United States Government Accountability Office

GAO Report to Congressional Requesters

WORLD TRADE 

ORGANIZATION 

Congress Faces Key 

Decisions as Efforts 

to Reach Doha 

Agreement Intensify 

March 2007 

GAO-07-379 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2007

WORLD TRADE ORGANIZATION

Congress Faces Key Decisions as Efforts 

Highlights of GAO-07-379, a report to to Reach Doha Agreement Intensify 

congressional requesters 

President Bush has identified the 

success of global trade talks 

launched in Doha, Qatar, in

November 2001 as one of the 

United States’ top trade policy 

priorities. Known as the Doha 

Development Agenda, the talks are 

an important means of spurring 

global growth and development. 

Completing the talks in 2006 was 

considered essential for an

agreement to qualify for 

streamlined congressional

consideration under the U.S. Trade 

Promotion Authority. However, the 

talks collapsed in late July 2006 in 

the face of wide differences over

the extent of agricultural reform 

and how best to promote economic

development in poor countries. 

Efforts to break the deadlock 

continue.

Given the tenuous state of this 

central plank of U.S. trade policy, 

GAO updated its series of prior 

reports. In this report, we assess 

(1) the overall status of the Doha 

Round negotiations now and the 

progress that had been made prior

to and since the breakdown of the 

talks, (2) the substantive divisions 

among key World Trade

Organization (WTO) members that

led to an environment of deadlock 

and the eventual suspension of the 

negotiations, and (3) the possible 

economic and other ramifications if 

the round is not concluded 

satisfactorily. 

The Doha talks remain deadlocked, and their ultimate success is uncertain.

However, the recent resumption in negotiations and renewal decisions 

facing Congress in 2007 create a window for breaking the deadlock. 

• Regarding agriculture, WTO members differ sharply over how much to 

reduce barriers that distort production and trade, namely import 

restrictions such as tariffs (import taxes) and government payments and 

other “domestic support” to farmers. As the world’s largest agricultural 

exporter, the United States is seeking to sharply reduce foreign barriers 

to U.S. exports and has insisted on attaining greater promise of 

commensurate market access gains before agreeing to further cut its 

trade-distorting payments to U.S. farmers. The European Union (EU) is 

among the major agricultural players that have resisted this, and it has 

joined forces with developing countries in demanding U.S. subsidy cuts 

far beyond those already offered. In particular, the EU and developing 

countries have pressed the United States to cut subsidies below current 

spending and to disavow certain programs that could lead to future 

increases. 

• Regarding development, members remain divided over how the WTO can

best promote economic growth and reduce poverty in the developing 

countries. Despite their diverse interests, developing countries maintain 

solidarity in pressing myriad demands for special treatment that would 

shield them from liberalizing their own imports. The United States 

believes such liberalization is not only critical to fostering development, 

but needed for WTO members to maximize the likely economic gains to 

both developed and developing countries, and to offset anticipated 

losses for some countries. 

Participants and observers offer mixed views on the implications if Doha is 

not successfully concluded. Some warn of forgone economic gains, a 

weakened global trading system, and a more difficult U.S. trade policy 

environment. Others suggest that the ramifications are much more limited. 

Congress faces renewal decisions in 2007 on two key pieces of legislation— 

Trade Promotion Authority and the Farm Bill—that could spur a 

breakthrough and be pivotal to the trading system and the future U.S. role in 

it. 

www.gao.gov/cgi-bin/getrpt?GAO-07-379.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347 or yagerl@gao.gov. 
Contents 

Letter 1

Results in Brief 2 

Background 4

Doha Talks Resumed after Months of Suspension, but No 

Breakthrough Is in Sight 9 

Persistent Disagreements on Agriculture and Development 

Contribute to the Impasse 13 

Participants Have Contrasting Views on Implications of Doha’s

Impasse 35

Conclusions 52

Agency Comments and Our Evaluation 53 

Appendix I Objectives, Scope, and Methodology 55 

Appendix II GAO Contact and Staff Acknowledgments 58 

Related GAO Products 59 

Commodities 59

Farm Program Payments and Payment Limitations 60 

Conservation 60

Crop and Revenue Insurance 62 

Food Aid 62 

Agricultural Trade 63 

Doha Round Negotiations 64 

Tables 

Table 1: U.S. Reform Proposal on Domestic Support and Estimated 

Domestic Spending Outlays for 2005 25 

Table 2: Estimated Economic Effect of a Potential Doha 

Multilateral Trade Agreement 37 

Page i GAO-07-379 World Trade Organization
Figures 

Figure 1: Summary of WTO Agriculture Agreement Boxes 7 

Figure 2: Differences between Bound and Applied Tariffs in 

Developing and Developed Countries 16 

Figure 3: Government Payments for U.S. Farm Programs, 1996-2005 46

Abbreviations 

CAP Common Agricultural Policy 

CRS Congressional Research Service 

EU European Union 

FAPRI Food and Agricultural Policy Research Institute 

FTA free trade agreement 

GATT General Agreement on Tariffs and Trade 

G-6 Group of 6 

G-8 Group of 8 

G-10 Group of 10 

G-20 Group of 20 

G-33 Group of 33 

G-110 Group of 110 

LDC least-developed country 

SSG special safeguard 

SSM special safeguard mechanism 

TPA U.S. Trade Promotion Authority 

TRQ tariff-rate quota 

UNCTAD United Nations Conference on Trade and Development 

USTR Office of the U.S. Trade Representative 

USDA U.S. Department of Agriculture 

WTO World Trade Organization 

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Page ii GAO-07-379 World Trade Organization
United States Government Accountability Office

Washington, DC 20548 

 

March 5, 2007

The Honorable Jim McCrery 

Ranking Minority Member 

Committee on Ways and Means 

House of Representatives 

The Honorable Wally Herger 

Ranking Minority Member 

Subcommittee on Trade 

Committee on Ways and Means 

House of Representatives 

In November 2001, the World Trade Organization (WTO) launched a new 

round of global trade negotiations at Doha, Qatar. The negotiations cover a 

broad range of issues, including agriculture, nonagricultural (industrial) 

market access, and services. Officially known as the Doha Development 

Agenda, the talks are the latest in a series of negotiating “rounds” among 

WTO members, which now number 150 nations and customs territories. 

President Bush identified completing the talks as a major U.S. trade policy 

priority for 2006. On July 24, 2006, after 5 years of negotiations and a 

deadlock on issues of agriculture reform and on how best to support 

development by the WTO’s poorest members, WTO Director-General 

Pascal Lamy called for an indefinite suspension of the negotiations in spite 

of the July 1, 2007, expiration of the U.S. Trade Promotion Authority 

(TPA). TPA streamlines congressional approval of trade agreements, and 

its expiration has served as a de facto deadline for the WTO talks. 

Considering the tenuous state of this central plank of U.S. trade policy and 

the possible implications for the global trading system, we updated our 

series of reports on the WTO negotiations.1

 In this report, we assess (1) the 

overall status of the Doha Round negotiations now and the progress that 

had been made prior to and since the breakdown of the talks, (2) the 

 1

GAO, World Trade Organization: Limited Progress at Hong Kong Ministerial Clouds

Prospects for Doha Agreement, GAO-06-596 (Washington, D.C.: Apr. 26, 2006); World Trade 

Organization: Global Trade Talks Back on Track, but Considerable Work Needed to 

Fulfill Ambitious Objectives, GAO-05-538 (Washington, D.C.: May 31, 2005); World Trade

Organization: Cancún Ministerial Fails to Move Global Trade Negotiations Forward; 

Next Steps Uncertain, GAO-04-250 (Washington, D.C.: Jan. 15, 2004); and World Trade

Organization: Early Decisions Are Vital to Progress in Ongoing Negotiations, 

GAO-02-879 (Washington, D.C.: Sept. 4, 2002).

Page 1 GAO-07-379 World Trade Organization
substantive divisions among key WTO members that led to an environment 

of deadlock and the eventual suspension of the negotiations, and (3) the 

possible economic and other ramifications if the round is not concluded

satisfactorily. 

To address these objectives, we met with and obtained documents from a 

wide range of WTO, U.S., and foreign government officials as well as a 

cross section of selected academic experts and private sector groups 

(including agricultural commodity groups, business associations, and civil 

society groups) in Washington, D.C., and Geneva, Switzerland. We also 

attended the September 2006 WTO Public Forum in Geneva. We 

conducted our work from June 2006 through February 2007 in accordance 

with generally accepted government auditing standards. 

A successful conclusion of the global trade talks remains uncertain, 

although resumption of the talks was recently achieved after a 6-month 

hiatus in the negotiations. WTO Director-General Lamy decided to 

suspend negotiations in late July 2006 after key members proved unable to 

break the impasse over agriculture. In the months after the December 2005

Hong Kong ministerial meeting, WTO members had made headway on 

issues such as trade facilitation and reforming WTO “rules” on regional 

trade agreements and antidumping. However, there was no breakthrough

on the key decisions needed to produce market access schedules to 

liberalize trade in agriculture, manufactured goods, and services—where 

most of Doha’s trade-creating gains were expected. Eleventh-hour 

involvement by world leaders proved insufficient to overcome resistance 

to reform and satisfy key players’ demands for a balanced, mutually 

beneficial outcome. A series of high-level pronouncements of commitment 

to a full resumption of the talks were made since the July suspension 

finally culminating in formal across-the-board resumption of the talks in 

February 2007. However, changes in position have yet to materialize. 

Results in Brief 

Substantive differences over agriculture and philosophical differences 

over development precipitated the negotiations’ collapse. The talks broke 

down in July due to persistent disagreement over agricultural market 

access and levels of domestic support for agriculture among key players, 

such as the United States, the European Union (EU), and developing 

countries led by Brazil and India. The United States is insisting on sizable 

market access gains through larger overall cuts in tariffs than the EU or 

developing countries are willing to accept. It also wants to sharply limit 

the percentage of specific agricultural products that the EU and 

developing countries can shield from full tariff liberalization. The United 

Page 2 GAO-07-379 World Trade Organization
States insists that only ambitious market access gains will permit it to 

offer further reductions in domestic support. The EU and developing 

countries believe that U.S. support levels should be reduced below current 

spending, and they have bristled at perceived U.S. pressure that they 

reciprocate for support cuts with “dollar-for-dollar” gains in market 

access. In addition, behind the deadlock on agriculture lies a perhaps more 

fundamental conflict among WTO members about what a “development 

round” means and how best to spur development in less-developed 

countries. The disagreement centers on how trade liberalization 

contributes to development and to what extent developing countries 

should be expected to open their markets. U.S. negotiators emphasize the 

development benefits of removing trade barriers, while many developing

countries reject the idea of paying for U.S. subsidy reform and fear the 

potential social and economic consequences to poor populations of 

lowering their own barriers to imports. As a result, agreement on how to 

satisfy developing countries’ demands for protection without codifying 

exceptions that would sharply limit market access gains has thus far 

eluded negotiators. Nevertheless, WTO members have moved forward 

with plans to provide additional trade-related assistance to developing 

countries. 

Participants and experts express varying views on the ramifications of 

Doha’s possible failure for the global and WTO member economies, the 

world trading system, and U.S. trade policy. Some participants and experts 

warn of forgone economic gains, a weakened multilateral trading system, 

and dimmed prospects for congressional renewal of TPA and reform of 

U.S. farm programs. First, they warn, the economic gains projected to 

result from a Doha agreement, for both the world overall and the U.S. 

economy in particular, would not be realized. Second, the multilateral 

trading system could face intense pressures if WTO members’ frustrated 

expectations and ill will spill over into regular WTO work, result in more 

trade disputes, or divert energies toward more exclusive regional trade 

deals. Finally, they argue that the leadership the United States has 

historically shown in the global trading system is being questioned and 

could be tested if poor Doha prospects cause Congress to balk at renewing 

TPA and reforming U.S. farm programs. Yet, others suggest that the 

ramifications in all three areas may be much more limited. First, some of 

the desired economic gains, which are relatively modest to begin with, 

could still be secured by other means, such as unilateral liberalization. 

Second, some of the countries most resistant to liberalization at the WTO 

showed some willingness to cut barriers in other contexts since July. 

Third, in the United States, debate is already occurring over the terms of 

extension of TPA and whether to proactively reform or continue subsidies 

Page 3 GAO-07-379 World Trade Organization
associated with the 2002 Farm Bill. Nevertheless, the on-going impasse of 

the Doha talks has effectively placed Congress at the center of the 

controversy because what the United States does in 2007 on TPA and 

Farm Bill renewal is widely seen as pivotal to the WTO and its role in the 

trading system. 

We provided a draft of this report to the Office of the U.S. Trade 

Representative (USTR) and the Departments of Agriculture (USDA), 

Commerce, and State. USTR and USDA provided technical comments, 

which we incorporated where appropriate. State and Commerce had no 

comments on the draft report. 

The WTO was established as a result of the Uruguay Round of trade 

negotiations on January 1, 1995, as the successor to the General 

Agreement on Tariffs and Trade (GATT). Based in Geneva, Switzerland, 

the WTO is led by a Director-General and administers agreed-upon rules 

for international trade, provides a mechanism for settling disputes, and 

serves as a forum for conducting trade negotiations. WTO membership has 

increased since 1995, and there are currently 150 WTO member nations 

and customs territories with widely diverse levels of economic 

development. Global trade negotiations occur in periodic comprehensive 

“rounds,” in which a large package of trade concessions among members 

is developed and ultimately agreed on as a single package; this process 

requires simultaneous agreement on all issues. Countries often negotiate 

as members of groups loosely named after the size of their membership,2

such as the Group of 10 (G-10),3

 the Group of 20 (G-20),4 the Group of 33 

Background 

 2

For example, the G-20 now has more than 20 members and the G-33 has more than 40

members. 

3

G-10 members are Bulgaria, Iceland, Israel, Japan, Liechtenstein, Mauritius, Norway, South

Korea, Switzerland, and Chinese Taipei. 

4

G-20 members are Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, 

Indonesia, Mexico, Nigeria, Pakistan, Paraguay, the Philippines, South Africa, Tanzania,

Thailand, Uruguay, Venezuela, and Zimbabwe. 

Page 4 GAO-07-379 World Trade Organization
(G-33),5

 and the Cairns Group6—groups that represent key negotiating 

positions on agriculture issues. Moreover, the EU negotiates on behalf of 

all of its member nations. USTR negotiates on behalf of the United States, 

in regular consultation with Congress, executive branch agencies, and 

official private sector advisors, among others. 

At Doha, Qatar, in November 2001, WTO members reached consensus to 

launch the Doha Development Agenda or Doha Round,7

 the ninth round of 

trade liberalizing negotiations since the trading system’s founding in 1947.

The Doha ministerial declaration established a work program with a 

number of negotiating areas, and members set specific goals for each area

and negotiating groups to achieve them.8

 The Doha declaration also put a 

special emphasis on addressing the needs and interests of developing 

countries in the negotiations. Of the Doha negotiating areas, agriculture 

remains the top issue for many participants and has been described as the 

lynchpin of the Doha negotiations. Reform of agriculture was first added 

to the trading system in the last (Uruguay) round, but domestic and export 

subsidies and tariff barriers remained. In July 2004, WTO members 

reached a framework agreement that established certain principles and 

agreed means for reform in agriculture as well as other Doha work areas. 

 5

G-33 members are Antigua and Barbuda, Barbados, Belize, Benin, Botswana, China, Cote

d’Ivoire, Cuba, Democratic Republic of Congo, Dominican Republic, Grenada, Guyana, 

Haiti, Honduras, India, Indonesia, Jamaica, Kenya, Madagascar, Mauritius, Mongolia,

Mozambique, Nicaragua, Nigeria, Pakistan, Panama, Peru, the Philippines, Senegal, South 

Korea, Sri Lanka, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname,

Tanzania, Trinidad and Tobago, Turkey, Uganda, Venezuela, Zambia, and Zimbabwe. 

6

Cairns Group members are Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, 

Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, South 

Africa, Thailand, and Uruguay.

7

For additional information on the fourth ministerial conference and the Doha 

Development Agenda, see GAO-02-879. 

8

There are currently 16 negotiating areas in the Doha work program: implementationrelated issues and concerns; agriculture; services; market access for nonagricultural 

products; trade-related aspects of intellectual property rights; trade facilitation; WTO rules; 

dispute settlement understanding; trade and environment; electronic commerce; small 

economies; trade, debt, and finance; trade and transfer of technology; technical 

cooperation and capacity building; least-developed countries; and special and differential 

treatment. Originally, the Doha declaration set forth 3 other potential negotiating areas 

(that is, transparency of government procurement, interaction between trade and 

competition policy, and relationship between trade and investment). 

Page 5 GAO-07-379 World Trade Organization
The Doha Round for agriculture commits countries to lower barriers in 

world agricultural markets and sets forth three “pillars” for agricultural 

trade reform related to (1) export competition programs (export 

subsidies), (2) domestic support (subsidies and other assistance to 

farmers), and (3) market access (including tariffs and tariff-rate quota 

(TRQ) levels that limit imports).9

 Regarding domestic support, one of the 

main premises of the existing WTO Agreement on Agriculture is whether 

government programs that support agriculture are trade distorting: Does 

the program affect trade by changing production levels, market prices, 

and/or export or import levels? In general, under the WTO agreement, 

domestic support programs that distort trade were limited and reduced, 

while programs that do not distort trade were exempt from alteration. 

