The Pop Psychology of WTO Doha Round Deadlock

♠ Posted by Emmanuel in at 5/28/2008 01:09:00 AM
Eric Berne's 1964 book Games People Play was more or less the starting point for a veritable cottage industry of self-help books, from Thomas Harris's I'm OK, You're OK to those endless spins on the Mars-and-Venus theme. Today, I will use games illustrated in Berne's book to explain what is going on in the current round of WTO trade negotiations. As I am (somewhat) cynical and value non-esoteric explanations, Berne's book fits my objectives here to a T. Unlike many subsequent books in the pop psychology genre, Games People Play is actually quite instructive. Already, I have alluded to Berne's games in calling the convoluted US position--conflicted as it is between the executive and legislature--one of "Kick Me."

I take no credit whatsoever in noting that the aftermath of the US passing the abominable farm bill is proceeding as I described earlier as anyone with a passing interest in the subject matter could have predicted the same. Yes, Bush vetoed the legislation, but healthy majorities in both houses of Congress ensure a veto override. The latest "modalities" on agricultural issues have now been circulated and talks will resume, but the passage of the US farm bill has definitely not been a sign of encouragement to countries which have long faulted the US for its extensive use of subsidies. From Reuters:

Several countries at the World Trade Organization (WTO) criticized the new U.S. farm bill on Monday for raising farm support when the WTO is trying to reach a deal to cut agricultural subsidies.

"A few of them had a go at the new farm bill," said New Zealand's WTO ambassador Crawford Falconer, after WTO members met to review the revised proposals he issued last week for a farm deal in the WTO's Doha round. The countries criticizing the $289 billion U.S. farm bill, passed last Thursday and overriding a presidential veto, included Burkina Faso, speaking for cotton producers, Canada, Paraguay and Bolivia.

Falconer said the new bill did not directly affect WTO negotiations, but agreed it would have a negative affect. "It's another factor which complicates everybody's life, there's no doubt about that politically," he said.

If WTO members, including the United States, agree a deal including reductions in farm support, and the U.S. Congress ratifies it, Congress would have to amend the farm bill to bring it into line with the new WTO rules.

Canada said that under certain assumptions the United States could hit its proposed limit for overall trade-distorting support with one product under the new bill, a participant in the meeting said. Given that food prices are likely to fall back from their current record highs in the coming years, the new farm bill will trigger support earlier than the present one, the senior negotiator for a major developing country told reporters.

But the new bill could also encourage developing countries to try to bank what has been agreed now, rather than let negotiations drag on into a new U.S. administration next year. Under current proposals, which Washington has indicated it could accept, the U.S. ceiling for overall trade-distorting support would fall to $13-16.4 billion from an estimated $48.2 billion now.

Worse still, many EU countries are not keen on giving up agricultural supports, either. Agence-France Presse notes that France and Ireland are taking umbrage to EU Trade Commissioner Peter Mandelson offering more agricultural market access to LDCs during the current round of negotiations in exchange for non-agricultural market access in LDCs:

France and Ireland poured cold water Monday on proposals to kick-start World Trade Organisation (WTO) talks, with Paris and Dublin indicating a sizeable gulf with EU Trade Commissioner Peter Mandelson. French trade secretary Anne-Marie Idrac said the two countries were far from alone in having misgivings, after she and her European Union counterparts were briefed by Mandelson on the state of negotiations. "A majority" of the 27 EU member states "expressed concern," she said.

Last week the WTO submitted new proposals on agriculture and industry to its 152 members in an effort to revive the stalled Doha round of trade liberalisation talks, launched in the Qatari capital in November 2001. Ironing out differences in farm and industrial goods areas has long dogged negotiators, while the pace of talks on services is also considered to have lagged.

"We have a lot of questions" about the agriculture proposals and "for us French there's no improvement on market access for our industrial goods to emerging markets," said Idrac. "We are less than ever in an ambitious and balanced negotiation," she told journalists after a meeting of EU trade ministers.

New Irish Foreign Minister Micheal Martin, speaking to reporters in Brussels, said there was no need and little chance of a WTO deal before the US presidential election in November. "Our view is you need substance. It's not about completing this just because there's six months left for the US presidency," he said, rejecting Mandelson's stance. Asked if he thought that it would be wise to wait until after the US election he replied "that would be my view, yes." Ireland is particularly worried that the current proposals will hit its vital meat industry hard. "The very clear imbalance in the present set of proposals makes them unacceptable to Ireland and to others," Martin said.

An EU official speaking on condition of anonymity said: "France, Poland, Ireland and to a lesser extent Lithuania really have problems with what's on the table. "Sweden and Britain are more positive," the official said, while "in the middle there is a series of countries with concerns," although "nobody called for the texts to be rejected."

Swedish Foreign Minister Carl Bildt said that Mandelson, whom France has attacked in the past for making too many concessions, enjoyed "fairly broad support" among ministers. "Some were less satisfied, and there are a number of open points to be addressed in the next ministerial in Geneva," Bildt stated.

Idrac said that Paris was against the idea of a ministerial meeting at the global free-trade body in June. "We've got the impression that the conditions are less than ever in place for a ministerial meeting in the short term that would meet European interests," she said.

This brings me to more of Berne's games. In all honesty, I believe that the Doha round as it stands is an unworkable mess, and that we are no closer to a deal now than we were in 2005 (or even 2001, for that matter). US, EU, and Japanese agricultural protectionism shows little sign of abating, and LDCs have become bolder in their demands in the meantime. Given the untenable position of the US on agricultural subsidies, LDCs and others with grievances over America's farm subsidies have the US right where they want it. In Berne-speak, it's "Now I've Got You, You SOB" (NIGYSOB). Agricultural supports are a way of demonstrating how others have been wronged by US insensitivity to global concerns. This will play out for a while, and I envision the US being dragged to the Dispute Settlement Mechanism for litigation in the near future.

There is little reason to expect a forthcoming deal. As most countries are likely to have similar expectations, multilateral negotiations may be little more than points-scoring opportunities that play to domestic audiences. For (most of) the industrialized countries, it's "cherishing our proud agricultural history" or something to that effect. For LDCs, it's "standing up to EU and US bullying despite offering few concessions on agricultural market access." The end result is same old, same old: deadlock. Thus, the Doha round degenerates into a game of ''Why Don't You--Yes But'' in which players begin by bemoaning a problem and inviting others to suggest solutions, all of which will be shot down. The real objective according to Berne is ''to demonstrate that no one can give them an acceptable suggestion.''

If someone can come up with a better pop psychology for trade negotiation failure, I'm all ears. Be careful, though, as I may be duping you into a game of "See What You Made Me Do?" (SWYMD).