the Europeans until
they showed flexibility in return. In private meetings over the last two
weeks, the message was delivered bluntly to Ms. Schwab and Mr. Johanns,
trade officials say.
Indeed, the political situation is so fraught that some experts wonder why
the Bush administration scheduled a make-or-break session on the trade talks
knowing it could not make a major compromise at a time when Mr. Bush and the
Republicans are fighting an uphill battle to avoid heavy losses in
“This has been badly handled,” Mr. Kantor said. “To have a trade negotiation
at this point, and try to get the Bush administration to make very difficult
choices before an election doesn’t make sense.”
For all their diminished role in the economy, farmers in the pivotal
battleground states of the Midwest still have a strong appeal to the
American conscience. But that same appeal also works in Europe, where
politicians see farmers as the backbone of their societies.
“Agricultural is so emotional and so cultural for many nations, including
ours,” said John Engler, president of the National Association of
Manufacturers and former Republican governor of Michigan. “We were all
agrarian societies once upon a time.”
By all accounts, the biggest supporter of farmers in Europe is France, where
even the offer by Mr. Mandelson drew criticism as “unacceptable.” Ms.
Schwab, who took office only in June, tried to orchestrate European
opposition to French intransigence, and to orchestrate global opposition to
the European stance on farm supports.
Asked what happened to that strategy, an American trade official shrugged
and said: “If it’s a toss-up between French farmers and the rest of the
world, apparently it’s French farmers who will win.”