Domestic support programs have been classified into categories called 

“boxes” based, in part, on the extent to which the programs are thought to 

be trade distorting. These boxes are called Green Box, Amber Box, and 

Blue Box. The Doha negotiations aim to lower levels of trade-distorting 

support in the Amber and Blue Boxes. Figure 1 provides a summary of the 

boxes. 

 9

Under a TRQ, a lower “in-quota” tariff applies to a limited quantity of imports, while a 

higher, often prohibitive, “over-quota” tariff applies to any imports that exceed the quota.

Page 6 GAO-07-379 World Trade Organization
Figure 1: Summary of WTO Agriculture Agreement Boxes 

Nontrade distorting

Green Box Amber Box Blue Box

De minimis

Product

specific

Nonproduct

specific

Trade distorting

Support programs in this

category have no or minimal 

trade-distorting effects.

No limits are set on support 

for these kinds of programs.

Support is determined by 

trade agreement.

Under the Uruguay Round, presently in effect, 

there is no cap on Blue Box support; in the 

Doha framework agreement, there would be a

cap based on a percentage of the value of 

production.

Support is limited by trade 

agreement.

Support programs in this

category are evaluated not to 

meet Green Box criteria and, 

therefore, are classified as

trade distorting.

Programs in this category are 

not counted against the Amber 

Box if they are below a minimal 

level, even though they may be 

trade distorting.

Programs in this category are not counted 

against the Amber Box limits.

Source: GAO analysis of WTO commitments on agriculture.

Agriculture reforms were an important issue at the most recent WTO 

ministerial conference, held in Hong Kong, China, in December 2005, 

where ministers sought to make progress in the negotiations.10 However, 

as we noted in our April 2006 report,11 limited progress in the negotiations 

since mid-2004 and missed milestones in 2005 caused WTO members to 

lower expectations for the Hong Kong ministerial. New agriculture 

proposals were made in October 2005 in an effort to reinvigorate the talks, 

but the proposals revealed wide gaps in the positions of the United States, 

the EU, and other key players. The agenda at the Hong Kong ministerial 

shifted from making decisions on core areas12 of the negotiations to 

focusing on narrower initiatives, particularly in agriculture and 

development, that could help the talks move forward, if only marginally. 

Members made the following commitments and also set new deadlines for 

needed decisions at the Hong Kong ministerial. Notably, they agreed to 

 10The Hong Kong ministerial was the sixth since the establishment of the WTO in 1995. 

Ministerial conferences are convened at least every 2 years, and the outcome is reflected in 

a fully agreed-upon ministerial declaration. 

11GAO-06-596. 

12The six core areas are agriculture, development, nonagricultural market access, rules, 

services, and trade facilitation. 

Page 7 GAO-07-379 World Trade Organization
• eliminate all forms of agricultural export subsidies by 2013; 

• eliminate, for developed countries, all forms of export subsidies for cotton 

in 2006; 

• establish duty-free and quota-free access for at least 97 percent of the tariff 

lines of developed countries’ imports from least-developed countries 

(LDC)13 by 2008 or by the start of implementation of the Doha agreements; 

• complete the round in 2006; 

• reach “modalities”—the formulas, thresholds, dates, and other numerical 

benchmarks that members will commit to meet when they revise their 

WTO schedules of subsidy and tariff commitments—for cutting tariffs and 

subsidies for agricultural and industrial goods and set disciplines on food 

aid, export credits, state trading, and other aspects of export competition 

by April 30, 2006; and 

• submit national schedules of commitments embodying the modalities for 

agriculture and industrial goods and present revised offers for liberalizing 

trade in services by July 31, 2006. 

Nevertheless, with nearly all tough decisions put off until 2006, the tension 

between members’ original high ambitions and the TPA14 time frame had 

 13The WTO recognizes as LDCs those countries that have been designated as such by the

United Nations. Since 1971, the United Nations has denominated LDCs as “a category of

States that are deemed highly disadvantaged in their development process...facing more

than other countries the risk of failing to come out of poverty.” In its 2003 review of LDCs,

the United Nations identified LDCs as countries with a 3-year average estimate of gross 

national income per capita under $900, among other criteria.

14Title XXI of the Trade Promotion Authority (TPA) Act of 2002 (Pub. L. No. 107-210) gives 

the president the authority to conclude trade deals around the world and to submit 

legislation approving and implementing the agreement subject to an up-or-down vote by

Congress, using expedited procedures within a fixed time period. To qualify, the President

must notify Congress of his intent to enter a Doha agreement and request the U.S. 

International Trade Commission to provide him and Congress with an assessment of its

likely effect by April 1, 2007, and any agreement resulting from the Doha negotiations must 

be entered into by the President before July 1, 2007. Expedited consideration is also

contingent on the President’s compliance with requirements for consultations with and 

notices and reports to Congress before, during, and after negotiation of the agreement. In 

negotiating the Doha Round on behalf of the United States, the Office of the USTR is 

guided by the goals outlined by TPA, including overall and principal objectives and 

promotion of certain priorities. 

Page 8 GAO-07-379 World Trade Organization
become acute, as we noted in our last report on this matter.15 The 

expiration of TPA on July 1, 2007, which enables the President to present a 

final Doha agreement to Congress for an “up-or-down” vote within a fixed 

period of time, has served as the de facto deadline for the round. Due to 

various U.S. TPA-related notification and consultation requirements, 

concluding the negotiations in 2006 was essential for a Doha agreement to

qualify for streamlined congressional consideration under TPA. 

On July 24, 2006, WTO Director-General Pascal Lamy suspended the global 

trade talks over an impasse in the agriculture negotiations, despite some 

progress before the July 2006 suspension. Prior to the suspension, world 

leaders made an appeal for flexibility and movement, but it proved 

insufficient to overcome the deadlock. During the suspension, countries 

professed commitment to the talks and urged their resumption, but these 

failed to bridge their differences. Nevertheless, as a result of these 

pronouncements, WTO Director-General Lamy announced a “soft relaunch” of the negotiations at the working level in mid-November. An 

informal ministerial meeting among some WTO members was held on 

January 27, 2007, on the margins of the World Economic Forum meetings 

held in Davos, Switzerland. Although no breakthrough was announced, 

key participants emerged more hopeful for progress in the near term. On 

February 7, 2007, Director-General Lamy announced in his report to the 

WTO General Council that talks had resumed fully. 

On July 24, 2006, Director-General Lamy announced the indefinite 

suspension of the Doha negotiations after the Group of 6 (G-6)16 key WTO 

players failed to break a deadlock over agriculture that had prevailed,

largely unabated, since prior to the Hong Kong ministerial. According to 

Lamy, unblocking the negotiations would require parallel movement by 

key players on what he refers to as the “triangle of issues”:17 that is, the 

United States would have to agree to further cut its payments to domestic 

Doha Talks Resumed 

after Months of 

Suspension, but No 

Breakthrough Is in 

Sight 

Lack of Progress in 

Negotiations Prompted 

Director-General Lamy to 

Suspend Talks in Late July 

2006 

 15GAO-06-596. 

16G-6 members are Australia, Brazil, the EU, India, Japan, and the United States. 

17The “triangle of issues” refers to the balance between agricultural market access, 

agricultural domestic support, and nonagricultural market access. The third side of the

triangle is developing country tariff cuts for nonagricultural goods. The idea is to achieve 

some sort of “balanced ambition” within and across key issues in the round that involve 

preparation of binding country-specific schedules of commitments. 

Page 9 GAO-07-379 World Trade Organization
farmers; the EU18 would have to agree to increase other countries’ access 

to its agricultural markets; and advanced developing countries, such as 

Brazil and India, would have to agree to lower tariffs on manufactured 

goods. This would enable WTO members to reach an agreement on 

modalities. Lamy said such movement could only occur in concert, but 

each group continued to insist that others move first. Lamy classified the 

suspension period as a “time out to review the situation, time out to 

examine available options, and time out to review positions.” 

Following the December 2005 Hong Kong ministerial, members made 

important progress on some issues. For example, at Hong Kong, WTO 

members authorized the chair of the negotiating group on rules to produce 

a draft text to serve as the basis for final negotiations. Negotiators 

reviewed numerous proposals in an attempt to narrow members’ positions 

in these areas. However, although the chair reported that he could meet 

this mandate, he was not able to do so because of the suspension. In 

addition, the negotiating group on trade facilitation continued to make 

good progress in reviewing proposals for expediting the movement of 

traded goods. However, due to the lack of agreement over agriculture that 

persisted despite intense efforts at both the political and technical level, 

WTO members have not been able to move forward on key decisions in 

other areas of the negotiations that would lead to market access schedules 

to liberalize trade in agriculture, manufacturing goods, and services—

where the bulk of Doha’s trade gains are anticipated. 

Before the suspension of the talks, trade negotiators met in Geneva in late

June 2006 for high-level meetings that failed to unlock the negotiations. 

However, it was agreed at these meetings that Director-General Lamy 

would take a more proactive role as a catalyst “to conduct intensive and 

wide-ranging consultations” to achieve agricultural and nonagricultural 

modalities. Prior to these meetings, Lamy had publicly suggested a “20-20-

20” formula as a possible resolution to the impasse that called for (1) the 

United States to accept a ceiling on domestic farm subsidies under $20 

billion; (2) the use of the G-20 proposal of 54 percent as the minimum 

average cut to developed country agricultural tariffs; and (3) a tariff ceiling 

of 20 for developing country industrial tariffs—in other words, a “Swiss” 

formula with a coefficient of 20 for reducing developing country industrial 

 18EU members are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia,

Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, 

Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden,

and the United Kingdom. 

Page 10 GAO-07-379 World Trade Organization
tariffs by cutting higher tariffs more than lower ones.19 This proposal was 

criticized by all sides and was not officially discussed or adopted. 

Days before Director-General Lamy suspended the talks, he made an 

eleventh-hour appeal directly to world leaders at the G-8 summit at St. 

Petersburg, Russia.20 Lamy said the leaders needed to act to avert a 

“failure” in the nearly 5-year-old negotiations by providing their trade 

negotiators “further room for negotiation” to finalize figures for subsidy 

and tariff cuts in agriculture and industrial products. He also told the 

leaders that, in his estimation, the differences between members were not 

insurmountable—on the order of a few percentage points more than the 

concessions already proposed. “The problem is not technical, but 

political,” he said—members were asking too high a price for the 

additional benefits demanded. In response to Lamy’s appeal, the G-8 

leaders stated that they were in favor of a trade deal and would give the 

necessary flexibility to their trade negotiators to secure a deal. The G-8 

leaders also issued a statement calling for WTO members to work with 

“utmost urgency for conclusion of the Round by the end of 2006” and 

promising “renewed commitment to pursue a high level of ambition in all 

areas of the negotiations with a view to reaching a meaningful and 

balanced outcome.” However, the leaders’ involvement proved 

unsuccessful in overcoming the differences on trade issues; the flexibility 

some had pledged and others had apparently expected to be forthcoming 

did not materialize. Instead, less than 1 week later, a short, acrimonious 

G-6 meeting quickly dissolved into a collapse that prompted Lamy to 

 19The “Swiss formula” is a nonlinear mathematical formula that (1) produces a narrow

range of final tariff rates from a wider set of initial tariffs and (2) specifies a maximum final 

rate, no matter how high the original tariff. A key feature is a number (the coefficient) that

is negotiated and plugged into the formula to determine the maximum final tariff rate. The

formula is so-named because it was first proposed by Switzerland in the 1970s in the Tokyo

Round of trade negotiations. 

20In addition to leaders of the G-8 nations (i.e., Canada, France, Germany, Italy, Japan,

Russia, the United Kingdom, and the United States), leaders from Brazil, China, the EU, 

India, Mexico, and South Africa, as well as the heads of the African Union and the 

Commonwealth of Independent States, were present. 

Page 11 GAO-07-379 World Trade Organization
suspend the talks.21 Despite the talks’ February 2007 resumption, the 

suspension all but ensured that any eventual agreement will not be 

reached in time for consideration under the current TPA. 

After the July suspension, numerous countries declared their commitment 

to the round and desire for a resumption. These statements largely did not 

go beyond reiterating commitment and blaming one another for the 

breakdown. Nevertheless, it could be argued that the statements clarified 

to some extent what a desirable Doha agreement would entail in practice.

In our interviews with various WTO members and officials in Geneva and

Washington, D.C., we noted disagreement over whether a near-term 

resumption of talks was likely or desirable. At our late September 

meetings in Geneva, country officials said that while the impasse was 

regrettable, they expected that the talks could be resumed in the near 

future. However, they also universally expressed a sense that reengaging 

prior to the November 2006 U.S. election was fruitless because U.S. 

political commitments to agriculture reform and to leadership at the WTO 

were seen as vital to closing a Doha deal. Several foreign government 

officials were adamant that more must be put on the table regarding 

agriculture and development to make Doha worthwhile. Nevertheless, 

there was a sense that technical work on certain knotty issues would be 

productive in the interim. Upon our return to Washington, however, we 

found officials and business persons less optimistic that talks would 

resume soon and not always convinced that they should resume. 

A growing sense that prolonging the suspension was not desirable and 

members’ pronouncements of commitment prompted WTO DirectorGeneral Lamy to announce a “soft re-launch” of the negotiations at the 

working level in mid-November. This informal restart of the talks 

Although Enthusiasm for 

Resuming Talks Varied 

during the Suspension, 

Talks Resumed in 

February 2007 

 21Our understanding is that the talks collapsed after expectations from all sides were not

fulfilled. According to observers and officials, during the last formal negotiating meeting in 

Geneva last July, many countries had come to the table expecting that the United States 

would announce an improved offer on domestic subsidy cuts. However, they were very

surprised, and reportedly some countries were even offended, when the United States did

not produce the expected offer. The United States for its part, however, apparently decided 

not to improve its offer because, on the basis of the limited flexibility for movement other 

members had signaled, it felt that its negotiating partners were unwilling or not ready to

reciprocate with meaningful market access concessions. In addition, there was a sense 

among U.S. negotiators that they had effectively run out of time under TPA, given its 

various notification and consultation requirements. 

Page 12 GAO-07-379 World Trade Organization
consisted of quiet diplomacy in capitals and chair-centered informal 

meetings in Geneva. Lamy also encouraged chairs of negotiating groups to 

carry out contacts and consultations as they judged most appropriate, to 

increase the opportunities for participants to begin to test each other’s 

positions again and explore possible options to take the negotiations 

ahead. Lamy warned members that the “window of opportunity” to 

negotiate is limited—“there must be significant progress by the early 

spring if we are to have a chance of finishing the round next year.” An 

informal ministerial meeting among some WTO members was held on 

January 27, 2007, on the margins of the World Economic Forum meetings 

being held in Davos, Switzerland. Although no breakthrough was 

announced, key participants emerged more hopeful for progress in the 

near term. U.S. Trade Representative Schwab reported “a new sense of 

optimism and momentum” and hope that, with hard work and good faith,

WTO members would find the will and the way to produce results that 

alleviate poverty and stimulate growth through new trade flows. On 

February 7, 2007, Lamy announced that the Doha talks had resumed fully, 

across the board. 

Underlying the breakdown in July 2006 were fundamental and persistent 

differences on agriculture between the United States, the EU, and 

developing country groups. As the world’s largest exporter of agricultural 

products, the United States insists on obtaining greater access to markets 

in the EU and other leading agricultural trading partners than have been 

offered to date. Behind this issue is a significant disagreement over how 

much countries can shield “sensitive” or “special” products from tariff 

reduction. At the same time, key negotiating partners, particularly the EU 

and the G-20 developing country group, argue that the United States must 

improve on its October 2005 offer to cut its agricultural subsidies 

(domestic support) for them to commit to greater market access. 

Specifically, countries contend that certain domestic support provided by 

the United States distorts trade, and that the U.S. proposal does not 

translate into real cuts in program spending. Beyond the deadlock on 

agriculture, WTO members are divided by an underlying conflict about 

what a “development round,” as the Doha Round is characterized, should 

accomplish. 

Persistent 

Disagreements on 

Agriculture and 

Development 

Contribute to the 

Impasse 

Page 13 GAO-07-379 World Trade Organization
With forecasted agricultural exports of over $77 billion in 2007, the United 

States seeks greater market access for farm products in the current Doha 

Round from both developed and developing countries. The United States 

considers increased market access an essential factor in balancing its 

proposed reductions in domestic support programs. Increased access into 

developing countries is especially significant since these markets, 

characterized by high growth in income, population, and urbanization, are 

the fastest growing U.S. markets for agricultural products such as 

livestock products and feeds, fruits, vegetables, and processed products.

