The Doha talks and the bargaining surplus in agriculture

The Doha Round has been slow to achieve a reduction in the level of agricultural protection. This remains the case notwithstanding the substantial economic benefits that would arise from a more liberal agricultural trading regime. This paper analyses the political motivations behind this reluctance to reduce agricultural protection through a bargaining model. It&nbsp;argues that whilst the bargaining countries received a substantial fiscal gain from reducing government expenditures in the run-up to the Uruguay Round, these fiscal constraints have been reduced and the same pressure to reach a bargain and control rent-seeking behaviour is not present in the Doha Round. <br /><br />In particular, the paper argues that the net bargaining surplus the European Union (EU) and the United States would gain from a more liberalised agricultural trade environment is limited when seen through the lens of a bargaining model. This is the result of three factors: the welfare gains available to the EU and the United States are smaller in the Doha Round, making a bargaining solution potentially more difficult to achieve<br /> both the EU and the United States have made a large number of domestic agricultural policy changes since the Uruguay Round, which they see as improvements to their agricultural policy<br /> it is easier for rent seekers to block potential gains from improved market access than it is for rent seekers to block the reduction in government expenditures on farm payments in times of fiscal constraints. The paper concludes that the Uruguay negotiations alleviated the fiscal pressure which has decreased government bargaining power but that other policy issues could, in the future, also limit that power of rent-seeking behaviour by the agriculture lobby. In particular, the paper points to the issue of climate change, which could increase the potential bargaining surplus of governments and be more difficult for rent seekers to block. <br />