A successful global agreement among members of the WTO would “send positive signals” that might help stem increases in food prices, US Trade Representative Susan Schwab said.
WTO negotiators are in the seventh year of talks on an accord to trim farm aid, cut tariffs and lower industrial trade barriers to buoy the global economy and ease poverty. Efforts to reach an agreement this year come as prices of food, including rice and wheat, soar to records.
“Only by letting comparative advantage operate do you have the opportunity to really bring supply and demand back to a better balance,” Schwab said in an interview yesterday in Nusa Dua, Indonesia.
The price of rice, staple for half the world’s population, doubled in the past year in Chicago as farmers harvested less of the grain than is being consumed.
Wheat prices jumped 69 percent in the period.
On Saturday, the 10 members of the ASEAN said they would “work closely” with trading partners to reach a global agreement within the WTO framework this year, and to cooperate in rice supplies as some countries, including India and Vietnam, curbed exports.
“Because of high prices of food, it should be easier to cut trade barriers, it should be easier to cut subsidies,” Schwab said. “We’re seeing also however efforts by governments to control exports are hurting the round.”
Schwab affirmed commitment by the US to see a conclusion of talks this year among WTO members, while the world’s biggest economy “acknowledges” issues regarding its own subsidies to its farmers.
“The US is committed to doing our share, we know that developed countries have to do the most,” Schwab said. “The key question in the Doha round is: What is the level of contribution and commitment on the part of the emerging markets.”
Schwab is in Bali for a four-day trip to meet ministers from ASEAN countries.