Friday, June 5, 2009

What are they going to do about it?

The developing country group in the G-20 and the Cairns group struck back and condemned export subsidies for US Dairy products. The protectionist gauntlet is down and it will escalate into a free for all.

It's over. It's embarrassing to see the Doha Round and the world trading system, take a step back due to something the system was supposed to prevent. But, perhaps the cuts in the initial phases were too much and too touchy, politically, in the first place?

The US blames the EU for the first move on certain diary products and now, the U.S. is getting much of the blame for something they reacted to and well within WTO rules.

The CAP in the EU and their structural protectionist system, rooted deeply in their VAT denominated quota system, has outclassed the U.S. blunt protection system at its core.

When the U.S. gives support directly, the political positions against as well as the economic case against- built on structural dis-similarities- will always be against them and they have to use blunt protectionist forces.

Another blow for the Doha Round indeed!
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