Moreover, market access barriers such as tariffs account for the largest 

share of agricultural policy distortions worldwide22—they are the trade 

barriers most widely used by countries, directly affecting market prices for 

both consumers and producers.23 Agricultural products still face significant 

tariff barriers in both developed and developing countries. Until the 

Uruguay Round negotiations, agriculture had not been a part of the 

multilateral trade negotiations, so it has not had the same opportunity for 

liberalization as manufactured products. As a result, the Doha declaration 

and July 2004 framework agreement called for significant cuts in 

agricultural tariffs so that meaningful trade liberalization could be 

realized. The prevalence of high tariff barriers in agriculture can be 

characterized as consisting of (1) a small number of tariff lines protecting 

the bulk of domestic production in certain countries, particularly 

developed countries (known as tariff peaks); (2) processed or higher value

products that have higher tariffs (known as tariff escalation) as compared 

to bulk products; and (3) a large proportion of tariff lines that have much 

larger WTO “bound” tariffs than the tariffs countries actually apply (or 

The United States Calls for 

the EU and Developing 

Countries to Increase 

Market Access to Balance 

Further Domestic Support 

Reductions in Agriculture 

 22USDA estimated that agricultural tariffs accounted for 52 percent of world price 

distortions, compared with 31 percent due to domestic subsidies, 13 percent due to export

subsidies, and 4 percent due to the interaction among these policies. 

23Although most economists believe that liberalizing market access barriers would provide 

the most gains from trade, some recent studies show that domestic subsidies can be quite 

trade distorting by way of cross-subsidization, exit deterrence (i.e., keeping otherwise 

uncompetitive or unprofitable farmers in production), risk reduction, and wealth effects 

such as higher land prices.

Page 14 GAO-07-379 World Trade Organization
“applied tariffs”), especially in developing countries.24,25 This difference is 

often referred to by negotiators as “water” in the tariff. Moreover, U.S. 

officials say U.S. exporters face high tariffs on numerous products in key 

markets such as the EU, Japan, and India. 

Currently, the United States has lower bound agricultural tariffs than 

the EU and much lower bound tariffs than the advanced developing 

countries. For example, the U.S. average bound agricultural tariff is 

12 percent, compared with 16 percent for the original 15 EU countries, a 

105 percent average among South Asian countries, and a global average 

of 62 percent.26, 27 The worldwide applied tariff average is much lower 

(19 percent), and because tariff cuts are negotiated from the bound rates,

fairly significant cuts may be required to achieve actual tariff reductions in 

the Doha Round. Figure 2 illustrates the large differences between bound 

and applied agricultural tariff rates in developing countries compared with 

developed countries. 

 24Kym Anderson, Harry de Gorter, and Will Martin, “Market Access Barriers in Agriculture 

and Options for Reform,” Trade, Doha, and Development: A Window into the Issues, 

Richard Newfarmer (ed.), World Bank (2006), chapter 6.

25WTO bound tariffs are the maximum tariff rates that WTO members may impose on 

imports, as agreed to in the Uruguay Round Agreement on Agriculture. Applied tariffs are 

the rates countries actually charged on imports and typically are the annual tariff rates 

published by national customs authorities for duty administration purposes. Applied tariffs

may be below or equal to bound tariffs, but may not exceed them. 

26USTR reports that the EU-25 average bound tariff rate is 24 percent. 

27It should be noted that, in fact, members’ tariffs are only bound at the WTO at the 

detailed, product-specific or “tariff line” level and not all tariffs are “ad valorem” or set as a

percentage of import value. As a result, data on average bound tariffs are indicative in 

nature and may differ, depending on such factors as how the averages are calculated (e.g., 

a simple average of the rates over the number of lines or a trade-weighted basis) and 

whether any attempt is made to estimate tariffs that would be charged for those lines 

subject to “specific” rates, such as 2 cents per pound. 

Page 15 GAO-07-379 World Trade Organization
Figure 2: Differences between Bound and Applied Tariffs in Developing and Developed Countries

0

20

40

60

80

100

120

Percentage

Region

Source: Anita Regmi and John Wainio, “Varying Tariff Profiles Illustrate Difficulties in Negotiating Cuts,” Amber Waves, vol. 4, no. 4

(September 2006), 27.

European Union-15

United States

Eastern Europe

Middle East

South America

Southern Africa

Central America

A

North Africa

sia Pacific

Non-EU Western Europe

Caribbean Islands

Sub-Saharan Africa

South Asia

Average bound tariff

Average applied tariff

World average agricultural bound tariff, 62%

World average agricultural applied tariff, 19%

Compared with other key negotiating proposals, the U.S. proposal of 

October 2005 offered the largest overall reductions in the central 

component of market access, the overall tariff reduction formula. WTO 

members have agreed to cut agriculture tariffs by use of a tiered approach, 

whereby members’ tariffs will be divided into tiers and then cut by agreed 

percentages, with the higher percentage cuts in the higher tiers. The 

negotiating parties, however, still need to agree on the thresholds for the 

tiers, the cuts that will apply, and the number of tariff lines or products 

that will be shielded from the formula cuts. Specifically, the United States 

proposed tariff cuts in the tiers for developed countries of 55 to 90 

The United States and the EU 

Remain Divided on Overall 

Agricultural Tariffs Cuts 

Page 16 GAO-07-379 World Trade Organization
percent, compared with a 35 to 60 percent cut proposed by the EU and a 

45 to 75 percent cut proposed by the G-20.28 According to USTR, these 

represent a 66 percent average cut by developed countries for the U.S. 

proposal, a 54 percent average cut for the G-20 proposal, and a 39 percent 

average cut for the EU proposal. Since the Hong Kong ministerial, the EU

has signaled a willingness to move closer to the G-20 position on tariff 

cuts. Press articles that GAO corroborated with several official sources 

cite this movement in average tariff cut by the EU as about 10 percentage 

points more than its previous offer, or about a 50 percent average cut. 

Nevertheless, the United States did not consider this movement to be 

adequate, since the signaled offer came less than halfway between the U.S. 

and the EU offers and was achieved through cutting tariffs on goods that 

the United States does not export, such as tropical products. Moreover, 

U.S. officials did not consider the G-20 proposal to be a true middle ground 

because, among other things, it envisaged higher tariff thresholds for each 

tier, which translates into lower cuts overall. For example, the G-20 set the 

threshold of the “highest tier,” which will undergo the greatest 

liberalization, at more than 70 percent (with a 75 percent tariff reduction),

whereas the United States set it at more than 60 percent (with an 85 to 90

percent tariff reduction). The tariff cuts for developed countries are 

important in their own right, and they are also important because they will

be the base from which developing countries will cut their tariffs. In 

general, it is assumed that developing countries’ tariff cuts will be twothirds those of developed countries, so the higher the developed country 

tariff cuts, the higher the developing country cuts.

29

Unlike the EU and certain developing country groups, the United States 

seeks to sharply limit the number of both sensitive and special products 

and calls for greater liberalization of these products. Sensitive products 

are ones that all countries can designate to face tariff cuts that would be 

lower than the overall tariff reduction, in return for TRQ expansion. The 

special product category is only for developing countries and would be 

Number and Treatment of 

Sensitive and Special Products 

Remain Major Points of

Contention 

 28The United States also has offered the lowest tariff cap of 75 percent, compared with the 

higher cap of 100 percent offered by the EU and the G-20. 

29According to some U.S. negotiators that we spoke with, while it is a working assumption 

in the negotiations that developing country tariff cuts will be roughly two-thirds of 

developed countries, this has not been formally agreed to, nor is there agreement on how it

would work in practice. They warn that with more complex modalities and subelements of

the tiers, some proposals would mean this fraction could be reduced to something much

smaller, or, for example, two-thirds of two-thirds or four-ninths of the original developed

country tariff cut. 

Page 17 GAO-07-379 World Trade Organization
subject to lower cuts or possibly exempt from tariff reductions. WTO 

members agreed in principle to these exemptions as part of the July 2004 

framework, but are still discussing the scope of these exemptions. At the 

Hong Kong ministerial, members agreed that developing country members 

will have the flexibility to self-designate an “appropriate” number of tariff 

lines as special products guided by indicators based on the criteria of food

security, livelihood security, and rural development needs. 

The issue of sensitive products has set the EU, the G-10, and certain 

developing countries against countries that want expanded market access, 

such as the United States and members of the Cairns Group. Members 

differ over the number of sensitive products and their treatment. 

Regarding the number, the current U.S. proposal offers a 1 percent 

exemption for sensitive products, while the EU has proposed up to 8 

percent of tariff lines as sensitive. In the run-up to the July 2006 meetings, 

however, there were some indications that the EU could move to an offer 

of 4 to 5 percent as sensitive products. However, studies have shown that 

exempting sensitive products from some or all trade liberalization could 

severely limit the overall level of market access into a country. For 

instance, the World Bank estimated that if even 2 percent of tariff lines 

avoided meaningful new access, about 75 percent of the gains from the 

Doha Round could be lost.30 As for their treatment, while WTO members 

have agreed that some liberalization through TRQ expansion will be 

required, the United States proposes a methodology or modality that 

would expand TRQs to a greater extent than proposed by the EU. Notably, 

the United States is proposing to use domestic consumption rather than 

imports (which the EU advocates) as the base for TRQ expansions. The 

EU maintains that consumption fails to account for a product’s 

“sensitivity”; the United States and others counter that the level of imports 

is artificially depressed due to trade restrictions. Recently, some parties, 

particularly the G-10 and the EU, have come forward with “hybrid” 

approaches, basing these levels on both consumption and existing TRQ 

levels. 

Similarly, there is currently a wide gap between countries’ proposals on 

the number and treatment of “special” products—products that developing 

countries can self-designate for more lenient tariff cuts guided by 

 30Kym Anderson and Will Martin, World Bank, “Agricultural Trade Reform and the Doha 

Development Agenda,” World Economy, vol. 28, no. 9 (September 2005). However, the

study also states that much of this could be recouped if WTO members agreed to caps on

tariffs. 

Page 18 GAO-07-379 World Trade Organization
indicators based on the criteria of food security, livelihood security, and 

rural development needs. Developing countries consider special-product 

flexibility essential to the success of their poverty-reduction and rural 

development strategies. The United States would prefer to see very few 

special products allowed—specifically, about 5 tariff lines—and would 

prefer that these be subject to greater liberalization through tariff 

reductions or TRQs than proposed by developing country members. 

Developing countries argue, however, that 5 tariff lines may not even allow 

countries to designate one product as “special.” For example, milk 

products cover from 8 to 37 tariff lines, depending upon which country’s

tariff schedule is used. The G-33 developing countries are proposing at 

least 20 percent of their tariff lines designated as special products, which 

could range from 130 to 300 tariff lines in key exporting countries. The 

U.S. Secretary of Agriculture has termed this a “nonstarter” for the United 

States, and WTO officials we spoke with suggested it is unacceptable to 

many other members. The G-33 also proposed that tariffs for half of these 

products would not be reduced at all, and the other half would be 

liberalized little (by 10 percent). The United States, on the other hand, 

would like to see increases in market access over time for special 

products. According to several stakeholders, one of the major problems in 

the negotiations was that very little attention or analysis was devoted to

this issue until just before the process broke down last July. Moreover, 

emotions have run high: demanders have insisted that the livelihood of 

their large, rural populations is an important social and development issue 

that is not negotiable, while exporting nations have termed these 

commercially significant “loopholes” that could easily be abused. 

Further complicating these issues is uncertainty about which products of 

export interest to the United States would be selected as sensitive or 

special by countries. Negotiations have been sequenced in such a way that 

WTO members would not know which products would be designated 

“special” until after the modalities were agreed upon and then applied by

countries to their detailed tariff schedules. Yet, knowing these 

designations is critical to determining the likely U.S. gains from

liberalization. Nevertheless, several studies have attempted to identify 

potential sensitive or special products in key markets, confirming the 

importance of product selection: 

Page 19 GAO-07-379 World Trade Organization
• On sensitive products, an analysis by the Food and Agricultural Policy 

Research Institute (FAPRI)31 used the following three criteria for 

identifying “sensitive” products: (1) commodities with high levels of 

protection, (2) commodities of high economic value, and (3) situations 

where implementing tariff reductions, such as those required for 

nonsensitive products, results in larger increases in imports and 

reductions in prices than the additional amount of imports resulting from 

the required TRQ expansion for sensitive products. The authors concluded 

that the following products were likely to be designated as sensitive: rice 

in Japan, South Korea, and the Philippines; sugar in the United States and 

the EU; and butter in the United States. The authors explained that the 

impact on U.S. agricultural production, trade, and prices was strongly 

affected by the choices made regarding sensitive products and the rules 

regarding TRQ increases for these products. 

• For special products, while certain broad criteria have been agreed to,

such as food and livelihood security, the indicators or basis for the 

designation of these products are broad, hard to measure, and only 

indicative rather than binding in nature.32 Since the top U.S. exports into 

developing markets are concentrated in a relatively few products, an 

analysis done by USDA found that having only 5 percent of tariff lines 

designated as special and exempted from tariff cuts could mean that 90 

percent or more of U.S. exports to these countries would not be 

liberalized. The WTO Secretariat came up with similar results in an 

analysis for the negotiating group chair. While not directly addressing their 

trade relevance to the United States, a series of independent country 

studies, done by the International Centre for Trade and Sustainable 

Development in collaboration with local researchers, suggests that an 

“appropriate” number of special products would probably range from 6 to

20, and on average represent about 10 percent of a country’s agricultural 

tariff lines. In these studies, the products most commonly selected as 

 31FAPRI, “U.S. Proposal for WTO Agriculture Negotiations: Its Impact on U.S. and World 

Agriculture,” Center for Agricultural and Rural Development, CARD Working Paper 05-WP

417 (December 2005). 

32For example, according to a proposal by the G-33 on special products, an indicator may

be that “a significant proportion of the domestic production is produced by vulnerable 

populations such as tribal communities, ethnic groups, women, aged people, or

disadvantaged producers.” 

Page 20 GAO-07-379 World Trade Organization
special products were beef, chicken, corn, milk and dairy products, 

onions, pork, potatoes, rice, tomatoes, and some vegetable oils.

33

In addition to the issues of sensitive and special products, the United 

States is equally concerned about the special safeguard mechanism 

(SSM)—designed to allow countries to temporarily increase import duties 

to deal with surges in import volumes or rapid declines in import prices. 

Under the Uruguay Round, the special safeguard (SSG) pertains to 

countries, primarily developed countries, that opted for tariffication 

(where quotas were converted to tariffs).34 In the Doha Round, developing 

countries have insisted that they need access to a similar mechanism, or 

the SSM, on the basis of their particular food and livelihood security and 

rural development needs. Other WTO members have accepted this in 

principle, but believe that there should be a link between these provisions 

and the extent of liberalization already undertaken. More specifically, the 

G-33 group believes that all products, including special products, should 

be eligible for the SSM, while the United States, Canada, Australia, and 

others argue that only products that are liberalized should be eligible. 

Other major differences between the proponents of the SSM and other 

countries include the remedy or the additional tariff allowed, the 

safeguard’s duration, and the trigger that would enable the special 

safeguard. According to one U.S. official that we spoke with, the United 

States is primarily concerned that the price- and volume-based triggers for 

the SSM could too easily be set off and that conditions giving rise to them 

are hard to predict. There also is disagreement between negotiating parties 

about the status of the present SSG. While most of the G-33, the Cairns 

Group, and the United States agree that it should be eliminated, other 

groups, such as the EU and the G-10, do not want to see the present SSG 

eliminated. In other words, the latter groups think both developed and 

developing countries should have access to the SSG. 

 33These 11 country studies and their methodologies are available at http://www.ictsd.org

and include the countries of Barbados, Ecuador, Fiji Islands, Honduras, Papua New 

Guinea, Pakistan, Peru, the Philippines, Sri Lanka, and Vietnam. These studies used a set of 

food security, livelihood security, and rural development indicators similar to those 

proposed by the G-33 and took into account variables such as the current levels of 

protection, including the difference between the bound and applied tariff rates, as well as 

import vulnerability. 

34However, the present SSG is available to all WTO members (both developing and 

developed) that have them listed in their country schedules. 

Page 21 GAO-07-379 World Trade Organization
In contrast to market access, the United States is on the defensive on 

domestic support for agriculture. The United States proposed reductions 

in domestic support in its October 2005 offer, but the EU and developing

countries believe that U.S. support levels should be further reduced below 

current spending. 35 They are also concerned that the proposal contains 

“water” that could enable the United States to increase spending in the 

future. Moreover, there is contention over whether there is a “dollar-fordollar” trade-off being demanded between market access and domestic 

support by the United States in the negotiations.

