TradePolicy.ch

Trade policy interested folks will once again focus Geneva - India and the EU will host a gathering of some 19 Doha Round key players "... in order to attempt to revive the trade talks that have been moribund for two years ..." (quoted from Bridges Weekly) - the same Bridges Weekly delivers, under the title of "All Eyes on US Ahead of High-Level Doha Meeting", a detailed analysis of the situation and the stakes - Click it and read!

Cutting the exhaustive Bridges / ICTSD analysis short:
The positions look way further apart than at the outset of the Round back ... was it in 2001? - in other words: back to square one, if not way farther.

Of course, everybody that lives on the moribundly creeping Doha Round will reject such a conclusion. This is understandable - less understandable is however the systemic resistance of all players to go back to the Doha Mandate in order to check whether the root cause of the uselessly revolving merry-go-round talks is not right there.

Looking far-fetched at first sight, such an analysis starts to make true sense once we start comparing global economic, political and trade maps at the end of the second millenium A.C. with those then years into the third millenium.

Unlike parents who trust that no news from their adolescent children are usually good news - Doha Round is the place where no news usually spell bad news. Assuming this to be true then the trade talks are clearly worse off than ever since their launch back in 2001. Never since the start in Doha we seem to have seen such an extended no news / no developments period as we are crossing now. This is significant for two reasons:
First, media seem to have lost interest in the matter
Second, even those making a living from the Doha Round - Negotiators, consultants ... you name them ... have turned silent.

In the absence of further comment worthy matters related to trade, I would like to redirect the reader's attention to an interesting aspect of the financial crisis.

Entitled "The gods strike back" (link may require subscription), The Economist published in its February 11th edition a special report on the world's ability to manage financial risk. The role of modelling obviously was part of the discussion.
The Economist's print edition of March 6th gives us the pleasure of some most thoughtful comments from readers (see Letters) - I would like to share them with visitors:

SIR – As a card-carrying technocrat I take exception to your characterisation of the financial crisis as technological in nature (Special report on financial risk, February 13th). There was no “technological shift” or “new technology-driven order” in the mismanagement of risk you described, but there was an over-reliance on whizz-kid “quants” who didn’t know the difference between models and the real world. Mathematics and modelling are not the same as “technology”, even if the quants did use computers in their calculations. As for the folly of “trying ever harder to capture risk in mathematical formulae”, that is called “chasing zero” and is a serious mistake for any engineer to make.

Banks should hire more engineers who know that “all models are wrong, some are useful”, who are trained to include safety factors in their calculations for that very reason, and who know that just because you can calculate to the fifth decimal place doesn’t mean that the last digit means anything. And when employing scientists, hire those who will remind you that as much as economics would like to be a science, it has a way to go yet.

Richard Poeton

Bennington, Vermont

SIR – It is astonishing that you did not discuss the massive losses and risk-management failures that were caused by fraud and corruption, the Madoff saga being just one of many cases. Fraud was a material part of the mortgage collapse, a big factor in commercial property and loan losses and a component in investment banking and private-equity losses that did more damage than acknowledged.

Mathematical models cannot predict or uncover fraud as well as some may think. Overhauling capital requirements and eliminating Level-3 risk might in some way minimise systemic risk and damage, but it will not eliminate the ongoing material risk associated with the continuing fraud schemes that today’s risk managers, boards and banks do not seem to take all that seriously.

We need more independent people on risk committees who recognise fraud. No risk manager can be really useful without being able to analyse whether the multiple sales and lending activities of his institution will fall victim to those who understand how best to steal.

Jeff Klink

President and chief executive Klink & Co., Inc

New York

* SIR – I take issue with your claim that the failures of complex models “point to greater use of judgment and less reliance on numbers in future”. Instead, both should be replaced with respect for uncertainty. I am an engineer and in my field we have a saying about models: “garbage in, garbage out”, or when your inputs or assumptions don’t match the expectations of the model, then the output of the model will be a waste.

