Tag Archives: tariffs

Better News on Agricultural Tarrifs

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For once something positive to report:

After months of deadlock, the Doha round of global trade talks has taken a big step forward, thanks largely to an abstruse but important deal over agricultural tariffs….On May 4th, negotiators from America, the European Union, Brazil, India and Australia hammered out a formula for converting specific tariffs on agricultural goods, such as 10 cents per pound in weight, into percentage (or so-called ad valorem) tariffs.

Measuring all tariffs as a percentage of the goods? value is a prerequisite for further progress in talks about reducing trade barriers for agricultural goods. Under the broad outline for the farm-trade talks agreed last summer, countries pledged to divide their tariff barriers into different tiers. Higher tariffs will be cut more than lower ones. Not surprisingly, those countries that protect their farmers most wanted a conversion formula that translated specific tariffs into lower percentages, as that would imply smaller cuts down the road. In the end, the deal was based on a compromise proposal made by the European Union.
Source: The Economist

Obviously this is a dense technical issue, but the good news is that the EU has moved to break the deadlock. The slightly ironic detail is that the meeting where the agreement was ironed-out was held in Paris with the French referendum campaign as a background. Still I suppose this puts the suggestions that current EU policy is being driven exclusively by the needs of obtaining a ‘yes’ vote in some sort of context.

Also, as the Economist notes there is plenty yet to do. In the first place all the details on agriculture have still to be worked out. And then there is the tricky question of services……………

The Games We Choose To Play.

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Brad DeLong today quotes from a piece from the Wall Street Journal (the rest being locked in pay per view) about yesterday’s WTO decision to uphold its earlier finding that US steel duties of up to 30%, imposed last year to protect US steel producers restructuring, are illegal because the US never proved that their industry had in fact been harmed by cheap steel imports and also because of a number of other, more legalistic, reasons.


Consequently, Pascal Lamy, EU trade commissioner, announced that the EU would impose up to $2.2 billion in sanctions should Washington not withdraw the tariffs within 35 days. One can certainly discuss the benefit of such retaliatory measures in general. But their specific nature is far more interesting, in my opinion. Especially given that the 2004 US electoral map was the main driving force behind the White House’s decision to impose the tariffs in the first place.


“To increase political pressure, many of the products targeted are produced in swing states that would be crucial to Mr. Bush’s re-election campaign next year. The White House is facing heavy political pressure in the dispute, especially from steel-producing states like Pennsylvania, West Virginia and Ohio, where campaigners want the tariffs kept in place. Representatives of industries that would be targeted by the EU’s sanctions, as well as big steel users in the U.S., have argued against the tariffs…” (from the WSJ ).

French farmers and American steelmakers – different continents, same problem? Or is there something particular about the global external effects of the US Electoral College?