While many believe agriculture is a unique sector that requires certain 

safety nets, economic studies have shown that production and tradedistorting subsidies can depress commodity prices on world markets.36 In 

the WTO, these policies are categorized according to the extent to which

they are considered to distort trade, with Amber Box (as measured by the 

so-called aggregate measure of support) being the most trade distorting, 

Blue Box trade distorting to a lesser extent, and Green Box minimally or 

not trade distorting. The Uruguay Round capped and reduced spending in 

the Amber Box below the level spent in the base period of 1986 through 

1988 (a period of relatively high supports resulting from depressed market 

prices), but permitted unlimited spending on policies that meet the Blue 

Box and Green Box criteria. In addition, members were given a “buffer” to 

provide product- and nonproduct-specific subsidies equal to 5 percent or 

less of the value of production (for developed countries) that was deemed 

“de minimis” and thus not counted against the Amber Box ceiling.37

However, if product- or nonproduct-specific de minimis support exceeds 

this threshold level by even one dollar, it all must be accounted for as 

Amber Box. Because of the large differences between the level of support 

permitted by the Uruguay Round Agreement on Agriculture and the actual 

spending since then, a gap called “water” has emerged that means even 

fairly large reductions in proposed ceilings may have little to no actual 

impact on policy. Moreover, as part of the July 2004 framework agreement, 

The EU and Developing 

Country Groups Say the 

U.S. Offer Does Not Cut 

Domestic Support 

Sufficiently 

 35In this report, we refer to spending and domestic support similarly. However, both of

these, including the term “spending,” do not necessarily translate into taxpayer-financed 

support to farmers, but may be due to the difference between an administered price and a 

market price. 

36World Bank, Global Economic Prospects: Realizing the Development Progress of the 

Doha Agenda 2004 (2003), chapter 3.

37The de minimis level for developing countries is 10 percent of the value of production 

under the Uruguay Round. In the United States, examples of nonproduct-specific de 

minimis support include programs for crop insurance subsidies and grazing subsidies.

Page 22 GAO-07-379 World Trade Organization
the United States secured WTO members’ commitment to expand the new 

Blue Box to include “programs that do not require production,” such as the 

countercyclical payments established by the 2002 Farm Bill, and to set its

ceiling at 5 percent of the value of production.38 Another innovation of the 

Doha Round is the widening of support that would be disciplined in the 

concept of the “overall trade-distorting support,” which is the sum of the 

Amber Box, the permitted de minimis, and the Blue Box support. 

During the last several years that they notified to the WTO,39 the 

Congressional Budget Office estimated the total levels of average annual 

domestic support to agriculture (Amber Box, Amber Box de minimis, Blue 

Box, and Green Box) for the United States, the EU, and Japan were $71 

billion, $87 billion, and $29 billion, respectively, amounting to about 84 

percent of world domestic support.40,41 However, mainly because their 

agricultural sectors are very large, the EU, the United States, and Japan 

 38In the current Blue Box (as with the Green Box), as set forth in the Uruguay Round

Agreement on Agriculture, the amount of permissible subsidies is not limited. However, in

the Doha July 2004 framework agreement, it was decided that these payments would be 

capped at less than 5 percent of a country’s total value of agricultural production based on

a historical period to be determined. Also, as part of the Agreement on Agriculture,

subsidies that would otherwise qualify as Amber Box are classified as Blue Box when they 

require farmers to limit production, such as in a marketing quota or land set-aside. 

However, in the 2004 framework agreement, the definition of the Blue Box was broadened 

to include “direct payments that do not require production” if, for example, such payments

are based on fixed or unchanging bases or yields. This would allow the United States to

include countercyclical payments in this classification. 

39Member countries are required to notify or submit documents to the WTO each year that

detail their expenditures on domestic government support to their agriculture sectors. The 

notifications, submitted annually, include the aggregate measure of support, an index of the 

monetary value of a country’s support to its commodity- and noncommodity-specific 

support policies that are considered trade distorting. In addition, these notifications also

include Green Box and Blue Box support policies, which are not presently subject to

reduction commitments.

40The averages for the United States and the EU are estimates from 1998 through 2001, 

whereas Japan’s estimate of average domestic support is for 1998 through 2002. The United

States has not notified its annual levels of domestic support to the WTO since 2001, and

Japan has not done so since 2002. Recently, according to USDA, the EU has notified its

levels of domestic support for 2002-03 and 2003-04. The Congressional Budget Office notes 

that a caveat to these estimates is that most countries report their subsidies in currencies 

other than dollars, and the office converted to dollars using exchange rates so that the

numbers from different countries could be compared in a common unit of measure. 

However, over time, exchange rates can fluctuate, and using dollars for other countries’ 

support levels could be misleading because of exchange rate changes. 

41Congressional Budget Office, Policies That Distort World Agricultural Trade: Prevalence 

and Magnitude (August 2005), 22, table 12. 

Page 23 GAO-07-379 World Trade Organization
individually provide smaller rates of domestic support than some other 

countries as a percentage of the value of their total agricultural output, 

each averaging a rate of about 37 percent from 1998 through 2002.42 Under 

the Uruguay Round, the final bound ceiling for Amber Box support to be 

reached when its results were fully phased in by year-end 2001 was 

substantially higher for the EU—about $82.9 billion compared with $19.1 

billion for the United States. However, since this period, a comparison of 

the amounts and composition of domestic support has become much more 

complex because of a variety of factors, including (1) the United States 

has not notified domestic support to the WTO since 2001, and the EU has 

only recently notified its support for years 2002-03 and 2003-04 (see 

footnote 40); (2) recent changes in domestic farm policies by both the 

United States and the EU; and (3) EU enlargement—that is, the addition of 

10 new member countries in 2004. For instance, the 2002 U.S. Farm Bill 

added to program spending in the Amber and Green Boxes, including, 

among other things, higher marketing loan rates; the countercyclical

program; fixed direct payments; and increased environmental program 

spending, such as the Conservation Security Program. In the EU, with the 

Common Agricultural Policy (CAP) reforms of 2003 and 2004, the trend 

has been away from Amber Box price support programs and Blue Box 

programs (in this case, direct payments that are commodity-specific) and 

more toward Green Box supports, such as the introduction of “singlefarm” payments. However, the CAP reforms would leave import barriers 

unchanged and export subsidies would be reduced only in response to 

limited support price reductions and lower export levels. 

The major criticism of the October 2005 U.S. offer on domestic support 

was that the level of overall trade-distorting support—which includes the 

sum of Amber Box, Amber Box de minimis, and Blue Box support—did 

not represent a “real” cut in actual program spending and should be 

reduced. Specifically, while the reduction in the Amber Box limit would 

probably require certain program changes under the current U.S. proposal,

trading partners believe that the cut proposed for U.S. overall tradedistorting support does not represent a “real” cut from current levels. Per 

the U.S. proposal, this support would be reduced 53 percent, while the EU

and the G-20 countries proposed reductions of 60 and 75 percent, 

respectively. As table 1 shows, the U.S. offer would bring this level to 

about $22.5 billion after 5 years. However, in 2005, actual support for these 

programs was estimated at about $19.7 billion. Allowing higher U.S. trade-

 42Policies That Distort World Agricultural Trade, 18. 

Page 24 GAO-07-379 World Trade Organization
distorting domestic support ceilings after the Doha Round is implemented 

than is presently spent is not acceptable to many WTO members. Key U.S.

stakeholders in the negotiations, however, argue that the ceiling should 

not be set at or below the level of support in 2005 (or any one year) 

because the nature of the programs is such that payments vary from year 

to year, depending on market conditions. Moreover, the de minimis 

ceilings themselves fluctuate annually with the value of production. 

Finally, the United States and other WTO members disagreed on the base

period to be used for setting the new product-specific caps for Amber 

Box—the United States would prefer 1999 to 2001 as the base (when U.S. 

support was higher due to lower U.S. crop prices), whereas other 

negotiating parties prefer 1995 to 2000 as the base (which includes both 

low and high support years). 

Table 1: U.S. Reform Proposal on Domestic Support and Estimated Domestic Spending Outlays for 2005 

Dollars in billions 

 October 2005 U.S. proposal 

Support component Present ceiling Percentage cut Ceiling

Actual 2005 

spending

Amber Box ceiling 

(Uruguay Round final bound total) $19.1 (60%) $7.6 $12.5

Blue Box ceiling 

(per July 2004 framework agreement; 

based on 2005 U.S. production value) 9.6 (50) 4.8 5.0

Product-specific de minimis 9.6 (50) 4.8 0.2

Nonproduct-specific de minimis 9.6 (50) 4.8 2.0

Overall trade-distorting support $47.9 (53%) $22.5 $19.7

Source: GAO analysis of USDA data. 

Note: Data analysis using information on bound levels and base levels of Amber Box, Blue Box, and 

de minimis; October 2005 percentage cuts and proposed ceiling levels from the U.S. proposal; and 

unofficial USDA estimates for 2005 outlays. 

Members also are concerned that the U.S. proposal would enable it to 

increase “de minimis” support. As seen in table 1, there is significant 

“water” between bound levels of support and actual support in both the 

product-specific and nonproduct-specific de minimis categories. Other 

countries are quick to point out that the United States could potentially 

expand programs under this category in the future. But U.S. officials say 

that this category is the least used, and since it is based on year-to-year 

production value, it is a risky category to rely upon. Moreover, the de 

minimis level may be higher in the U.S. proposal because Congress wants 

Page 25 GAO-07-379 World Trade Organization
flexibility to decide what to do with U.S. farm programs in the 2007 Farm 

Bill. 

While welcoming proposed U.S. cuts in spending under the new Blue Box, 

other key players want additional disciplines. The October 2005 U.S. 

proposal would reduce the cap on Blue Box spending from 5.0 to 2.5 

percent of the total value of agricultural production based on a historical 

period to be determined. This reduction translates into about a $5 billion 

ceiling, whereas the 2002 Farm Bill allows as much as $7.6 billion in 

countercyclical payments. Recent spending on countercyclical payments 

suggests that the proposal on Blue Box would not constrain spending in 

most years, but would provide a cap in low-priced years.43 Nevertheless, 

other member countries continue to press for disciplines (i.e., productspecific caps) to ensure that Blue Box payments actually have minimally 

trade-distorting effects. 

As shown in table 1, the U.S. offer would reduce the ceiling for Amber 

Box, the most trade-distorting support, by 60 percent—from about $19.1 

billion to $7.6 billion. These cuts are significant and would require some 

changes to present U.S. programs, since unofficial estimates of Amber Box 

support in the United States was about $12.5 billion in 2005. Examples of 

Amber Box programs include marketing loan benefits and milk and sugar 

price supports. However, the extent to which these programs would have 

to change depends on future commodity prices. If prices were high, the 

programs may require only small changes. However, larger changes might 

be required if prices were lower because current programs would lead to

greater spending. A recent study by FAPRI estimating the effects of the 

U.S. offer on U.S. farm programs demonstrated that the offer would 

require some significant cuts or changes to the 2002 Farm Bill provisions 

for Amber Box and Blue Box support. Specifically, this study suggests that 

these reductions to the Amber Box and new Blue Box could translate into

 43Countercyclical payments are made to participating producers when the marketing year

average price received by farmers for a covered commodity is less than the target price. 

Target prices are set in legislation and apply only to the covered commodities of barley, 

corn, grain sorghum, oats, peanuts, rice, soybeans and other oil seeds, upland cotton, and

wheat. After being eliminated in the 1996 Farm Bill, target prices were restored under the 

2002 Farm Bill. 

Page 26 GAO-07-379 World Trade Organization
about an 11 percent cut in loan rates (reducing loan deficiency payments)44

and a 7 percent cut in target prices (reducing countercyclical payments). 

However, in both scenarios of the FAPRI models, most farmers would 

experience increased overall crop and livestock receipts due to higher 

demand and prices caused by lower tariffs, the expansion of TRQs, and 

the removal of export subsidies worldwide. 

Although not officially supported by the United States, the EU and 

developing countries have complained that the United States would like to 

see “dollar-for-dollar” compensation in market access (tariff cuts) in 

exchange for further reducing its domestic support levels. The EU trade 

commissioner did so publicly at the time of the July breakdown, and 

various foreign government officials did so in our September meetings in 

Geneva. Moreover, according to a recent United Nations Conference on 

Trade and Development (UNCTAD) report, which covered the suspension 

of the Doha talks, other WTO members from developing countries do not 

believe that this “dollar-for- dollar” equivalence between domestic subsidy 

reductions and market access is acceptable.45 The UNCTAD report noted 

that some countries believe that since domestic support is inherently trade 

distorting, a “dollar-for-dollar” exchange is not possible, and greater 

reductions in domestic support are required. 

However, both U.S. officials and the Farm Bureau deny that they are 

insisting on a strict “dollar-for-dollar” trade-off. A USDA official explained 

that the United States is seeking rough parity among the three pillars of 

agricultural reform and needs to see broadly commensurate U.S. market 

access gains. According to this U.S. official, the notion of a “conversion 

rate” between the pillars of market access and domestic support came 

about as a result of an analysis by the American Farm Bureau Federation. 

An August 2006 article by the Farm Bureau’s chief economist indicated

that the federation had analyzed the extent to which market access gains 

 44A loan deficiency payment is the amount by which the loan rate (the price per unit at

which the government provides nonrecourse or recourse loans to farmers by the 

Commodity Credit Corporation) exceeds the posted county price or prevailing world 

market price, and thus is equivalent to the marketing loan gain that could alternatively be 

obtained for crops under loan. Loan deficiency payments are available for barley, corn, dry

beans, grain sorghum, honey, lentils, mohair, oats, rice, small chickpeas, soybeans and 

other oilseeds, upland cotton, and wool. 

45UNCTAD, Report of the Trade and Development Board on Its Fifty-Third Session, 

Volume I, Trade and Development Board, Fifty-Third Session (Geneva, Switzerland: Oct.

11, 2006). 

Page 27 GAO-07-379 World Trade Organization
could be used to offset the adverse affects on U.S. producers of domestic 

support reductions and found that trade gains from a 50 percent reduction 

in tariffs would offset a 50 percent reduction in domestic support.46 The 

article further indicated that the United States’ October 2005 proposal 

appears to meet the criteria of generating enough trade gains to offset the 

proposed reductions in domestic support. Farm Bureau officials told us 

that the bureau’s position is that it has to see a positive balance—or at 

least not a negative balance—between cuts in domestic support versus 

gains from market access. Specifically, the net impact on U.S. farm income 

of losses from cuts in U.S. domestic support should be fully offset by gains 

in U.S. farm income driven by cuts in foreign tariffs or other improvements 

in foreign market access, but would depend on the specific products 

involved. 

WTO Members Are 

Divided by Underlying 

Conflict on Expectations 

from a “Development 

Round” 

Another issue facing WTO members is an underlying conflict about their 

fundamental expectations from the Doha Round—a round that originated

with the intention of focusing on the interests and needs of developing

countries. Despite this shared objective, the views of developed and 

developing country members often diverge on the desired outcome of a 

“development round.” Developing countries are playing a more pivotal role 

than in past rounds and have maintained a show of solidarity at critical 

moments, despite their diverse interests. Two developing countries that 

have informally led the developing country camp—Brazil and India—are 

now included in the inner circle of the Doha negotiations because of their

major role in world trade as well as their leadership roles. Recent 

economic studies generally confirm that some developing countries face 

particular challenges in trade liberalization related to worker 

displacement, and that a few are likely to lose overall from a Doha 

agreement. The United States and other developed countries tend to 

emphasize the benefits of opening markets, while generally developing

countries tend to be wary of the economic and social effects of lowering 

their own trade barriers. All agree that developing countries should 

receive assistance to adjust to and benefit from trade liberalization. 

 46Robert E. Young, “The Coming Tug of War: Forces Moving the 2007 Farm Bill,” Journal of 

Agriculture and Applied Economics (August 2006). 

Page 28 GAO-07-379 World Trade Organization
WTO members began the Doha talks with the intention of helping 

developing countries benefit from international trade. Although the Doha 

ministerial declaration did not define specific outcomes from the 

negotiations for developing countries, it referred often to addressing 

issues of interest to developing countries and providing assistance to 

them. The preamble to the Doha declaration explicitly addressed the 

development objective of the round, as follows: 

Intent of the Doha 

Development Agenda Was to 

Help Developing Countries 

Benefit from Trade 

“We recognize the need for all our peoples to benefit from the increased opportunities and

welfare gains that the multilateral trading system generates. The majority of WTO Members 

are developing countries. We seek to place their needs and interests at the heart of the

Work Programme adopted in this Declaration. ...We shall continue to make positive efforts

designed to ensure that developing countries, and especially the least-developed among

them, secure a share in the growth of world trade commensurate with the needs of their 

economic development.” 

Without this emphasis, several foreign officials we met with in Geneva told

us, the round might never have been started, because many developing

countries had ongoing difficulties in implementing the Uruguay Round 

agreements and said they were not prepared to make new commitments. 

WTO members mean different things when they refer to the “development 

dimension” of the Doha negotiations. Many developing countries express a 

concern about ensuring that trade rules are applied fairly to all countries. 

They see the Doha Round as an opportunity, even a promise, to redress 

trade rules that they believe particularly harm poor countries. For 

example, at the Hong Kong ministerial, Pakistan’s Commerce Minister 

defined development as “synonymous with the end of discrimination 

against developing countries.” This concern is focused on trade barriers 

imposed by developed countries in sectors of particular interest to 

developing countries, such as agriculture and textiles and apparel. 

Developing countries—which now make up some two-thirds of WTO’s 

membership and a growing share (over one-quarter) of world trade—have 

diverse trade interests in the Doha negotiations. Some countries have 

strong offensive interests in gaining more access to world markets for 

their exports in certain sectors, such as Brazil in agriculture and China in 

manufactured goods; while others express primarily defensive interests in 

protecting their industries and markets from imports, such as the island 

countries that consider themselves part of the “small and vulnerable 

economies” group. Some countries have a combination of interests, such 

as India, which has offensive interests in services and defensive interests 

in agriculture. 