If a model overestimates the lift around an aircraft’s wing, then the actual plane might not get off the ground. This gives rise to a culture that understands that paper and computers can only go so far to predict reality, and that uncertainty abounds until a track record is established. Perhaps, if a financial institution sacrificed gains in the bubble by replacing reliance on judgment and numbers with more accommodation of uncertainty, then it would have come out of the crisis leaps and bounds ahead of the competition.

Steve Bryant

Houston

* SIR – Far from reducing the prop-trading activities of investment banks, the best way to manage risk and deal with compensation issues is to make it intrinsic to every bank’s business. Traders and bankers would consider their risk-taking more carefully if a reasonable proportion of their previous year’s bonus, say 50%, were used to mirror the following year’s activity.

For example, if a trader takes 10% of his book for a ten-year swap, then 5% of his previous year’s bonus is used for the same position. Likewise a banker arranging a structured finance has a proportion of his bonus in the junior debt arising from that transaction.

Oliver Blaydon

Head of risk

eg. 1

London

* SIR – You depicted the reckless disconnect between the default rates predicted by the ratings agencies and the actual default rates. Ratings firms assert that they are not liable for losses suffered by those relying on their credit reports as those reports are protected as free speech.

But Oliver Wendell Holmes long ago reasoned that free speech does not protect a person who falsely shouts “Fire!” in a theatre. The logical equivalent of his reasoning also is true: free speech cannot be used to protect one who falsely shouts that “All is well”, when in fact a financial fire is raging all around.

Jeff Meller Cambridge, Massachusetts

Asian religions believe in the power of words MANTRAS - typically repeated stoically during long periods - as means to create transformation.

As a matter of fact, interested parties led by DG General Lamy have been repeating - mantra-like:
- that "progress is at hands", that "nobody throws the towel", that "substantial negotiations are ahead", that "agreement on technical issues is promising" .... you name it.

What we have been seeing since maybe the Hong Kong Ministerial (this was in 2005 - freshen up your memory!!!) is a slowly revolving merry-go-round with mantra spelling trade and government officials sitting on the artfully crafted horses.

Let us see whether the upcoming (Feb 22) Report by the Chairman of the Trade Negotiations Committee to the WTO General Council will prove us wrong - here the proposed agenda:

GENERAL COUNCIL: MEETING OF 22-23 FEBRUARY 2010

I. Report by the Chairman of the Trade Negotiations Committee II. Work Programme on Small Economies — Report by the Chairman of the Dedicated Session of the Committee on Trade and Development III. The financial and economic crisis and the role of the WTO — Communication from Argentina, Ecuador and India (WT/GC/W/617 and ADD.1) IV. Accession of developing countries — Communication from Gabon on behalf of the informal group of developing countries (WT/GC/126) V. Information on EU schedule CXL — Statement by the European Union VI. Appointment of Officers to WTO Bodies VII. Election of Chairperson Other business back to top

Already a matter of routine, a interested group of trade ministers met at the sidelines of WEF in Davos in order to discuss state of play and next steps for troubled DOHA Round. Even for the trade ministers, optimists by proefession, the result is meager, as reported by Reuters:

DAVOS, Switzerland (Reuters) - Trade ministers expressed gloom on Saturday about the prospects of concluding stalled global trade liberalization talks this year, with many blaming the United States for foot-dragging.

Davos: China | Davos

Ministers from about 20 major economies held informal talks on the sidelines of the annual World Economic Forum meeting in the Swiss ski resort of Davos, but Egypt's trade minister said they made little progress.

"I don't think very much came out of this meeting unfortunately," Rachid Mohamed Rachid said.

"If we don't have the participation at ministerial or even ambassador level from the United States, of course it doesn't give us a positive signal," he said.

Symbolizing the Obama administration's reluctance to commit to an endgame in the long-running negotiations, the world's biggest economy sent only a deputy ambassador who was not authorized to speak.

"We had other representatives who could not take the floor because they were not ministers," Swiss President Doris Leuthard, who chaired the meeting, told a news conference. "Those who are not present don't have the floor."

