Volatile food prices shutting down trade talks

MONTREAL – Volatile world food prices did more than drive millions into poverty and hunger, says an agricultural economist.

They have also helped bog down World Trade Organization negotiations, says former senior Agriculture Canada economist Douglas Hedley.

“What the 2008 spike showed us is we can’t trust trade,” he said Oct. 5 during a McGill University conference on global food security.

“I think we have lost that and it is one reason holding up the Doha Round,” he said.

In a later interview, Hedley said the problem was the way governments reacted, hoarding national food reserves to offset rising prices.

For example, India’s 2008 decision to stop rice exports to food-deficit Bangladesh to keep Indian domestic prices down added to the hunger and poverty misery in one of the world’s least developed countries.

“The issue was that when you have more than three dozen countries that shut down exports to countries that they normally trade with, what you’ve done is exported to a whole series of countries the volatility that results, particularly the rice price in Asia,” he said.

“India shut it down. They normally move rice to Bangladesh seasonally and on a net basis. They shut that down. Bangladesh got hurt very badly so how does Bangladesh feel about, ‘trade is wonderful, freer trade is even better,’ when they’ve been hurt so badly from what they were told in the WTO?”

Hedley said the suspicions about trade are part of a deeper malaise that is undermining the WTO talks, now nearing their 10th anniversary and still mired in disagreement. It was supposed to be a three-year round.

The premise of the 2001 launch of what was called the Doha Development Round was that trade is the way to improve the economies of developing countries.

He said the belief in trade and markets as an economic solution has eroded. The Greek debt crisis has sent stock markets plunging in developed countries, and food price spikes are roiling agricultural markets.

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