In an interview published in the latest newsletter of the Council on Foreign Relations, Bhagwati, a senior fellow at CFR, said modest accomplishments already pushed through in the Doha round have narrowed negotiations to the core issues, however, difficult these issues might be.
But he said that for a significant deal to be cut between the US and developing countries like India and Brazil, US officials must move beyond traditional double standards in US trade policy.
In response to a question if there is any reason to expect greater flexibility on the American side given that the US agricultural subsidies have held things up in the past, Bhagwati said everybody knows what is to be done.
"We are minimalists in terms of making concessions in the farm sector, which is the critical one. At the same time we are maximalists in making demands on others in terms of agriculture," Bhagwati, regarded as one of the foremost international trade theorists, said.
He said for the US it is mainly the agricultural subsidies and the tariff barriers to some extent that have held things up. "We have around $20 billion (in annual subsidies). According to the farm bill that is being considered right now, we are willing to go to $17 billion,' he said.
"I don't think the rest of the world is going to be excited about that. So, we have a problem that we are not offering enough, in my view," he said.
At the same time Bhagwati said US wants India to make substantial concessions in agriculture. He said the Europeans, who do not have any interest in exporting agriculture because they do not have any comparative advantage in it are 'perfectly happy' to see India and Brazil make concessions in manufacturing and services."
We should be willing to do that. But because of the farm lobby saying it will never give up subsidies unless it gets big market access elsewhere -- that creates a very basic source for pessimism right now, he said.
"It's really our farm lobby -- it is not our executive. The executive would like to make those concessions,' he said.
Noting that he was in India in January, Bhagwati said there is no way anybody in India could be prevailed upon to make the kinds of concessions that are required by the US farm lobby, against a cut of only $3 billion.
"It's not the economics that matters. When you go into the public policy space, in India, and say, "Look, we have to open up our markets to American competition when Americans are subsidizing even $10 billion dollars" -- how does the trade minister get it past anybody except for economists?" he asked.
"As an economist, I would say, wonderful, we get cheaper stuff. But that's not how the common public reacts. They say it is unfair. And it is not just the common public. The New York Times says that. They don't bring economics to the issue.
"They bring some kind of crazy, quasi-ethical argument. And that's what plays in the public arena," he said.