Leaders of the G20 grouping of major economies, including U.S. President Barack Obama, agreed in Pittsburgh last September on the goal of wrapping up the Doha round of World Trade Organization negotiations in 2010.

Rachid said there was very little prospect of meeting that goal, adding: "We are not optimistic, we are very concerned."

Many participants say domestic politics and the impact of the financial crisis and high unemployment in the United States and Europe have made chances of an early trade deal more remote.

David Shark, deputy U.S. envoy to the WTO, declined comment on the complaints at the level of U.S. representation but said: "It was interesting as always. It was just a conversation."

"FRANK EXCHANGE"

The long-running 153-nation talks collapsed in 2008 over a dispute between the United States, India and China on protection for farmers in developing countries. Other unresolved issues include cotton subsidies, trade in services and in environmental goods and services.

Brazilian Trade Minister Celso Amorim suggested that G20 leaders should get involved, as at last month's Copenhagen U.N. climate talks, to make key trade-offs needed to clinch a deal.

But WTO Director-General Pascal Lamy told reporters any such top-level engagement would require lengthy preparation to boil down the complex issues to simple, manageable choices.

Leuthard said ministers agreed the strength of the WTO system had safeguarded free trade during the recession, but the longer the world went without a new pact, the bigger the risk of a retreat into protectionism.

India's Trade Minister Anand Sharma agreed there was an urgent need for trade negotiators to learn lessons from the global financial crisis.

"It was a rules-based system that has prevented the world trade from collapsing during the economic crisis and the global economy stands to gain much," Sharma said.

The Obama administration has said big emerging economies such as China, India and Brazil must open their markets more to make a global trade deal worthwhile for U.S. business.

Australian Trade Minister Simon Crean saw hope in the fact that Obama's State of the Union address on Wednesday had underscored the link between free trade and job creation.

"Look at President Obama's speech where he talks about the objective of doubling exports. That can't be done unless trade is liberalized," he said.

Senior officials are due to conduct a stocktaking exercise in late March to see if an outline WTO deal is possible this year, and participants said no one would want to put negotiating cards on the table at this stage.

(Additional reporting by Ben Hirschler, writing by Paul Taylor and Dominic Evans, editing by Hans Peters)

The Reuters Report speaks for itself and there is little to add. There is however on piece of additional info that makes interesting reading. Frau Leuthard, Swiss trade minister and host of the referred meeting was slightly more outspoken to Swiss media - we quote from the HandelszeitungOnline:

WTO-Minister wollen Freihandelsrunde wieder in Fahrt bringen

Die festgefahrene Liberalisierung des Welthandels soll wieder in Bewegung kommen: Unter der Führung von Bundespräsidentin Doris Leuthard plädierte eine informelle Ministerrunde in Davos für einen Versuch, der stillstehenden Doha-Runde wieder Leben einzuhauchen.

Es sei beschlossen worden, dass die Chefunterhändler bei der Welthandelsorganisation (WTO) im Februar und März eine Liste von Schlüsselthemen erstellen sollten, die noch konkretisiert werden müssten, kündigte Leuthard vor den Medien am Rande des Weltwirtschaftsforums (WEF) an.

Dabei gehe es um technische Bereiche wie etwa Verhandlungen im Industriesektor, Abbau der Zölle für bestimmte Sektoren, Antidumping-Massnahmen oder Massnahmen gegen Überfischung, sagte die Schweizer WTO-Chefunterhändlerin Marie-Gabrielle Ineichen-Fleisch auf Anfrage der Nachrichtenagentur SDA. Erst dann könne eine nächste Ministerrunde mit neuen oder revidierten Papieren vorbereitet werden.

"Am Schluss geht es natürlich um den politischen Willen", sagte Leuthard nach dem Treffen von 17 Ministern und WTO-Generaldirektor Pascal Lamy. Hier stünden einige Staaten immer noch abseits. Ohne gemeinsamen politischen Willen werde diese Runde nicht vorwärtskommen.