Developing Countries Have 

Diverse Trade Interests, Yet 

Maintain Solidarity in the Doha 

Negotiations

Page 29 GAO-07-379 World Trade Organization
Despite their different trade interests, developing countries have organized

into a newly assertive force since they precipitated the collapse of WTO’s 

Cancun Ministerial in 2003 and have displayed public solidarity at key

points in the negotiations. Their common link is the demand for a 

development focus in the talks. They also insist that agriculture be 

negotiated first before they are willing to resolve other issues of interest to 

developed countries—that is, manufactured goods and services. They have 

demonstrated relative unity in the Doha Round by adopting elements of 

various groups’ key concerns in joint public statements. For example, at 

the Hong Kong ministerial, several developing country coalitions came 

together as the informally named “G-110” to draw attention to a number of 

shared, general demands, such as the removal or reduction of tradedistorting subsidies and the extension of duty-free, quota-free access to 

LDCs.47 In September 2006, G-20 ministers and officials met with the 

coordinators of the G-110 coalitions, plus others, to discuss the suspension 

of the negotiations. Their joint statement described the suspension as “an 

unacceptable situation for all developing countries,” reiterated their 

“shared interest in a pro-development outcome” for the round, and 

highlighted “the indivisibility of such a development agenda.” Developing 

countries have largely avoided divisiveness so far by not jointly addressing 

issues on which there is dissension, such as the details of special-product 

designation. As the architect of these gatherings, Brazil has modified its 

aggressive agricultural negotiating stance in the talks to accommodate the 

defensive interests of other developing countries, primarily because it 

highly values its role as the G-20 leader. China also has stood with the 

developing countries in the G-20 and the G-33, despite urging by the United 

States and others for it to step away from the pack and assert its interests 

in market access. 

A primary rationale driving the Doha liberalization agenda is the belief that

international trade can benefit a country’s overall growth and 

development. International trade increases competition and specialization,

provides greater access to technology, and expands export markets, 

enabling some producers to achieve economies of scale. Over time, a more 

liberal trading regime may reduce costs on both imported manufacturing 

inputs and exported final products, creating incentives to invest in new 

production. Greater integration with the global economy may also spur 

Trade Liberalization Poses 

Particular Challenges for Some 

Developing Countries 

 47This statement was made on behalf of the G-20; the G-33; LDCs; the African Group; the

Small Economies; and the African, Caribbean, and Pacific Group of States. 

Page 30 GAO-07-379 World Trade Organization
foreign investment, providing additional capital for development and 

growth of the local economy. 

However, trade liberalization also can involve significant adjustment costs. 

These costs may include unemployment in sectors that are not 

internationally competitive, may include fiscal reform as governments 

heavily dependent on trade taxes shift toward income or production taxes,

and may contribute to worsening of inequality. Developing countries also 

may face some specific challenges, such as greater instability due to 

volatile export markets and an increased reliance on international debt to

finance trade deficits. Finally, trade is not the only factor affecting a 

country’s economy or the only means of increasing its growth. For 

example, human capital development through education and the 

strengthening of institutions and the rule of law also play important roles 

in a country’s economic development.48

Economic models of the potential effects of a Doha agreement generally

predict overall benefits for most developing countries. However, these 

models find that some developing countries in sub-Saharan Africa and the

Mediterranean region may actually lose overall from a Doha agreement, 

due to several factors (see the discussion of these models in the next 

section of this report). First, developing countries in these regions 

generally benefit already from preferential access into the U.S. and the EU 

markets that could be eroded under a Doha agreement. Second, U.S. and 

EU agricultural subsidies tend to reduce the price of certain agricultural 

products on the world market. While this can harm domestic agricultural 

producers in developing countries, it benefits those countries that import 

more food than they export. Many of these net-food importers are in subSaharan Africa. Third, potential special and sensitive product exemptions 

previously discussed in this report would limit the scope of liberalization.

When these exemptions are factored in, the gains from Doha that 

otherwise would have been possible and that would have offset some of 

the other losses, do not materialize. 

In part for these reasons, many developing countries are wary of 

undertaking broad liberalization for imports. While they want to share in 

the growth of global trade by increasing their exports, they fear the 

Many Developing Countries Are 

Wary of Opening Markets 

 48For more discussion of the potential benefits and challenges of trade liberalization for

developing countries, see GAO, Foreign Assistance: U.S. Trade Capacity Building 

Extensive, but Its Effectiveness Has Yet to Be Evaluated, GAO-05-150 (Washington, D.C.: 

Feb. 11, 2005), appendix IV. 

Page 31 GAO-07-379 World Trade Organization
negative economic and social effects of relaxing their own trade barriers. 

They hold that their development needs would best be met by limiting the 

degree and speed with which they open their markets in the Doha Round.

Protecting large numbers of poor people who make a living in industries 

that may have difficulty competing internationally is a priority for many 

developing countries. India, with over 600 million poor rural farmers, has 

been one of the most vocal countries on this issue. India has defended

special and differential measures and the G-33’s demand to allow 

developing countries to protect a relatively large percentage of agricultural 

products through special-product designation. The African, Caribbean, and 

Pacific Group of countries, which receive preferential access to the EU 

and are often dependent on a few export products, have repeatedly called

for the negotiations to soften the impact of erosion of preferences. 

Specifically, they would like to preserve “a commercially meaningful 

preference margin” by identifying products potentially affected and having

countries that provide preferences apply smaller tariff cuts over a longer 

time. However, some developing countries are vigorous advocates of trade 

liberalization to achieve development goals and have objected to such 

efforts to limit market access in developing countries. Costa Rica and 

Colombia, for example, spoke out to WTO members at the time of the July 

collapse, criticizing both developed and developing countries for a lack of

flexibility. 

Some trade experts agree that developing countries should be given the 

latitude (or “policy space”) to develop their economies before being

expected to remove their trade protections. They maintain that each 

country’s development needs are specific and trade rules need to be 

flexible. They also point out that most developed and advanced developing 

countries achieved economic growth by using strategic trade barriers at 

certain points in their history. These experts, and most developing 

countries, advocate for trade liberalization to be undertaken over years, or 

even decades, in phases that allow their economies to grow before 

opening markets fully. 

In contrast, the United States is one of the most outspoken advocates for 

trade liberalization. U.S. negotiators emphasize that lifting trade barriers 

and opening markets is essential to making economic gains from trade 

agreements. They point out that about half of the estimated benefits to 

developing countries from a Doha agreement come from liberalization by 

other developing countries. Thus, aside from its own commercial interests

in more open markets overseas, the United States maintains that 

developing countries would benefit from an ambitious Doha agreement 

United States Is a Strong 

Advocate for Trade 

Liberalization 

Page 32 GAO-07-379 World Trade Organization
that leads to significant market opening by all parties, except LDCs. U.S. 

officials acknowledge that liberalization involves adjustment costs, but 

they state that these costs are typically short term and can be mitigated 

through social safety nets. They agree that developing countries should 

receive assistance to address transition issues and take advantage of trade

opportunities. 

Members Agree to Help 

Developing Countries 

Adjust to and Benefit from 

Trade Liberalization 

WTO members already plan to give developing countries flexibility in 

complying with WTO agreements, through what are called special and 

differential treatment provisions. While the full extent of these flexibilities 

has yet to be decided, these provisions would apply to most aspects of an 

agreement, including agriculture, manufactured goods, and services. For 

example, the flexibilities are likely to allow developing countries to make 

smaller tariff cuts and phase them in over a longer time. WTO members 

also have decided that WTO’s poorest members—LDCs—would be 

exempted from most liberalization commitments in a Doha agreement. 

Although the future of the Doha Round is uncertain, WTO members also 

have decided to move ahead with providing increased “Aid for Trade” to 

help developing countries take advantage of trade opportunities, 

regardless of the outcome of the current negotiations. The WTO 

Secretariat, individual members, and international organizations have 

provided technical and financial assistance for years to help developing

countries and LDCs meet existing WTO obligations; participate in the 

negotiations; and build institutional, human, and physical capacity to 

benefit from the trading system. The level of such assistance has increased

since the start of the Doha Round, but international consensus has 

recently arisen that these resources need to grow and become better 

coordinated.

During 2006, WTO members endorsed recommendations from two task 

forces on improving assistance. One task force, charged at Hong Kong 

with developing ways to “operationalize” Aid for Trade, outlined policies 

for identifying and fulfilling trade-related needs of developing countries. 

Its report recommendations focused on coordinating resources and 

activities at the national, regional, and global levels and strengthening 

monitoring and evaluation to ensure effectiveness and accountability by 

both donors and recipients. The task force and Director-General Lamy 

urged WTO members and other stakeholders to carry out the 

recommendations as soon as possible, underscoring that Aid for Trade 

was not tied to the Doha Round and should be considered a complement 

to, and not a substitute for, a multilateral trade agreement. The report 

Page 33 GAO-07-379 World Trade Organization
stressed that additional, predictable sources of funding were necessary 

and urged Lamy to “clarify” the Aid for Trade pledges made at the Hong 

Kong ministerial. The United States had pledged to double its trade-related 

assistance for developing countries to $2.7 billion a year by 2010, the EU 

had said it would commit 2.0 billion euros a year by 2010, and Japan 

offered to provide $10.0 billion from 2006 through 2008. 

The second task force recommended strengthening a program called the 

“Integrated Framework” that provides assistance specifically to LDCs in 

the early stages of building trade capacity.49 Earlier evaluations of this 

program showed it had generally failed in integrating trade into countries’

development plans and in providing adequate resources. The task force 

estimated that about $400 million would be needed over 5 years to finance 

the recommended actions. 

USTR officials hope to make the Aid for Trade and Integrated Framework 

recommendations more concrete and workable. Some major decisions on 

the enhanced Integrated Framework, such as clarifying the legal status of 

a new executive secretariat and trust fund and their relationship with the 

WTO, are still pending. Regarding Aid for Trade, the WTO will provide only 

limited assistance, but Director-General Lamy would like it to play an

important—and new—role in coordinating and monitoring assistance 

provided by bilateral and multilateral donors. U.S. officials said there is a 

high level of commitment among WTO members to move forward on both 

initiatives and, in particular, to make the enhanced Integrated Framework 

operational early in 2007. They said that making progress on these efforts 

is important to maintaining credibility with developing countries and 

ensuring that these countries begin to see more benefits from the trading 

system. 

 49The Integrated Framework for Trade-Related Technical Assistance to Least-Developed

Countries, launched in 1997, is sponsored by six multilateral agencies: the International 

Monetary Fund, the World Bank, the WTO, the International Trade Center, UNCTAD, and 

the United Nations Development Program. Its goals are to help LDCs integrate trade

priorities into their national development plans and encourage coordination of assistance 

to LDCs for these priorities. 

Page 34 GAO-07-379 World Trade Organization
Participants and experts express varying views on the ramifications of 

Doha’s possible failure for the global and WTO member economies, the 

world trading system, and U.S. trade policy. Some participants and experts 

warn of forgone economic gains, a weakened multilateral trading system, 

and dimmed prospects for both congressional renewal of TPA and reform 

of U.S. farm subsidies. Others say the ramifications on all three fronts may 

be much more limited. What the United States does in 2007 is expected to

prove pivotal for the WTO and U.S. trade leadership. 

Participants Have 

Contrasting Views on 

Implications of Doha’s

Impasse 

Without a Doha 

Agreement, Potential 

Economic Gains Might Not 

Be Realized 

The Doha Round has the potential to break new ground in the 

liberalization of agriculture trade, while opening up new areas of services 

and goods trade. A range of economic studies predict that both the global 

economy as a whole and the United States as a nation would gain overall

from the multilateral trade agreement envisaged. However, if the Doha 

Round fails, these potential economic gains would not be realized. Some 

of these benefits could be achieved through unilateral actions, such as a 

reduction in domestic subsidies or through regional free trade agreements 

(FTA). But the resulting gains would likely be more limited for the United 

States than the already relatively modest gains estimated from a Doha 

agreement. 

Some officials and observers of the Doha Round point out that the 

negotiations have included significant groundbreaking liberalization in 

agriculture and could potentially expand market access significantly in

other areas. WTO Director-General Lamy is not alone in arguing that what

has already been notionally agreed to in the Doha Round is significant in

terms of reform and liberalization and in some areas would go beyond 

what was achieved in the last (Uruguay) round of global trade talks. By the 

December 2005 Hong Kong ministerial, WTO members had agreed to 

phase out export subsidies altogether and to provide duty-free, quota-free 

access to LDCs for at least 97 percent of tariff lines. The Uruguay Round 

resulted in some liberalization of agriculture and services markets, and set

a baseline of rules as well as subsidy and market access levels. In the Doha 

Round, across-the-board “formula” cuts are being discussed for both 

agriculture and manufactured goods that would apply to most WTO 

members and most tariff lines, although the depth of these cuts is still 

under debate. This approach to cutting barriers is more encompassing 

than that employed in the Uruguay Round and means more trade will be 

secured by WTO disciplines. Increased market access in core services 

such as financial services and telecommunications, as well as steps to 

streamline the transit and clearance of goods, are also expected to 

produce tangible gains. 

Doha Focused on Largest 

Remaining Barriers to World 

Trade 

Page 35 GAO-07-379 World Trade Organization
An international trade agreement reducing trade barriers and subsidies 

would economically benefit the United States and the world economy, 

overall, according to economic models.50 Although some individuals and 

groups within countries could be made worse off (such as farmers who 

lose their subsidies), the net effect on the world economy and the United

States individually would likely be positive.51 For example, a recent World 

Bank study estimated that a potential Doha agreement could (under a 

certain scenario) increase worldwide real income by about $96 billion 

annually by 2015 and increase U.S. real income by about $5 billion 

annually. Other models offer similar predictions on the overall positive 

effect on the world and the United States, although the benefit magnitude 

varies. Table 2 shows the results of four recent studies that rely on the 

most recent tariff and trade data available and model likely Doha 

outcomes.52

Extent of Potential Economic 

Gains May Not Be Realized 

without a Doha Agreement 

 50This means that the resulting changes in the production, prices and wages, and trade 

would result in greater economic welfare than without these changes. The economic 

studies discussed below generally measure increased economic welfare in terms of real 

(i.e., inflation-adjusted) income gains for the economy, as a whole. 

51In addition, not all countries are predicted to gain from a potential Doha agreement. In a

previous section of this report, we discuss some of the developing countries and regions 

that could potentially lose economically and the reasons that this may occur.

52For additional discussion on economic models of trade negotiations and a list of previous

economic studies, see our prior study, GAO-05-538, appendix V.

Page 36 GAO-07-379 World Trade Organization
Table 2: Estimated Economic Effect of a Potential Doha Multilateral Trade Agreement 

U.S. dollars in billions 

Annual change in real income 

after an agreement is implemented

Economic study World United States

Developed

countries

Developing

countries

Carnegie Endowment, 2006a$58.6 $6.5 $28.5 $30.1

Centre d’Etudes Prospectives et d’Informations 

Internationales, 2004 (trade liberalization in agriculture 

only)b

 23.2 4.0 18.3 (0.8)

International Food Policy Research Institute, 2006c 54.7 Not available 32.0 22.7

World Bank, 2006d 96.1 4.9 79.2 16.1

Source: GAO analysis of studies listed in notes a through d.

Note: Since the final results of a Doha agreement are not known, modelers estimate the degree of 

liberalization they think is likely. We chose, for illustration purposes in this table, those scenarios that 

represented the modelers’ baseline scenario for a likely Doha agreement. However, many times 

modelers include multiple scenarios that represent different potential scenarios (e.g., tariff cuts of 20

percent versus 40 percent) to show how different agreements affect each economy. For details on the 

exact specification used by each model, as well as a comparison of other scenarios, refer to the 

original studies. 

a

Sandra Polaski, Winners and Losers: Impact of the Doha Round on Developing Countries

(Washington, D.C.: Carnegie Endowment for International Peace, 2006). 

b

Antoine Bouet, Jean-Christophe Bureau, Yvan Decreaux, and Sebastien Jean, “Multilateral 

Agricultural Trade Liberalization: The Contrasting Fortunes of Developing Countries in the Doha 

Round,” Paper 2004-18 (Paris, France: Centre d’Etudes Prospectives et d’Informations 

Internationales, November 2004). “Developing countries” in this table combines “developing 

countries” and the “poorest countries” from this model. 

c

Antoine Bouet, Simon Mevel, and David Orden, “Two Opportunities to Deliver on the Doha 

Development Pledge,” Research Brief No. 6 (Washington, D.C.: International Food Policy Research 

Institute, July 2006). 

d

Kym Anderson, Will Martin, and Dominique van der Mensbrugghe, “Market and Welfare Implications

of Doha Reform Scenarios,” in Kym Anderson and Will Martin (eds.), Agricultural Trade Reform and 

the Doha Development Agenda (Washington, D.C.: World Bank, 2006). 

