The Wall Street Journal is running a story that the WTO trade talks have collapsed — Global Trade Talks Falter. The speculation is that this was the last chance for the Doha Round (so named because the talks began with a meeting in Doha). Of course, this is not the first time that the trade negotiations have been said to be at the end. I can’t count the number of posting on this blog about the “end” of the Doha Round.
Part of the problem is what the Round was trying to accomplish. Originally, the Round was supposed to be the “services round” — the so-called Millennial Round which fell apart in Seattle in 1999. But it quickly became the “development” round at the meeting in Doha. The idea was that developing countries would gain access to markets in the developed world, especially of agricultural products. As the Journal story puts it:
The nine-day meeting, the longest trade summit diplomats in Geneva could recall, aimed at concluding a simple bargain: The European Union and U.S. would lower farm subsidies and tariffs in exchange for China, India, Brazil and other emerging economies opening up their markets for industrial goods like chemicals and cars.
Boiled down to this trade off, the Round has become less and less relevant to the world economy as the talks have stretched on. The Round seemed premised on an international division of labor that long longer exists: “developed” nations make products and “developing” nations have an advantage in agriculture. It seems that this trade off is not worth it to India and China. Rather than wanting to lower agricultural barriers in the US so that they can export more farm products, India and China are more worried about a surge of agricultural products coming into their markets. They want surge protection clauses in the agreement on sugar, cotton and rice. India’s trade and commerce minister, Kamal Nath, the Indian Trade and Commerce Minister, reportedly said, “I’m not risking the livelihood of millions of farmers.” The proverbial shoe is apparently on the other foot now.
More importantly, the nature of global economic activity has shifted. Let me repeat my comment back at the beginning of the Round in 2001 (in After Doha: What The WTO Is Not Talking About), many of the real issues weren’t even on the table:
Slightly less than a decade ago, I played a small part in the implementation of the Uruguay Round and the birth of the WTO. As a Senate trade policy staffer, I had fly-on-the-wall view of the pushing and shoving. At the time, I could not help but think that I was witnessing the last major trade round. I may be proven wrong. But, regardless of whether a new round is launched and successfully completed, it will be outdated before it begins. As we engage in the first war of the 21st century, we may be entering into the last trade negotiations of the 20th Century.
This is not to say that the negotiations are unimportant. There are numerous areas, ranging from agricultural subsidies to the dispute settlement process, that need to be addressed. These are, however, the loose ends of trade in the Industrial Age – not the emerging issues of the Information Era.
Maybe the new Administration can move beyond the past and craft a new approach to trade negotiations. Clearly, the current one isn’t working.