Overcoming thorny farm issues a key challenge in regional free-trade talks
Overcoming thorny farm issues a key challenge in regional free-trade talks
Martin Abbugao, Agence France-Presse, Singapore
Overcoming thorny farm issues will be a key challenge as the
United States and Japan take on their developing Southeast Asian
allies in free-trade negotiations, analysts said.
Criticisms of the U.S.-Australia free trade agreement
underscore the potential minefields awaiting negotiators as they
attempt to weave a web of free-trade pacts across a region where
agriculture is the mainstay in several economies.
The U.S.-Australia accord came under fire in Australia because
it excludes sugar, largely maintains U.S. protection on dairy and
beef produce, and gives U.S. pharmaceutical firms the right to
appeal measures designed to keep the cost of medicines down.
The United States is due to start trade negotiations with
Thailand this month, with Malaysia seen as next in line, possibly
next year.
Japan has begun FTA talks with Thailand and the Philippines in
among the many upcoming or current FTA negotiations in the
region.
In the United States' free trade accord with Singapore,
Washington's first with an Asian country, agriculture was not an
issue because the city-state does not have a farm sector.
Kathie Krumm, a World Bank expert on trade and regional
integration, said one danger of the web of bilateral and regional
FTAs is that they may have "extensive provisions" for excluding
sensitive sectors like agriculture.
This would "substantially reduce the potential for welfare
gains from such arrangements," said Krumm, who co-edited East
Asia Integrates, a recently published World Bank book.
But should regional negotiators succeed in resolving farm
issues, it would result in opening up the sector on a wider
scale, Krumm told AFP.
"Regional agricultural markets are already large. If
agriculture can be liberalized in a regional setting, then a
favorable political dynamic can be set in place that will lead to
more open agricultural sectors overall," she said.
But some analysts said political lobbies could result in
watered down agreements.
Others fear protectionist moves in the United States to stem
the flight of hundreds of thousands of jobs to Asia would not sit
well with America's regional trading partners.
"I think the political lobby and how strong they are will
determine the outcome of the negotiations," said Jose Tongzon, an
economics professor at the National University of Singapore who
does consultancy work with the Association of Southeast Asian
Nations (ASEAN).
The U.S.-ASEAN Business Council, an influential business lobby
group, said despite protectionist rhetoric, it will push
Washington to deepen its trade engagement with ASEAN.
"Despite the furore over outsourcing and the kind of negative
signals against trade, we believe that the trade agenda will move
forward past the U.S.-Singapore FTA," council president Ernest
Bower told reporters here recently.
The council said Washington should aim to pass the U.S.-
Thailand FTA by 2005, prepare for free-trade talks with Malaysia,
normalize trade ties with Laos and help Vietnam enter the World
Trade Organization.
Bower acknowledged that reaching agreement on farm issues will
be a key challenge in the U.S.-Thailand negotiations, which could
serve as a "template" for future accords if successful.
"The stakes are very high and we will be lobbying for the U.S.
to give a very comprehensive offer to the Thais on agriculture.
We will also be asking the Thais to give a lot," Bower said.
He criticized recent moves by the United States accusing
Vietnam and Thailand of dumping shrimp exports on the U.S.
market, calling them "absolutely protectionism in its worst
form."
"These were our worst fears that in a political year in the
United States, protectionism can rear its ugly head and we think
that it's a terrible mistake."
FTAs lead to increased market access as economies, including
the financial and services sectors, are opened up. But they also
allow the influx of possibly cheaper and higher quality products
that would compete with locally made goods.
This is why negotiators must deal with entrenched vested
interests.
In the Philippines for example, a small but vocal left-wing
movement has made an uncompromising stand against globalization.
Thai negotiators will have to contend with a powerful
political lobby if they want Washington to phase out sugar quotas
faster than the 12-year time frame under the U.S.-Chile FTA, the
Thailand Development Research Institute said in a study.
Negotiators would also have to work on a mutually acceptable
sanitary and food safety standards to ease the entry of Thai
tropical fruits and vegetables to the U.S. market.
Hefty government subsidies to U.S. farmers would affect the
competitiveness of Thai rice exports, the study said.
Krumm of the World Bank suggested lessons can be learned from
the "early harvest" approach contained in the ASEAN-China FTA now
under negotiations.
The approach calls on both parties to liberalize trade in
certain goods well ahead of the full completion of the accord as
a goodwill gesture.
However, the main objective should still be an overall pact.
"If you allow yourself to get stuck with early harvest, that
will be a disaster for Southeast Asia," Bower said.