These estimated gains, although positive, are relatively modest relative to

the size of the U.S. and world economies. For example, the increase of $4.9

billion annually for the U.S. economy estimated by the World Bank 

represents only 0.03 percent of the U.S. economy, and the estimated gains 

globally represent less than one-quarter of 1 percent of the world 

economy. However, as we noted in our last report, real income gains of 

$50 billion to $90 billion annually are roughly comparable to global aid 

flows in recent years.53 Countries might gain additional benefits from trade 

 53Kimberly Ann Elliot, “Can Doha Still Deliver on the Development Agenda?” Policy Brief 

No. PB06-5 (Washington, D.C.: Institute for International Economics, June 2006). 

Page 37 GAO-07-379 World Trade Organization
liberalization due to productivity improvements and increased investment 

as the economy becomes more efficient and competitive. These “dynamic” 

gains from trade liberalization are modeled in some studies and can 

double or triple the estimated economic gains over time.54

The estimated gains also are not uniform within and across countries. As 

is well known, trade liberalization creates winners and losers. The studies

we reviewed suggest the following: 

• For developed economies such as the United States, the EU, and Japan, 

some of the largest expected benefits from a Doha agreement come from 

liberalization of their domestic agriculture markets. However, these 

changes can create challenges for the producers of the specific 

agricultural products that lose protection and subsidies. Outside of 

agriculture, there has been concern in the United States and other 

developed economies over the effect of competition from large developing 

economies, such as China and India, on domestic manufacturing and 

services workers.55 A Doha agreement may increase this competition; 

however, it also may help to create relatively better access for U.S. 

producers in these markets. 

• For developing economies, the expected benefits and costs of a potential 

Doha agreement vary widely. For example, in the World Bank and 

Carnegie studies, both Brazil and China are expected to gain from Doha 

overall, but for different reasons. Brazil benefits from greater market 

access in agriculture, while China benefits largely from greater access in

manufacturing. On the other hand, both studies show that Mexico is likely 

to lose somewhat from a Doha agreement due to the erosion of its 

preferential access to the U.S. market under the North American Free 

Trade Agreement. Some lesser developed countries in Sub-Saharan Africa 

and the Mediterranean region also could be made worse off overall by a 

 54Economic models of international trade agreements have inherent limitations. Although

they are useful to compare the relative magnitude of various policy changes (such as trade 

liberalization) and identify the likely winners and losers from such changes, they are not 

intended to forecast the actual economic situation in the future since other changes 

(e.g., technology) will occur. In addition, models vary in the degree to which they account 

for adjustment costs, institutional and market structures in individual countries, and other 

details that can affect the outcomes for specific groups and regions. For more discussion of 

the strengths and limitations of these models, see GAO-05-538, appendix V.

55For more discussion of these issues, see recent GAO work on the issue of offshoring,

including Offshoring: U.S. Semiconductor and Software Industries Increasingly Produce 

in China and India, GAO-06-423 (Washington, D.C.: Sept. 7, 2006), which includes a list of

all GAO work on the subject. 

Page 38 GAO-07-379 World Trade Organization
Doha agreement due to preference erosion and higher imported food 

prices. 

• Studies by international economists show that global poverty is likely to 

be reduced overall after a Doha agreement, but some countries may 

actually experience an increase in poverty.56

The most recent economic models, such as those highlighted in table 2, 

generally estimate lower benefits from trade liberalization than previous 

models. Earlier economic models relied on tariff and trade regime data 

that did not fully include benefits that many countries already received 

through preferential trade programs (such as the U.S. African Growth and 

Opportunity Act) and FTAs. Thus, the models overestimated liberalization 

benefits resulting from trade liberalization since they include some 

liberalization that had already occurred. For example, a 2002 World Bank 

study estimated real income gains from a Doha agreement that were 

significantly larger than a similar scenario estimated in the previously 

mentioned 2006 study. Although the models had similar assumptions and 

methodology, they differed in their underlying data on current trade 

protections that countries faced.57

Some of the economic gains expected from a Doha agreement could be 

achieved unilaterally or through regional FTAs. However, these gains may 

be difficult to implement outside of a comprehensive agreement like Doha

and would probably result in lower benefits. For example, the majority of 

economic gains for the United States (about $3 billion of the $5 billion) are 

due to the reduction in export subsidies and domestic support payments 

to farmers, on the basis of the World Bank model.58 Although certain U.S. 

farmers benefit from these federal government payments, overall they 

Some Economic Gains Could 

Be achieved without a Doha 

Agreement 

 56For example, see Ann Harrison (ed.), Globalization and Poverty (Chicago, IL: University 

of Chicago Press, 2006); and Thomas Hertel and L. Alan Winters, Poverty and the WTO: 

Impacts of the Doha Development Agenda (Washington, D.C.: World Bank, 2006). 

57World Bank, Global Economic Prospects 2002: Making Trade Work for the Poor 

(Washington, D.C.: World Bank, 2002). 

58However, other models find that greater benefits come from other sectors. For example, 

in the Carnegie Endowment model, the United States gains relatively more from various 

trade liberalization scenarios due to manufacturing liberalization than from agricultural

liberalization. Also, studies that include services liberalization (although difficult to model) 

generally show large gains from greater services market access abroad for the United 

States and other developed countries. This is consistent with the U.S. service industry’s 

own analysis. 

Page 39 GAO-07-379 World Trade Organization
cause distortions and cost the federal government and taxpayers more 

than the benefits received by those particular farmers. The United States 

could unilaterally reduce its own subsidies and achieve some of the 

expected gains. However, politically it may be difficult for the United 

States to reduce these programs without similar reductions by the EU and 

other major subsidizers that often compete with U.S. producers. 

The United States also would derive gains from greater market access 

abroad—whether agricultural products, manufactured goods, or 

services—but this depends on other countries’ willingness to lower trade 

barriers. Regional agreements such as FTAs continue to be vigorously 

pursued and may provide some of the same market access that could be

achieved at the WTO, but by their nature involve fewer benefits because 

they cover fewer countries and less trade.59 In addition, negotiations with 

larger U.S. trade partners under the Free Trade Area of the Americas, 

which includes Brazil, have not advanced recently, and the United States 

does not have current negotiations under way with Japan and the EU. 

Some participants and observers said the impact of the July negotiations’ 

collapse on the WTO would depend on the length of the suspension. A 

short pause was seen as inevitable and possibly useful. A prolonged lapse 

was seen by many as likely to harm the WTO as an institution and the 

global trading system generally. 

The consequences of failing are considerable, some fear. Seeking to stress 

this, Director-General Lamy likened Doha’s precarious state to a disease 

putting the WTO’s “economic lungs, political heart, and systemic bone 

structure” at risk. Specifically, he explained, failure to conclude the talks 

would deprive WTO members of the economic stimulus created by trade 

liberalization; the WTO’s political legitimacy would be questioned if it is 

unable to address issues of fairness that concern many members; and the 

WTO’s value and functioning would be weakened if bedrock principles of 

nondiscrimination are eroded and the system bears the brunt of resolving 

conflicts among members. More recently, Lamy warned that Doha’s failure 

Some Warn That WTO’s 

Role Could Be 

Undermined by Prolonged 

Doha Delay, but Others 

See July Offer as a “Bad 

Deal” 

 59Regional agreements tend to be customs unions or FTAs, which either eliminate tariffs 

among partners completely or on substantially all trade among them, thereby reducing

tariffs among partner countries more than is likely under a multilateral Doha agreement.

However, regional agreements also can divert trade to less-efficient suppliers and may still 

exclude sensitive sectors. 

Page 40 GAO-07-379 World Trade Organization
could fuel a political backlash by developing countries against the United 

States and other developed nations. 

Others share the concern that WTO’s authority and integrity could be 

weakened. In a recent business-sponsored poll, more than 70 percent of 

1,060 economic experts surveyed said they were “concerned” or “very 

concerned” about Doha’s collapse in July. Among other things, these 

experts predicted rising protectionism and diminished export 

opportunities at a time when global economic growth prospects are 

“clouded.”60 Others warn that: 

• The number and intensity of trade disputes could rise. 

• Frustration could spill over into regular WTO work. 

• Regional deals such as FTAs could proliferate, which may create trade, but 

they carry risks—such as discriminatorily distorting trade against 

nonparticipants and further marginalizing the poorest WTO nations. 

Already, since June, nine new disputes have been initiated at the WTO; 

several ongoing disputes have intensified; and more disputes, particularly 

on agriculture, are considered likely. For example, Canada just initiated 

the first stage of WTO dispute settlement against U.S. corn subsidies. 

Regionally, the EU has shifted its stance from focusing primarily on the 

WTO to renewed pursuit of bilateral free trade deals. India also has 

actively pursued bilateral agreements, despite its professed fears over 

significant liberalization in the WTO context. 

Some U.S. and foreign officials and other observers are less concerned 

about adverse effects on the trading system from Doha’s collapse. Among 

other things, they argue that: 

• The WTO will remain central regardless. 

• The WTO can withstand the uncertainty of the present deadlock. 

• Waiting for a better package and political timing is sensible. 

 60The poll was sponsored by the International Chamber of Commerce and the Ifo Institute 

for Economic Research at the University of Munich and reported on Dec. 5, 2006. 

Page 41 GAO-07-379 World Trade Organization
• Other options for liberalization, such as unilateral liberalization, FTAs, and 

WTO accessions, are available, if second best. 

• A bad deal would have been worse for the trade system. 

In general, U.S. government officials, congressional leaders, and business 

representatives we consulted remain convinced that what was on offer by 

others in July 2006 was a “bad deal” that would have been detrimental to 

U.S. interests and to the trading system. Certain foreign officials we spoke 

with also expressed somewhat similar sentiments, in that they said holding 

fast to Doha’s ideals and holding out for more significant results was 

preferable to accepting existing offers. Indeed, some see insistence on 

more liberalization as a welcome sign of determination to ensure the 

WTO’s continued relevance and promoting growth potential.

Breaking the Doha impasse, many participants and trade experts agree, 

depends on political will and timing. The desire by key WTO members to 

move forward with liberalization without a Doha agreement is seen by 

some as a good sign. For example, UNCTAD’s long-standing, but elusive, 

goal of liberalizing trade among developing countries moved somewhat 

closer to realization with a recent announcement that developing 

countries had agreed to cut applied tariffs up to 30 percent.61 Yet, as some 

commentators have pointed out, agriculture is politically sensitive in 

virtually all countries, large and small, developed and developing. In the 

United States, for example, the sensitivity involves reducing payment 

support to farmers or large agricultural interests that have come to rely on

these payments. In other countries, just increasing market access to other 

countries is of social and political concern. In France, for example, in 

addition to the economic implications, farming has special social and

cultural dimensions that make liberalization of the sector a particularly 

sensitive issue. As a result, observers believe that it may be difficult for the 

EU to offer market access concessions given the French presidential 

elections in mid-2007. In developing countries, moreover, rural farming 

populations are typically the poorest and have the least access to other 

types of jobs and income. 

Creating a healthier negotiating dynamic also is considered key to 

breaking the Doha impasse. A noticeable lack of trust among key WTO 

players appears to be contributing to the difficulty in striking a 

 61This is known as the Global System of Trade Preferences or GSTP.

Page 42 GAO-07-379 World Trade Organization
compromise. This may help explain why developing countries have 

refused to break ranks and insisted that the agriculture issue must be 

resolved first, before industrial goods and services are negotiated. Unlike 

past times when Doha breakthroughs have occurred, the United States and 

the EU have been at odds since before the Hong Kong ministerial. A 

number of countries say they are unwilling to “go first” in making offers or 

concessions, for fear that the other members will “pocket” these offers 

without providing enough in return. Since the July collapse, U.S. Trade 

Representative Schwab has sought to establish a better basis for progress 

with counterparts, yet stressed that “you first” tactics and artificial 

deadlines have not worked and should not be repeated. 

Other groups with an interest in the negotiations said that the pause 

provided a welcome opportunity to refocus. For example, the United 

Nations’ Food and Agriculture Organization stated “the Doha Round 

collapsed because of a fundamental lack of fairness in its vision, its 

process, and its projected outcomes.” It urged that “when negotiations 

restart, the Doha Round should truly be a development round approached 

in a broader and participatory way...that deals seriously with supply side 

capacity and related investment needs for the least-developed countries.” 

Despite predicting that a Doha agreement may not be completed until 2009 

or after, one of the Carnegie Endowment’s trade specialists suggests relief, 

rather than alarm, is appropriate.62 She argues that rebuilding a bipartisan

consensus in the United States in favor of trade liberalization and 

reorienting WTO talks to deal with what she believes are well-founded 

demands for flexibility by developing countries and with worldwide fears 

of job loss will provide a better foundation for an eventual Doha deal. 

The uncertainty over whether the WTO talks will progress is occurring at a 

time when Congress faces key decisions. Two of these decisions in 2007 

are seen as bellwethers of U.S. intentions at the WTO: that is, TPA and the 

Farm Bill. 

Congressional renewal of TPA is considered essential to finalizing a Doha 

deal. U.S. trade officials argue that TPA is vital to keep the United States 

Congress Faces Pivotal 

Decisions in 2007 on 

Whether to Renew Trade 

Promotion Authority and 

the 2002 Farm Bill 

TPA Renewal Considered Vital 

for Concluding Doha Deal 

 62Sandra Polaski, “The Future of the WTO,” Carnegie Endowment for International Peace 

Policy Outlook (September 2006). 

Page 43 GAO-07-379 World Trade Organization
“in the game” at global talks and to conclude bilateral and regional FTAs. 

Such agreements are negotiated on the United States’ behalf by the 

President and USTR. Under TPA, Congress must vote up or down on any 

negotiated trade agreement within a fixed period of time. Present 

authority expires on July 1, 2007, and without TPA, U.S. trade partners 

may be reluctant to seal “their best deal” if there is a concern that 

Congress would avoid acting on the legislation or demand that parts of the 

agreement be renegotiated. However, President Bush formally asked 

Congress to renew TPA on January 31, stating that “the only way America 

can complete Doha and make headway on other agreements is to extend 

Trade Promotion Authority.” Such renewal will require congressional 

passage of new legislation. Key congressional leaders are now debating 

the terms and goals for renewal. 

Prospects for passing new TPA legislation remain uncertain, but are 

considered stronger if a Doha agreement is in sight. U.S. Trade 

Representative Susan Schwab has stressed that bipartisanship on trade 

has prevailed in the past and is possible in the future. Several leading U.S.

agriculture and business groups say they will fight for TPA renewal. To 

this end, an umbrella group called Trade for America was launched in 

February 2007 to represent the interests of U.S. companies and trade 

associations that want TPA renewal. Among the concerns expressed about 

present TPA by current Chairs of the House Ways and Means and Senate

Finance Committees, for example, is that Congress has not always been 

sufficiently consulted by the executive branch in recent trade negotiations. 

Other concerns include fears over U.S. job losses and inadequate worker 

adjustment mechanisms; laxness in recent approaches to enforcing trade 

agreements and managing currency imbalances; and the need to do more 

to prevent a race to the bottom in terms of U.S. wages and labor and 

environmental protections. Still, having more hope for success at the 

WTO—and tangible gains for U.S. interests—is considered key to 

mobilizing support for TPA. 

The lack of progress of the Doha negotiations could affect the likelihood

of U.S. agricultural subsidy reform in 2007. Several aspects of the Farm 

Bill expiring in September 2007 pertain to subsidies covered by the WTO 

that are being discussed in the Doha Round. The administration and some 

farm groups are among those urging reform despite Doha’s collapse. They 

say reform is needed to make U.S. programs less vulnerable to challenge 

under existing WTO rules and could help the United States in Doha 

negotiations. Others, including several influential farm groups, think 

renewing the 2002 Farm Bill largely intact is desirable in its own right or 

Shape of the 2007 Farm Bill 

Could Affect (and Be Affected 

by) Doha’s Prospects 

Page 44 GAO-07-379 World Trade Organization
advisable until the United States secures a more level playing field with 

key partners in terms of subsidies and trade barriers. 

The United States is already obligated under existing WTO agreements to 

ensure that its farm programs conform with agreed-upon restrictions.63 The 

2002 Farm Bill was considered by some to be a setback to global 

agricultural reform because, among other things, it reestablished the link

between income support payments and market prices. In part as a result, 

the present Farm Bill is projected by the Congressional Research Service 

(CRS) to result in $21.975 billion in commodity-specific support in fiscal 

year 2006.64 The amount and distribution of government expenditures for 

all U.S farm programs, from the introduction of the 1996 Farm Bill that 

implemented U.S. Uruguay Round commitments until the present, are 

shown in figure 3. The general depiction is of payments in subsequent 

years that were higher than 1996 and 1997. Ad hoc emergency payments 

contributed to increases from 1999 to 2001, with the largest payments for 

all programs occurring in 2005. 