Über einen Abschluss der sich bereits acht Jahre hinziehenden Doha-Runde noch heuer zeigte sich die Bundespräsidentin skeptisch: Zwar sei die technische Seite unproblematisch. "Da ist das Jahr 2010 immer noch im Bereich des Möglichen. Aber auf der politischen Seite wird sich das Ganze nicht realisieren lassen, wenn gewisse Staaten keine Verpflichtungserklärungen abgeben."

"Wir brauchen die USA. Das macht uns allen Sorgen, dass auch hier US-Präsident Barack Obama sehr zurückhaltend ist und seine Prioritäten anderweitig setzt", sagte Leuthard weiter.

The text is unfortunately in German - two points are interesting:
one: the ground note is substantially more optimistic

second: Frau Leuthard, going more into details than the Reuters report, enumerates the areas where

....trade negotiators at WTO will establish, in the course of February and March, a list of key issues that still need concrete work .... we refer thereby to issues such as technical matters in the industrial sector, anti-dumping or measures against over-fishing ...

certainly more than interesting the areas that are being skipped and that therefore do not appear to be in need of concrete work (whatever that means)

HJN

The new Barroso Commission designate for the period 2009 to 2014 is out - and it is indeed interesting to have a look at the list (click here) - check out in particular their CVs and their national origin.

Interesting in our context here the nomination to the succession of Frau Fischer Boel , the agricultural commissioner - the Romanian Dacian Ciolos - check out his CV - CVciolos_en.pdf - and a summary of a hearing in the European Parliament - both make interest reading and are most self-explantory.

Trade negotiators appear to have returned rather quietly from their X-Mas leaves - nothing much has been catching public visibility so far. However, the news on a common proposal by ACP, Latam and the EU in respect of how to deal with the issue preference erosion, seem to me much more significant than the little of news coverage this proposal has so far received beyond the really specialized media channels.


In fact, a common proposal from those with directly opposite interests in the matter is more than remarkable - this is not a small step but a huge jump towards a DDA conclusion.

The wide spread use of antibiotics in animal farming has been causing concerns for quite some years, now.
The absence of globally binding rules governing the use of antibiotics as feed additives and clear disciplines for the veterinary application of the same - say SPS and TBT related issues in WTO speak - are rightfully on track to turn trade barriers much more important than tariffs. In this respect, I found a most interesting backgrounder drawn up by Keith Good on his Farm Policy site. For easy reference, here his text:

Quote

Associated Press writers Margie Mason and Martha Mendoza reported yesterday that, “[M]ore and more Americans — many of them living far from barns and pastures — are at risk from the widespread practice of feeding livestock antibiotics. These animals grow faster, but they can also develop drug-resistant infections that are passed on to people. The issue is now gaining attention because of interest from a new White House administration and a flurry of new research tying antibiotic use in animals to drug resistance in people.

“Researchers say the overuse of antibiotics in humans and animals has led to a plague of drug-resistant infections that killed more than 65,000 people in the U.S. last year — more than prostate and breast cancer combined. And in a nation that used about 35 million pounds of antibiotics last year, 70 percent of the drugs — 28 million pounds — went to pigs, chickens and cows. Worldwide, it’s 50 percent.”

The AP article stated that, “The rise in the use of antibiotics is part of a growing problem of soaring drug resistance worldwide, The Associated Press found in a six-month look at the issue. As a result, killer diseases like malaria, tuberculosis and staph are resurging in new and more deadly forms.

“In response, the pressure against the use of antibiotics in agriculture is rising. The World Health Organization concluded this year that surging antibiotic resistance is one of the leading threats to human health, and the White House last month said the problem is ‘urgent.’”

Yesterday’s article noted that, “More than 20 percent of all human cases of a deadly drug-resistant staph infection in the Netherlands could be traced to an animal strain, according to a study published online in a CDC journal. Federal food safety studies routinely find drug resistant bacteria in beef, chicken and pork sold in supermarkets, and 20 percent of people who get salmonella have a drug resistant strain, according to the CDC.

