By Ray Seilie

The European Union, led by France and its small but vocal farming lobby, has scuttled the Doha Round of WTO negotiations, preserving artificial trade barriers and harming consumers throughout the world.

The Doha Round, so named because the current round of free-trade negotiations began with a ministerial meeting in Doha, Qatar in November 2001, aimed to lower trade barriers around the world by reducing trade-distorting tariffs and farm subsidies while improving market access for developing nations. 

A significant reduction of global trade barriers would benefit consumers throughout the world by increasing competition and lowering prices.  Successful negotiations would also have permitted farmers in developing nations to access markets in wealthier countries, increasing prosperity through trade and reducing dependence on foreign aid. 

Unfortunately, the unrelenting protectionism of the EU, flanked by the similarly obstinate positions of India and Brazil, ensured that these almost universal benefits would not reach consumers any time soon.

Predictably, the European Union swiftly blamed the United States for the talks' failure, demanding American concessions while insisting that its own trade policies be allowed to retain a level of "flexibility" that would have left its existing protectionist policies almost entirely intact.  Specifically, the EU refused to ratify any proposal that would reduce French agricultural subsidies below the 2003 Common Agricultural Policy (CAP) agreement among European nations.

The CAP, a protectionist monstrosity enacted in 1960, now comprises about 43% of the entire EU budget, costing around €43 billion ($55 billion).  The policy guarantees a minimum price for crops, paying farmers a subsidy based on the amount of crops they plant, allowing them to ignore actual demand levels when setting production levels.  Moreover, the CAP imposes import tariffs designed to raise world market prices up to fixed EU price levels.

French farmers accrue the vast majority of benefits from European protectionism receiving €9 billion ($11.5 billion), or 21% of the CAP budget for its own farmers.

Of course, EU trade liberalization without French support is unlikely.  But even France's support for its own farmers may initially appear puzzling.  Only 3.5 % of French citizens are employed by the agricultural sector.  Accordingly, 96.5% of French citizens are losing out on lower taxes and prices as a result of the CAP.

The talks collapsed on July 24, 2006 after five years of negotiations.  It is unfortunate that global economic progress can be undermined by the stubborn will of a tiny minority of French farmers.

The failure of the talks should also be seen as a failure of the EU generally.  By allowing the self-motivated interests of 3.5% of a single country to hijack the policy of an entire bloc of nations, the EU has demonstrated that it has truly strayed from its original purpose: realizing the benefits of free trade by lowering trade barriers throughout a large group of nations.

To be fair, the United States is also guilty of some market distortion through agricultural subsidies.  Levels of American subsidization, however, have always been substantially less egregious than the amounts received by French farmers annually.  Consequently, until the EU lowers its own trade barriers to at least the same level as America's, EU calls for the United States to alter its policies stink of hypocrisy.

Upon closer examination, perhaps France's behavior is not surprising.  After all, the French government is famously known for aversion to free markets and timidity in the face of tiny interest groups, farmers and riots.

Just this year, for example, a proposal to liberalize French labor policy making it easier for employers to fire bad workers was scuttled after protesting students who preferred pampered job security flooded the streets.  Throughout the Doha Round, moreover, French farmers routinely threatened to riot if their interests were jeopardized by global competition.  Fearful politicians have thus preserved those farmers' selfish interests for a few more years.

And that means for a few more years, the world can thank France's shortsighted politicians for lost economic opportunities.