 63The United States is already obligated at the WTO to keep its farm spending within limits 

negotiated as part of the Uruguay Round Agreement on Agriculture that became effective 

January 1, 1995. Specifically, WTO rules state that domestic support programs that do not 

meet specified criteria intended to ensure that they have “no, or at most minimal, tradedistorting effects or effects on production” are to be measured and then reduced and 

capped. The current U.S. ceiling for such Amber Box programs is $19.1 billion, but the U.S. 

potentially has about another $20.0 billion in allowed spending if it qualifies for de minimis 

exemptions. Regarding export subsidies, the United States is only allowed to provide them

if they were properly notified and do not exceed specified levels. Should another WTO 

member choose to challenge it, U.S. farm support spending in excess of these limits could 

be found to constitute a violation of WTO obligations of the Agreement on Agriculture.

Moreover, with the expiration of the “peace clause” in 2004, if another WTO member 

demonstrated that such spending was causing or threatening serious prejudice to its 

interests, it would violate WTO obligations under the Subsidies and Countervailing 

Measures Agreement, regardless of whether it falls within or below the established 

spending caps. The peace clause refers to Article 13 of the Agreement on Agriculture, 

which protects countries using subsidies that comply with the agreement from challenges 

under other WTO agreements. 

64Randy Schnepf and Jasper Womach, Potential Challenges to U.S. Farm Subsidies in the 

WTO: A Brief Overview, CRS (Oct. 25, 2006), 5, table 2. 

Page 45 GAO-07-379 World Trade Organization
Figure 3: Government Payments for U.S. Farm Programs, 1996-2005

Note: Data do not include miscellaneous payments; payments for peanuts and tobacco have been 

combined; and marketing loan and loan deficiency payments have been combined. Also, note that 

these are all government payments, irrespective of the “boxes” that they may be related to within the 

WTO context. 

As explained in a previous section, official U.S. proposals tabled in the 

Doha Round would, if ultimately agreed to by WTO members, involve 

substantial change in some U.S. agricultural policies that would require 

Source: GAO analysis of USDA/ERS data.

0

5

10

15

20

25

30

U.S. dollars in billions

Year

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Ad hoc emergency programs

Flexibility contract payments

Direct payments

Countercyclical payments

Conservation programs

Milk income loss payments

Peanut and tobacco buyout

Certificate exchange gains

Marketing loan and loan deficiency payments

Page 46 GAO-07-379 World Trade Organization
statutory changes to the Farm Bill.65 While the President was in a position 

to make such proposals at the WTO in 2005 and seeks to influence the 

legislative debate in 2007, it is Congress that writes the Farm Bill. 

Since July’s suspension, the Secretary of Agriculture has continued to 

emphasize the administration’s commitment to reforming U.S. farm 

programs in 2007 to ensure that they are “equitable, predictable, and 

beyond challenge.” The Secretary disagrees with those who say the 

breakdown of the Doha negotiations makes it advisable for the United 

States to stick with its present policies, saying policies encouraging free

trade and market access will be of benefit to U.S. farmers, regardless. 

Five of the reasons offered involve trade or trade agreements, as follows: 

Some Advocate Agricultural 

Reform Despite Doha Delay 

• Trade is important to U.S. agriculture. Exports of high-value products, 

such as hides, nuts, and dried fruit, have been outpacing domestic demand

for two decades.66 Regarding bulk commodities, three-fourths of U.S. 

cotton production, nearly one-half of U.S. wheat and rice crops, and onethird of U.S. soybean and tobacco production are exported. 

• WTO rules are important to this trade’s continuation and growth. A former 

USDA official recently noted that “as the largest agricultural exporter, the 

United States benefits most from a rules-based trading system,” and that 

“the WTO provides the only rules applying to agricultural products 

adhered to worldwide.” Although U.S. farm interests have made known 

their frustration about ongoing difficulties in selling to foreign markets for 

products ranging from poultry to rice, these WTO rules and the WTO’s 

binding dispute settlement system have been used to successfully 

challenge some barriers to U.S. exports, such as unjustified bans on beef,

apples, and biotechnology crops, and duties on high-fructose corn syrup.

• Key aspects of the current U.S. agriculture subsidies have already been 

successfully challenged at the WTO, and more challenges are likely. In 

September 2006, Brazil secured a formal WTO review of U.S. compliance 

with the WTO’s adverse ruling in the Brazil cotton dispute and said it will 

seek up to $3 billion in retaliation regarding prohibited subsidies and 

 65For a discussion of the possible need for changes to U.S. export subsidy, food aid, and 

domestic support programs as a result of proposals under discussion in Doha talks, see 

Charles E. Hanrahan and Randy Schnepf, WTO Doha Round: The Agricultural 

Negotiations, CRS (Sept. 12, 2006), 26-28. 

66USDA FAS Fact Sheet, The Importance of Agricultural Trade (February 2006). 

Page 47 GAO-07-379 World Trade Organization
$1.037 billion in retaliation regarding actionable subsidies if 

noncompliance is found. Some of the needed changes to the marketing 

loan and countercyclical payment programs were expected to be dealt 

with in the 2007 Farm Bill.67 In late October, CRS concluded that all major 

U.S. commodity program crops are potentially vulnerable to challenge at

the WTO, after analyzing existing U.S. WTO obligations, the criteria 

applied in the WTO’s cotton ruling, and U.S. spending under the 2002 Farm

Bill and other legislation.68 Oxfam and others suggest that more cases are 

being readied, with rice among the U.S. products targeted by other 

nations. If these prove successful, the United States would be obligated to

change or face retaliation, without offsetting concessions from others. 

• Market-opening commitments the United States has made under the North 

American Free Trade Agreement and the Central American–Dominican 

Republic Free Trade Agreement may make the present U.S. sugar 

program—which relies on import restrictions to keep domestic price 

levels above world prices—unworkable, USDA suggests. 

• A former USDA official and U.S. agriculture negotiator said “the best hope 

for an eventual WTO agreement may be changes in U.S. domestic farm 

policy for the 2007 Farm Bill.” For example, some argue that shifting 

toward Green Box spending, which does not distort prices, production, 

and trade, would give U.S. negotiators more room for maneuver on 

domestic supports at the WTO. 

A number of farm groups and other agricultural policy experts also see an

immediate need for change. They support reforming the Farm Bill in 2007, 

rather than extending it in its current form, despite Doha’s delay. In 

addition to echoing the Secretary’s views, specific reasons for reform 

include the need to (1) address the distortions that our current policies 

may cause in production and trade and (2) establish agricultural policy 

that allows farmers to make long-term economic decisions. The 

commodity title is the focus of many proposals for change, with some farm 

 67According to CRS, although Congress passed legislation authorizing elimination of the

Step 2 program, which was found to be a prohibited export subsidy, Brazil has pressed for

further reductions in U.S. cotton support in response to the panel ruling. As a result,

according to CRS, additional permanent modifications to U.S. farm programs may still be 

needed to fully comply with the “actionable subsidies” portion of the WTO ruling, most

likely in the context of the 2007 farm bill. See Ralph M. Chite, Agricultural Issues in the 

109th Congress, CRS (Oct. 6, 2006). 

68Randy Schnepf and Jasper Womach, Potential Challenges to U.S. Farm Subsidies in the 

WTO, CRS (Oct. 25, 2006). 

Page 48 GAO-07-379 World Trade Organization
groups seeking expanded support and others seeking less. Groups such as 

the National Corn Growers Association, National Association of Wheat 

Growers, and American Soybean Association believe adjustments to 

commodity programs are needed to make them more beneficial to their 

producers and, in some cases, more compliant with current WTO 

provisions. Other farm groups, academics, and agricultural experts seek to 

minimize the farm sector’s reliance on product-specific, trade-distorting 

(Amber Box) programs, such as price supports or loan deficiency 

payments, with proposals that include, among other approaches, (1) 

environmental and land stewardship programs that reward farmers for the 

environmental services they provide;69 (2) direct payment programs that 

would not be linked to specific types of production, so as to comply with 

Green Box standards;70 (3) whole farm, revenue insurance approaches to a 

farm safety net that would cover all commodities;71 and (4) buy-out 

programs, similar to the present buy-out programs for tobacco and 

peanuts.72 Moreover, there are calls for reductions or alterations in the 

marketing loan programs and countercyclical payments to make them less 

susceptible to WTO challenge. 

As this report was going to publication, USDA offered a new proposal for 

the 2007 Farm Bill. The administration has proposed several changes that, 

according to USDA, could, on balance, make farm programs potentially 

less market distorting and less likely to face WTO challenge. For a number 

of commodities, the proposal lowers or shifts payments away from those 

that are linked to present market prices and toward greater fixed 

payments. Major portions of the administration’s proposal include: 

 69American Farmland Trust, Agenda 2007: A New Framework and Direction for U.S.

Farm Policy (Washington, D.C.: May 8, 2006). 

70The Chicago Council on Global Affairs, Modernizing America’s Food and Farm Policy: 

Vision for a New Direction, Report of the Agricultural Task Force, Catherine Bertini, 

August Schumacher Jr., and Robert L. Thompson, Co-chairs (2006). 

71“Whole-farm revenue” programs have been proposed as a new form of income 

stabilization that would not be linked to production of particular commodities and, thus,

less production and trade distorting. One such example of a whole-farm revenue program,

revenue insurance, is an insurance program offered to farmers that pays indemnities on the 

basis of revenue shortfalls. 

72David Orden, “Feasibility of Farm Program Buyouts: Is It a Possibility for U.S. Sugar?”

Presented at the third annual North American Agrifood Market Integration Workshop,

“Achieving NAFTA Plus,” Calgary, Canada (May 31–June 2, 2006). 

Page 49 GAO-07-379 World Trade Organization
• Basing marketing loan rates on actual commodity market prices in recent 

years; specifically, by setting loan rates equal to 85 percent of a 5-year 

Olympic average (the last 5 years minus the high and low prices), which 

has the effect of reducing them. In addition, they would also be subject to 

a maximum level. This would particularly affect cotton loan rates, which 

have come under a great deal of scrutiny at the WTO. 

• Continuing support of the sugar and dairy programs, counted as part of the 

Amber Box at the WTO, in a similar manner as in the current Farm Bill. 

Specifically, for dairy, the proposal maintains the current support price of 

milk at $9.90 per hundredweight and reauthorizes the Milk Income Loss 

Contract Program, a countercyclical program for dairy, while basing it on

reduced and historical payment rates. For sugar, the proposal continues 

price supports for raw and refined sugar at their current levels through the 

use of the sugar TRQ as well as the reinstatement of domestic marketing 

allotments when imports exceed 1.532 million short tons. 

• Increasing the amount of direct payments by $5.5 billion, which are 

potentially classified at the WTO as Green Box. Along with this change is a 

proposal to remove the “fruit and vegetable” planting restriction on 

program crop acres that are considered base acres for determining a 

farmer’s direct payments—in response to the WTO cotton ruling’s 

discussion of direct payments’ compliance with WTO rules. 

• Changing the current countercyclical payment program to a revenue-based

program that would pay out when market revenue (commodity yield times 

market price) falls below a target level. However, revenue would not be 

based on the individual farmer’s revenue, but would be calculated from a 

national average yield for the crop times the higher of the national seasonaverage market price or the marketing loan rate.

• Ending the “three-entity rule,” which permits farmers to establish 

corporations and other entities that allow the amount of payments 

received to exceed statutory limits. In contrast to the current Farm Bill, 

the proposal links the payments to an individual and sets the payment 

limit at $360,000. To receive commodity program payments, a farmer must 

meet a new bound on Adjusted Gross Income (wages and other income 

minus farm expenses and depreciation), which has been reduced from 

$2.5 million to a new limit of $200,000. 

• Including an additional $7.8 billion for conservation programs—to simplify 

and consolidate conservation programs, and to create a new 

Environmental Quality Incentives Program and a Regional Water 

Enhancement Program. 

Page 50 GAO-07-379 World Trade Organization
While USDA’s Farm Bill proposal has been welcomed in some quarters 

and accepted as a contribution to the congressional debate, trading 

partners have generally urged even more ambitious reform, and some U.S. 

farm groups continue to prefer programs in the 2002 Farm Bill. 

GAO reports concerning 21st century challenges and commodities 

highlight other reasons to consider certain reforms in 2007.73 For example, 

we have reported extensively on the U.S. cotton program, which is one of 

the most highly supported farm programs, and added to the policy debate 

on dairy, peanuts, rice, and sugar. We also have reported on U.S. food aid, 

payment limitations, crop insurance, revenue insurance, and conservation 

programs. (For a list of these reports, see the Related GAO Products 

section at the end of this report.) In a November 17, 2006, letter, the 

Comptroller General of the United States identified the integrity and equity

of federal farm programs as one of several suggested areas for oversight 

for the incoming 110th Congress. Among other things, the Comptroller 

General noted that more than $25 billion is spent annually by the federal 

government on subsidies and on disaster and conservation payments for 

farmers, but just 10 percent of the recipients collect 70 percent of the 

benefits. Moreover, we have found that each year thousands of producers 

falsely collect crop insurance, while individuals with limited involvement 

in farming qualify for subsidy payments and evade payment limits.74

Nevertheless, many groups want to extend the present Farm Bill largely 

“as is” or with minor changes. The program is popular, and keeping U.S.

leverage could better position it to pursue future cuts in foreign barriers, 

some say. Farm groups such as the American Farm Bureau Federation, the 

National Farmers Union, the National Cotton Council, and the USA Rice 

Federation, among others, have proposed extending the 2002 Farm Bill in 

its current form. These groups’ reasons are diverse, although two common 

arguments for extending the bill have emerged: (1) the bill’s current farm 

programs are beneficial to producers and merit extension and (2) delays in 

the Doha negotiations make Farm Bill reform impractical. Several groups

recognize the level of support the current Farm Bill enjoys among farmers 

Opponents of Reform 

 73GAO, 21st Century Challenges: Re-examining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005). 

74As previously noted, agriculture is one of the most heavily protected and distorted

economic sectors across the globe, and the United States is by no means the only country

facing challenges in designing and managing efficient and fair programs. Indeed, earlier 

GAO work on trade topics, such as export credits and the role of foreign state-trading 

enterprises in undermining U.S. exports, highlighted such issues. 

Page 51 GAO-07-379 World Trade Organization
and cited the benefits of current farm policy as a reason for extension. 

USDA notes that debate over U.S. farm support typically involves diverse 

stakeholders with varying goals, such as price and income support and 

higher or more stable prices. Given the limited progress in the Doha talks, 

a number of organizations have asserted that U.S. lawmakers cannot 

accurately predict the outcome of trade negotiations and, therefore, are 

not in a position to make appropriate changes to the Farm Bill. Such 

groups generally believed an extension of the 2002 Farm Bill would 

maintain the United States’ negotiating leverage and increase its 

probability of achieving reductions in other nation’s agricultural subsidies 

and tariffs, notably in key markets like the EU. Nevertheless, some farm 

groups said they would support minor changes to the bill to comply with 

current trade rules or would support additional changes at a more 

appropriate future date.

The view that it would be unwise to “get ahead” of WTO was echoed in our 

meetings with some U.S. officials. In addition, some U.S. industrial 

manufacturing interests and agriculture interests that do not receive

subsidies under the Farm Bill told us that they see cuts in U.S. farm 

subsidies as the major bargaining chip the United States has to play in the

Doha Round. Thus, they advised holding onto this leverage until there is 

greater certainty of U.S. export gains, especially since active support by 

U.S. agriculture interests has been key to congressional passage of any 

trade legislation. 

Despite calls from a variety of voices around the world to successfully 

resolve the remaining issues in the negotiations, the future of the Doha 

Development Round remains highly uncertain. Our research suggests that 

the breakdown in the talks in 2006 had both political and practical 

dimensions, which was perhaps not surprising given the sensitivity of the

issues involved; the building tension between members’ original 

ambitions; their overall lack of progress in achieving them; and the tight, 

unmovable timetable associated with the U.S. Trade Promotion Authority. 

Agricultural trade has proven highly sensitive, in part because it is one of

the last remaining areas of protection to be tackled by the WTO. Developed 

nations such as the United States, the EU, and Japan have complex 

programs that provide different combinations of domestic support, export 

subsidies, and import restrictions such as tariffs and quotas. While these 

programs may well be costly to these nations’ overall welfare, they have 

proven to be beneficial to powerful interests and are strongly supported by 

those groups. Moreover, key players are seeking not only to reduce the 

barriers left during the last round, but to redress perceived disparities 

Conclusions 

Page 52 GAO-07-379 World Trade Organization
among them. An even more fundamental disagreement between developed 

and developing nations surrounds the relationship between trade and

development. While the Doha Development Agenda recognizes the 

benefits and welfare gains from a more open multilateral trading system, 

certain developing nations remain unconvinced by research showing that a 

large share of projected benefits from a more open trading environment 

would come from opening markets in other developing countries, as well 

as in removing their own trade barriers. 

Given the sensitive and complex nature of the issues and the fundamental

disagreements between major groups within the negotiations, WTO 

deadlines have proven to be ineffective in moving negotiations to closure. 

External events are potentially more meaningful, but they sometimes add 

further complexity to the process. The end of TPA in July 2007 creates 

uncertainty about the prospects of any WTO agreement that might be 

achieved, as well as potentially closes out the series of bilateral 

negotiations the United States has under way. Congressional action on the 

Farm Bill also complicates the WTO negotiations, as many resist major 

changes to the Farm Bill or are unwilling to do so in advance of a global 

WTO agreement. As a result, a successful negotiation now not only 

requires an agreement that creates sufficient gains to be distributed among 

150 diverse nations, but also requires a willingness by Congress to actively 

support those talks through renewed TPA and in the details of a new Farm 

Bill. 