“Here’s how it happens: In the early ’90s, farmers in several countries, including the U.S., started feeding animals fluoroquinolones, a family of antibiotics that includes drugs such as ciprofloxacin. In the following years, the once powerful antibiotic Cipro stopped working 80 percent of the time on some of the deadliest human infections it used to wipe out. Twelve years later, the New England Journal of Medicine published a study linking people infected with a Cipro-resistant bacteria to pork they had eaten.”

The AP writers pointed out that, “Antibiotics are a crucial part of [farmer and veterinarian Craig Rowles'] business, speeding growth and warding off disease.

“‘Now the public doesn’t see that,’ he said. ‘They’re only concerned about resistance, and they don’t care about economics because, ‘As long as I can buy a pork chop for a buck 69 a pound, I really don’t care.’ But we live in a world where you have to consider economics in the decision-making process of what we do.’

“Rowles gives his pigs virginiamycin, which has been used in livestock for decades and is not absorbed by the gut. He withdraws the drug three weeks before his hogs are sent for slaughter. He also monitors his herd for signs of drug resistance to ensure they are getting the most effective doses.

“‘The one thing that the American public wants to know is: Is the product that I’m getting, is it safe to eat?’ said Rowles, whose home freezer is full of his pork. ‘I’m telling you that the product that we produce today is the safest, most wholesome product that you could possibly get.’”

With respect to policy related issues, the AP article indicated that, “Some U.S. lawmakers are fighting for a new law that would ban farmers like Rowles from feeding antibiotics to their animals unless they are sick.

“‘If you mixed an antibiotic in your child’s cereal, people would think you’re crazy,’ said Rep. Louise M. Slaughter, D-N.Y. [FarmPolicy.com Note: See related news items on this issue from Congresswoman Slaughter here (July 2009), here (September 2009), here (October 2009), and here (October 2009). A related release from the House Rules Committee, which is chaired by Rep. Slaughter, is available here (July 2009)].

“Renewed pressure is on from Capitol Hill from Slaughter’s bill and new rules discussed in regulatory agencies. There is also pressure from trade issues: The European Union and other developed countries have adopted strong limits against antibiotics. Russia recently banned pork imports from two U.S. plants after detecting levels of tetracycline that the USDA said met American standards.”

On the other hand, the article stated that, “Opponents, many from farm states, say Slaughter’s law is misguided.

“‘Chaos will ensue,’ said Kansas Republican Congressman Jerry Moran. ‘The cultivation of crops and the production of food animals is an immensely complex endeavor involving a vast range of processes. We raise a multitude of crops and livestock in numerous regions, using various production methods. Imagine if the government is allowed to dictate how all of that is done.’

“He’s backed by an array of powerful interests, including the American Farm Bureau, the National Pork Producers Council, Eli Lilly & Co., Bayer AG, Pfizer Inc., Schering-Plough Corp., Dow AgroSciences and Monsanto Company, who have repeatedly defeated similar legislation.”

With respect to legislative and administrative history on this issue, the AP article explained that, “The FDA says without new laws its options are limited. The agency approved antibiotic use in animals in 1951, before concerns about drug resistance were recognized. The only way to withdraw that approval is through a drug-by-drug process that can take years of study, review and comment.

“In 1977 the agency proposed a ban on penicillin and tetracycline in animal feed, but it was defeated after criticism from interest groups.

“There has been one ban: In 2000, for the first time, the FDA ordered the poultry medication Baytril off the market. Five years later, after a series of failed appeals, poultry farmers stopped using the drug.

“In 2008 the FDA issued its second limit on an antibiotic used in cows, pigs and chickens, citing ‘the importance of cephalosporin drugs for treating disease in humans.’ But the Bush Administration — in an FDA note in the federal register — reversed that decision five days before it was going to take effect after receiving several hundred letters from drug companies and farm animal trade groups.”

Unquote

Your contribution:
Make sure and inquire with your supplier, whenever you purchase animal products - i.e. beef, pork, poultry, aquaculture fish and seafood, eggs, dairy products - that those were produced without antibiotic feed additives and that relevant and trust worthy certification is at hand.

You may also request your government / authorities to expedite legislation banning the use of antibiotic feed additives in your country and in the products to be imported into your country.