Blame domestic politics for trade talk impasse
Originally, the Doha round of the World Trade Organization trade talks was supposed to be the "development round," helping to alleviate global poverty by boosting trade to the developing world. But that vision is now gone--the negotiations, begun just after 9/11, have pretty much collapsed, and not many believe that they can be revived in the near future.
This round was supposed to reduce agricultural tariffs and subsidies, thus equalizing the global playing field for poorer countries with agriculture-dependent economies. But it also would have benefited the world at large.
"Countries have been so hung up on agriculture--formulas for cutting tariffs, how much subsidies can be reduced - that they have ignored how much could be achieved in manufacturing and services by a successful round," says Jeffrey Schott, senior fellow at the Institute for International Economics who was a negotiator during the Tokyo round in the 1970s. President Bush and other world leaders at the G-8 summit pledged to bring the talks to a successful conclusion this year, and the World Bank says that a successful round would have added nearly $300 billion to the world economy.
So what happened? Blame it on politics. Domestic politics, that is. While the world's two richest trading blocs, the United States and the European Union, engage in rigorous finger-pointing, they each deserve some of the blame for not going far enough in cutting subsidies for their respective farmer constituencies. The agribusiness lobby in Congress overpowers any force for trade liberalization. The United States now has billions of dollars in subsidies going to farmers--and the EU has even more. Developing countries, on the other hand, were unwilling to make concessions to open up their markets without the promise of agricultural liberalization.
But in the end, the bottom line of all these countries could not converge. It was not unlike children in the playground poking each other and saying, "You first!"
"What we need is to see a commitment to real market access," says one U.S. trade official, "not a 'Doha lite' with meaningless tariff cuts on paper that don't really lead to any increase in trade but let us all walk away patting each other on the back."
Most rounds fail before they succeed. The 1986-94 Uruguay round of talks was suspended for two years while Washington and Brussels duked it out. And the talks have seemed to be put on ice before, most notably during meetings in Cancun, Mexico, which were plagued by antiglobalization riots.
But many think that the suspension of these talks might mean more. When President Bush's so-called fast-track authority to make trade deals expires at the end of June 2007, it will be difficult to persuade other governments to bring their best offers to the table, since they might justifiably fear that packages would be renegotiated by Congress. And because the deal to get this authority passed by just three votes in 2002, many doubt it will be extended.
The poorest countries have the most to lose from the collapse--especially those in Africa. Without it, countries will negotiate with each other on a bilateral or regional basis, through free trade agreements, which the United States has now signed with 23 partners, or economic partnership agreements, which the EU wants to sign with countries in Africa, Asia, and the Caribbean.
This is harder on developing countries, which have less leverage against their more powerful counterparts when negotiating on a one-on-one basis. Coalitions of developing countries in the 149-member WTO, on the other hand, are able to have more of a voice.
Advocates for the developing world are left frustrated that the opportunity to alleviate global poverty is now once again out of reach.
"Both the U.S. and the EU agreed after 9/11 that important steps must be taken to give developing countries more benefit from the global trading system, for both economic and security reasons," says Sherman Katz, a senior associate at the Carnegie Endowment for International Peace. "But now it's obvious that when push came to shove, that will was not enough."
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