USTR and USDA broadly agreed with our draft report, but provided us 

with several technical comments and issue characterizations, which we 

incorporated in the report as appropriate. Overall, USTR asked us to 

reflect somewhat more diversity of developing countries’ demands and 

positions, based on their experience in negotiating with them on both 

agriculture and nonagricultural market access issues. We added some 

material to reflect this. The Departments of Commerce and State had no

comments. 

We are sending copies of this report to interested congressional 

committees; the U.S. Trade Representative; and the Secretaries of 

Agriculture, Commerce, and State. We will also make copies available to 

others upon request. In addition, this report will be available at no charge 

on the GAO Web site at http://www.gao.gov. 

Agency Comments 

and Our Evaluation 

Page 53 GAO-07-379 World Trade Organization
If you or your staffs have any questions about this report, please contact 

me at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix II. 

Loren Yager

Director, International Affairs and Trade 

Page 54 GAO-07-379 World Trade Organization
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

In this report, we assess (1) the overall status of the Doha Development 

Round now and the progress that had been made prior to and since the 

breakdown of the talks, (2) the factors and substantive divisions among 

key World Trade Organization (WTO) members that led to an environment 

of deadlock and the eventual suspension of the negotiations, and (3) the 

possible economic and other ramifications if the round is not concluded

satisfactorily. We conducted this work upon specific request by Congress. 

GAO is not a policymaking agency of the U.S. government and thus is not 

authorized to take a position on the Doha Round overall or on specific 

issues related to the round. 

We followed the same overall methodology to complete all three of our 

objectives. We obtained, reviewed, and analyzed documents from a variety 

of sources. From the WTO, we analyzed the 2001 Doha ministerial 

declaration; the Doha work program decision adopted by the General 

Council on August 1, 2004, known as the “July framework agreement”; the 

Hong Kong ministerial conference declaration from December 2005; 

statements by the WTO Director-General and negotiating group chairs; and 

negotiating proposals and other documents from WTO member countries.

From U.S. government agencies and foreign country officials, we obtained

background information regarding negotiating proposals and positions. A 

variety of international organizations, experts, former officials, private 

sector interests, and other actors have commented on Doha’s difficulties, 

and we have monitored scholarly journals and other sources for these 

perspectives. We also obtained information on day-to-day developments 

from reputable trade publications. 

To assess the status of the Doha negotiations, we met with officials from 

various U.S. government agencies, including the Office of the U.S. Trade 

Representative and the Departments of Agriculture, Commerce, and State, 

to obtain information on progress in the negotiations and on specific 

issues and factors affecting the negotiations. Furthermore, we attended 

conferences and seminars that discussed these issues, such as those 

sponsored by the Carnegie Endowment for International Peace, the 

German Marshall Fund of the United States, the Global Business Dialogue, 

and the Washington International Trade Association. 

To assess what led to the environment of deadlock and the eventual 

suspension of the negotiations, we talked with more than 35 officials from 

the major negotiating parties in Geneva, Switzerland, and Washington, 

D.C., including officials from the United States; the European Union; and 

the developing countries of Bangladesh, Benin, Brazil, China, India, 

Indonesia, Kenya, South Africa, and Zambia, about their respective 

Page 55 GAO-07-379 World Trade Organization
Appendix I: Objectives, Scope, and 

Methodology 

proposals and views regarding why the negotiations collapsed. Second, 

since the negotiations broke down over agriculture, we interviewed 

agricultural economists who are experts in international trade and 

domestic farm policy, and who are familiar with the issues of market 

access and domestic support. In addition, we met with officials from U.S. 

industry groups such as the National Corn Growers Association, the 

American Farm Bureau Federation, the National Cattlemen’s Beef 

Association, and the National Association of Manufacturers. Third, we 

surveyed current research on major proposals in the negotiations, 

including analyses contained in academic journal articles, government 

reports, nongovernmental organization reports, and press releases. Finally, 

we attended several conferences that pertained to the economic analyses 

of agriculture and development aspects of the negotiations. 

To assess the possible economic and other ramifications if the round was 

not resumed in a short period of time or if the talks could not be 

successfully concluded, we discussed these potential effects with the 

range of officials and experts previously mentioned. For the economic 

effects, specifically, we reviewed the economics literature and identified 

specific studies that calculated the estimated effects of potential Doha 

agreements. Building on our analysis from prior reports, we identified 

specific recent studies that included both (1) likely liberalization scenarios 

based on the status of the negotiations at the time (rather than studies that 

just examined the potential effects from complete liberalization of all trade 

barriers) and (2) the most recent tariff and other trade regime data that

take into account the range of preferential trade programs that currently 

exist. We then compared these studies and the range of potential 

economic effects from various Doha scenarios. To examine the other 

ramifications, including the potential effects on the stature of the world 

trading system and the implications for domestic legislation, including the

Trade Promotion Authority and the 2007 Farm Bill, we discussed the 

relationship of Doha and the implications of its failure with country 

representatives, WTO officials, and other trade experts (previously 

mentioned). We also reviewed documents and studies that discuss these 

implications. However, because the actual effects of a Doha failure are 

unknown and determined by a wide range of factors, we do not predict or

measure the full ramifications of a collapse in the negotiations. Rather, we 

identify those areas indicated by our analysis that could potentially be 

affected. 

With the assistance of the Office of the United States Trade Representative

and the State Department, we traveled in September 2006 to WTO 

headquarters in Geneva. We met with WTO member country officials, 

Page 56 GAO-07-379 World Trade Organization
Appendix I: Objectives, Scope, and 

Methodology 

including those from Australia, Bangladesh, Benin, Brazil, China, the 

European Union, India, Indonesia, Japan, Kenya, South Africa, and 

Zambia. We also met with WTO officials, including a Deputy DirectorGeneral and the Director of Agriculture. At the U.S. mission, we met with

officials overseeing the agriculture, industrial (nonagricultural) market 

access, and service negotiations, as well as with the Deputy Chief of 

Mission. We also met with organizations and groups following the 

negotiations, such as the International Centre for Trade and Sustainable 

Development and Oxfam. During our trip, we also attended the WTO 

Public Forum. Upon returning from our trip, in October 2006, we briefed 

House Ways and Means Committee staff on the status of the Doha 

negotiations. 

We performed our work from June 2006 through February 2007 in 

accordance with generally accepted government auditing standards. 

Page 57 GAO-07-379 World Trade Organization
Appendix II: 

A

GAO Contact and Staff 

cknowledgments 

Page 58 GAO-07-379 

Appendix II: GAO Contact and Staff 

Acknowledgments 

Loren Yager, (202) 512-4347 or yagerl@gao.gov

In addition to the individual named above, the following persons made 

major contributions to this report: Kim Frankena, Assistant Director, and 

Venecia Rojas Kenah, Analyst-in-Charge, as well as Ann Baker, Karen 

Deans, Barbara El Osta, Marisela Perez, and Timothy Wedding. The team 

benefited from the expert advice and assistance of Ron Maxon, Paige 

Gilbreath, and Carol Bray as well as Martin de Alteriis and Ernie Jackson.

GAO Contact 

Staff 

Acknowledgments 

World Trade Organization
Related GAO Products 

Page 59 GAO-07-379 

Related GAO Products 

Dairy Industry: Information on Milk Prices, Factors Affecting Prices, 

and Dairy Policy Options. GAO-05-50. Washington, D.C.: December 29, 

2004. 

Peanut Program: Potential Effects of Proposed Farm Bill on Producers, 

Consumers, Government, and Peanut Imports and Exports. 

GAO-01-1135R. Washington, D.C.: September 26, 2001. 

Dairy Industry: Estimated Economic Impacts of Dairy Compacts. 

GAO-01-866. Washington, D.C.: September 14, 2001. 

Dairy Industry: Information on Milk Prices and Changing Market 

Structure. GAO-01-561. Washington, D.C.: June 15, 2001. 

Fluid Milk: Farm and Retail Prices and the Factors That Influence 

Them. GAO-01-730T. Washington, D.C.: May 14, 2001. 

Dairy Products: Imports, Domestic Production, and Regulation of UltraFiltered Milk. GAO-01-326. Washington, D.C.: March 5, 2001. 

Sugar Program: Supporting Sugar Prices Has Increased Users’ Costs 

While Benefiting Producers. GAO/RCED-00-126. Washington, D.C.: June 9, 

2000. 

Sugar Program: Changing the Method for Setting Import Quotas Could 

Reduce Cost to Users. GAO/RCED-99-209. Washington, D.C.: July 26, 1999. 

Commodity Programs: Impact of Support Provisions on Selected 

Commodity Prices. GAO/RCED-97-45. Washington, D.C.: February 21,

1997. 

Agricultural Marketing: U.S. Cotton Market Before and After Import 

Assessments. GAO/RCED-96-49. Washington, D.C.: January 22, 1996. 

Cotton Program: Costly and Complex Government Program Needs to Be

Reassessed. GAO/RCED-95-107. Washington, D.C.: June 20, 1995. 

Sugar Program: Impact on Sweetener Users and Producers. 

GAO/T-RCED-95-204. Washington, D.C.: May 24, 1995. 

Rice Program: Government Support Needs to Be Reassessed. 

GAO/RCED-94-88. Washington, D.C.: May 26, 1994. 

Commodities 

World Trade Organization
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Sugar Program: Changing Domestic and International Conditions 

Require Program Changes. GAO/RCED-93-84. Washington, D.C.: April 16,

1993. 

Cotton Program: The Marketing Loan Has Not Worked. 

GAO/RCED-90-170. Washington, D.C.: July 31, 1990. 

Farm Program Payments: USDA Should Correct Weaknesses in 

Regulations and Oversight to Better Ensure Recipients Do Not 

Circumvent Payment Limitations. GAO-04-861T. Washington, D.C.: June 

16, 2004. 

Farm Program Payments: USDA Needs to Strengthen Regulations and 

Oversight to Better Ensure Recipients Do Not Circumvent Payment 

Limitations. GAO-04-407. Washington, D.C.: April 30, 2004. 

Farm Programs: Information on Recipients of Federal Payments. 

GAO-01-606. Washington, D.C.: June 15, 2001. 

Farm Programs: Observations on Market Loss Assistance Payments. 

GAO/RCED-00-177R. Washington, D.C.: June 30, 2000. 

U.S. Department of Agriculture: Marketing Assistance Loan Program 

Should Better Reflect Market Conditions. GAO/RCED-00-9. Washington, 

D.C.: November 23, 1999.

Agricultural Conservation: USDA Should Improve Its Management of 

Key Conservation Programs to Ensure Payments Promote 

Environmental Goals. GAO-07-370T. Washington, D.C.: January 17, 2007. 

USDA Conservation Programs: Stakeholder Views on Participation and 

Coordination to Benefit Threatened and Endangered Species and Their 

Habitats. GAO-07-35. Washington, D.C.: November 15, 2006. 

Agricultural Conservation: USDA Should Improve Its Process for 

Allocating Funds to States for the Environmental Quality Incentives 

Program. GAO-06-969. Washington, D.C.: September 22, 2006. 

Farm Program 

Payments and 

Payment Limitations 

Conservation 

Page 60 GAO-07-379 World Trade Organization
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Conservation Security Program: Despite Cost Controls, Improved USDA 

Management Is Needed to Ensure Proper Payments and Reduce

Duplication with Other Programs. GAO-06-312. Washington, D.C.: April 

28, 2006. 

Environmental Information: Status of Federal Data Programs That 

Support Ecological Indicators. GAO-05-376. Washington, D.C.: September

2, 2005. 

Agricultural Conservation: USDA Should Improve Its Methods for 

Estimating Technical Assistance Costs. GAO-05-58. Washington, D.C.: 

November 30, 2004. 

Columbia River Basin: A Multilayered Collection of Directives and Plans 

Guides Federal Fish and Wildlife Activities. GAO-04-602. Washington, 

D.C.: June 4, 2004. 

Agricultural Conservation: USDA Needs to Better Ensure Protection of 

Highly Erodible Cropland and Wetlands. GAO-03-418. Washington, D.C.: 

April 21, 2003. 

Agricultural Conservation: Survey Results on USDA’s Implementation of 

Food Security Act Compliance Provisions. GAO-03-492SP. Washington, 

D.C.: April 21, 2003. 

Livestock Agriculture: Increased EPA Oversight Will Improve 

Environmental Program for Concentrated Animal Feeding Operations. 

GAO-03-285. Washington, D.C.: January 16, 2003. 

Agricultural Conservation: Survey of USDA State Technical Committee 

Members. GAO-02-371SP. Washington, D.C.: March 1, 2002. 

Agricultural Conservation: State Advisory Committees’ Views on How 

USDA Programs Could Better Address Environmental Concerns. 

GAO-02-295. Washington, D.C.: February 22, 2002.

Natural Resources Conservation Service: Additional Actions Needed to 

Strengthen Program and Financial Accountability. GAO/RCED-00-83. 

Washington, D.C.: April 7, 2000. 

Page 61 GAO-07-379 World Trade Organization
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Crop Insurance: More Needs to Be Done to Reduce Program’s 

Vulnerability to Fraud, Waste, and Abuse. GAO-06-878T. Washington, 

D.C.: June 15, 2006. 

Crop Insurance: Actions Needed to Reduce Program’s Vulnerability to 

Fraud, Waste, and Abuse. GAO-05-528. Washington, D.C.: September 30, 

2005. 

Crop Insurance: USDA Needs to Improve Oversight of Insurance 

Companies and Develop a Policy to Address Any Future Insolvencies. 

GAO-04-517. Washington, D.C.: June 1, 2004. 

Crop Insurance: USDA’s Progress in Expanding Insurance for Specialty

Crops. GAO/RCED-99-67. Washington, D.C.: April 16, 1999. 

Crop Revenue Insurance: Problems With New Plans Need to Be 

Addressed. GAO/RCED-98-111. Washington, D.C.: April 29, 1998. 

Crop Insurance: Opportunities Exist to Reduce Government Costs for 

Private-Sector Delivery. GAO/RCED-97-70. Washington, D.C.: April 17, 

1997. 

Foreign Assistance: USAID Completed Many Caribbean Disaster

Recovery Activities, but Several Challenges Hampered Efforts. 

GAO-06-645. Washington, D.C.: May 26, 2006. 

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Foreign Assistance: Observations on USAID’s Commodity Import 

Program in Egypt. GAO-04-846T. Washington, D.C.: June 17, 2004. 

Foreign Assistance: Lack of Strategic Focus and Obstacles to 

Agricultural Recovery Threaten Afghanistan’s Stability. GAO-03-607. 

Washington, D.C.: June 30, 2003. 

Foreign Assistance: Sustained Efforts Needed to Help Southern Africa 

Recover from Food Crisis. GAO-03-644. Washington, D.C.: June 25, 2003. 

Food Aid: Experience of U.S. Programs Suggests Opportunities for 

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Crop and Revenue 

Insurance 

Food Aid 

Page 62 GAO-07-379 World Trade Organization
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Foreign Assistance: Global Food for Education Initiative Faces 

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Foreign Assistance: North Korean Constraints Limit Food Aid 

Monitoring. GAO/T-NSIAD-00-47. Washington, D.C.: October 27, 1999. 

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Expenditures. GAO-07-201. Washington, D.C.: December 18, 2006. 

Analysis of Data for Exports Regulated by the Department of Commerce. 

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Mexico’s Successful Transition to Liberalized Agricultural Trade under

NAFTA. GAO-05-272. Washington, D.C.: March 25, 2005. 

Free Trade Area of the Americas: Missed Deadline Prompts Efforts to 

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Page 63 GAO-07-379 World Trade Organization
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Compliance. GAO-03-461. Washington, D.C.: March 31, 2003.

Free Trade Area of the Americas: Negotiators Move Toward Agreement 

That Will Have Benefits, Costs to U.S. Economy. GAO-01-1027. 

Washington, D.C.: September 7, 2001. 

International Trade: Concerns Over Biotechnology Challenge U.S. 

Agricultural Exports. GAO-01-727. Washington, D.C.: June 15, 2001. 

Agricultural Trade: Impacts of the Andean Trade Preference Act on 

Asparagus Producers and Consumers. GAO-01-315. Washington, D.C.: 

March 15, 2001. 

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System: The First Five Years. GAO/T-NSIAD/OGC-00-202. Washington,

D.C.: June 20, 2000. 

World Trade Organization: Progress in Agricultural Trade Negotiations 

May Be Slow. GAO/ T-NSIAD-00-122. Washington, D.C.: March 7, 2000. 

U.S.-Mexico Border: Better Planning, Coordination Needed to Handle 

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March 3, 2000. 

Pork Industry: Trade Barriers and Other Factors Limit Federal 

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April 26, 2006. 

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Doha Round 

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Page 64 GAO-07-379 World Trade Organization
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(320422) Page 65 GAO-07-379 World Trade Organization
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