A nother attempt to revive the Doha Round of international trade negotiations has failed. Unable to find common ground on agricultural issues, some 60 trade ministers — less than half the members of the World Trade Organization (WTO) — cut short efforts recently to break the deadlock in Geneva. Before departing, however, they entrusted Mr. Pascal Lamy, director general of the WTO, with the task of finding a way to break the stalemate. Although the differences appear intractable and time is running short, Mr. Lamy believes a deal is possible.
The Doha Round began five years ago. From the outset, participants agreed this would be a “development round” that would focus on issues of chief concern to developing countries. This was necessary because of growing anger among those countries that previous talks had disproportionately benefited developed nations. In practical terms, this meant negotiations would focus on agriculture, the primary source of income for developing nations, and would target the quotas, tariffs and subsidies that shield farmers in the developed world from competition.
There were no illusions about the difficulties posed by the focus on agriculture. The issue had been downgraded in previous negotiations precisely because of the power of domestic agricultural lobbies in developed countries. Sadly, the rhetorical commitment to developing country concerns was easier to make than to honor. The difficulty in bridging the gap between developed and developing countries has been exacerbated by divisions among developed countries themselves over the appropriate scope of protection and aid for their farmers. The result has been deadlock and the collapse of the meeting in Geneva.
There are two primary issues of contention. The first is the readiness of developing countries to continue opening their own markets. While economists insist that lowering protectionist barriers will produce net welfare gains for all countries, developing nations argue that the bulk of those gains come at the expense of their industries. They are not prepared to further liberalize to admit either the manufactured goods (and services) of developed nations or the agricultural products of other developing countries. This reluctance is understandable — and consistent with the “development round” focus of the talks — but it makes it difficult to put together a deal. Here, the United States is blamed for insisting on continuing liberalization, although Europe is also pushing for more access for its manufactured goods.
The second issue is the readiness of developed nations to cut support for their farmers. Here, the main battle is being fought among the developed countries — primarily the U.S. and the European Union, but Japan and South Korea are key players, too. Washington and Brussels have been fighting over the appropriate level of cuts to farmers who have long been coddled by their governments and have, as a result, flooded markets with excess goods, depressed world prices and further impoverished developing world competitors. The U.S. is demanding — and says it is prepared to make — greater cuts than Europeans are ready to accept, and that disagreement is the biggest obstacle to a deal.
Bitter disagreements are not new to trade negotiations. The Uruguay Round, which led to the creation of the WTO, almost collapsed in 1990 but managed to revive and reach a deal three years later. Since their inception, Doha Round talks have flirted with collapse. Deadlines have been repeatedly missed and only sheer doggedness has allowed them to continue.
This time could be different, however. There is increasing skepticism worldwide about the value of trade liberalization; that skepticism diminishes the enthusiasm of politicians and their negotiators to make the hard choices for a deal. And the U.S. president’s trade promotion authority — which forces Congress to consider a trade agreement as a whole without amendments — expires next year and extension is doubtful.
There is also growing concern over the increasing resort to bilateral and regional trade deals. These are less than optimal, in economic terms, and they drain the time and energy of the bureaucracies that negotiate global deals. Worse, they undermine the WTO itself, creating a patchwork of authorities and uncertainty about which rules control disputes.
Mr. Lamy is well aware of the difficulties he faces as he begins his shuttle diplomacy. As befits someone in his job, he believes the differences are not unbridgeable. In addition to his unflagging energy — he is a marathon runner — Mr. Lamy is aided by fears among WTO members of the consequences of a total collapse of the talks. Time is running short, however. He needs to remind all governments of the stakes. These negotiations are not merely about trade. Trade is a means to an end — the prosperity and development that provides hope of better lives and are the cornerstone of peace and stability.
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