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Ethanol Subsidies, Food Prices and the Doha Round
Sanjay Paul, Ryan Mulcahey

Last modified: 2011-09-08


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Begun more than a decade ago, the Doha Round of the WTO meanders on. This latest round of trade talks seeks to link globalization and development explicitly; however, intransigence over agricultural subsidies (by the developed countries) and market access to services (by the developing countries) has stymied progress. The recent buildup in food prices has aggravated the situation dramatically, with several developing countries at risk of seeing their hard-won gains in their struggle against poverty and hunger evaporate. In this paper we seek to establish the linkages between ethanol subsidies and corn production in the developed countries (primarily the U.S.) and show how they might have contributed to the sharp increases in food prices in the global market. We also discuss the likely impact of commodity prices on the Doha Round. We argue that rising budget deficits in the West may lead to a reduction in agricultural subsidies (including those for ethanol) and thereby supply a sliver of hope for progress in the trade negotiations.