Tuesday, July 22, 2008

Bush administration promising agricultural concessions in attempt to pass the worthless Doha round of WTO negotiations

A Reuters article reports that the current US and European leadership is working hard to pass the Doha round of the WTO negotiations. The story doesn't mention that the Doha Round does not address mercantilist government currency manipulations, a glaring oversight that makes the whole agreement worthless.

The article reports that the Bush administration wants to pass the agreement as a way to help the flagging world economy. But the real reason that the world economy is flagging is because the WTO rules, with or without the Doha Round, do not prohibit mercantilism, the practice of deliberately maximizing exports and minimizing imports in order to steal market share in the world economy.

As Richard Duncan pointed out in The Dollar Crisis: Causes Consequences and Cures, the (mercantilist) countries pursuing export-oriented growth are producing more and more goods without a corresponding increase in income among worldwide consumers.

Back in 2003, Duncan predicted exactly what is happening today: US consumers will not be able to borrow more for consumption. Like other debtors they will be forced to pull back.

Europe is picking up the slack in American demand at the moment, but unless the mercantilist countries change their policies, an eventual world depression or severe recession is in the offing.

In our book, Trading Away Our Future we advocate that the United States insist upon relatively balanced trade with the mercantilist countries. This would move the world system toward a sustainable system based upon balanced trade, instead of the current regulatory-based system that permits mercantilism.

We advocate that the United States require that our mercantilist trading partners move their trade with us toward balance over 5 years or we would force that movement toward balance using Import Certificates to balance trade, adapting a recommendation originally made by Warren Buffett in 2003.

The Bush administration is in a hurry to pass the agreement thinking that it would enhance the world economy. But any newly negotiated agreement that doesn't combat mercantilism is just another step toward the upcoming worldwide depression or recession.

The Bush administration should leave the negotiations to an Obama or McCain administration. Neither could be as incompetent as the Bush administration in these negotiations. Here is a selection from the story:

GENEVA (Reuters) - The United States sought to kickstart efforts to rescue a global trade deal on Tuesday by offering to cut a ceiling on its contested farm subsidies, but leading developing countries said it was not enough.

U.S. Trade Representative Susan Schwab announced Washington was ready to cap its trade-distorting farm subsidies at $15 billion (7.5 billion pounds) a year, on condition countries like Brazil and India also make concessions to save the World Trade Organisation talks.

"This is a major move, taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market access," Schwab told reporters.

The long-awaited U.S. move came on the second day of a week-long push by ministers for a breakthrough on farming and manufacturing -- core trade issues that have dogged the WTO's nearly seven-year-old Doha round of world trade talks....

Supporters of a WTO deal say it could send a morale-boosting signal to the slowing global economy.


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