The Doha Round of trade negotiations is dead, having succumbed to a combination of neglect, indifference, a lack of political will and, above all, a lack of leadership. WTO Director-General Pascal Lamy announced on July 24 in Geneva that the trade talks would be suspended indefinitely. Resquiescat in pace.
Of course, the coroner’s report is not official yet. The patient’s attending “doctors” — trade ministers and ambassadors from assorted countries — may yet find a way to break the impasse in negotiations and conclude a deal by December 2006, thereby beating the April 2007 deadline set by the U.S. Congress for submission and ratification. But that would require a monumental act of political will by all the major trading countries working together, and they don’t have it.
The cure for the dying patient was always obvious: The large trading countries needed to lower tariffs and subsidies and improve market access to increase trade. Every country, rich and poor, would have gained from the outcome. In the medical profession, such doctors as these would be brought up on charges of neglect and malpractice. Earlier this month, one trade minister came late to an important meeting, preferring to watch a World Cup match instead. In general, the tedious posturings have recently deteriorated into accusations by each one that all the others are killing the patient. Meanwhile, the negotiators sat on their hands. They all had a hand in pulling the plug on life support.
The Doha Round was born under an unlucky star. It failed to launch in the WTO’s disastrous Seattle meeting in 1999, and began only in the brief wave of global solidarity that came in the wake of Sept. 11. Unfortunately, the sense of urgency for trade liberalization has not been sustained, and yet another WTO meeting collapsed in Cancun in 2003. After some patch-up work in 2004 kept the Round going, the Hong Kong meeting in 2005 ended with barely any progress, creating new deadlines that could not be kept.
In past trade negotiations, such crises were common, and had always led to eleventh-hour theatrics that saved the day and concluded the deal. The Uruguay Round, for example, nearly foundered on a bitter split between the United States and the European Union over agricultural subsidies before concluding in 1994. But the world of trade negotiations has changed. The U.S. and EU still fight over agriculture, yet other factors have complicated the process of concluding a trade deal.
Developing countries now account for three-fourths of the WTO’s membership, and the rich countries have not adjusted to the effect of this change on the negotiating process. Previously, trade deals started with consensus among the “quad” (U.S., EU, Japan, Canada) and developing country interests got secondary treatment. Led by India and Brazil, the developing countries balked at this approach in Cancun, and discovered that they now had the power to block the negotiations.
The trade talks were nicknamed the “Development Round,” and it has not helped that many countries took this to mean that the rich countries would have to cut tariffs and subsidies while the developing countries would not. Egged on by anti-globalization and “fair trade” groups, some developing country delegations have declared that “no deal is better than a bad deal,” as Kamal Nath, Indian trade minister, repeated recently. This stance feeds into the mercantilist posturing that the WTO system was designed to overcome. Trade rounds are about reciprocity among all the major players, since a trade package with expanding exports for all is the only way that most governments can get reluctant legislatures to ratify the deal.
The United States and EU did their share of stonewalling as well. United States negotiators balked at major cuts in agricultural subsidies, and the U.S. Congress pulled any possibility of trade law reforms from the Doha table, declaring such matters too sensitive to negotiate. Guesswhat this has done to the willingness of other countries to open up on their own “sensitive” issues? EU governments, for their part, continued to protect their elaborate system of agricultural subsidies and tariffs, denying their trade negotiator, Peter Mandelson, any flexibility in bargaining for a compromise.
There are always domestic lobbying groups that will fight hard against more market access for imports. A broad trade deal must therefore receive the active support of the heads of governments to mobilize domestic pro-trade forces and neutralize opposition to it. Yet such political will is scarce these days. President Bush is contending with the war in Iraq, high gas prices and low poll numbers, and was unwilling to spend his remaining political capital on a trade deal. European leaders, facing a backlash against worker mobility from the new eastern EU members and the collapse of the proposed EU constitution, became gun-shy of a trade deal that would inflame entrenched economic interests. In the United States, EU, and all the other major trading countries, political timidity on trade predominates, and no one was willing to take the first step to break the impasse.
Compromise, flexibility, the willingness to bargain and come back with new initiatives if things get stuck this is the oxygen that keeps a negotiation alive. The Doha Round never had much oxygen from the beginning, and now it is gone. The patient is dead.
Can Doha be resuscitated, Lazarus-like, from a certain grave? An extension of the U.S. congressional “fast-track” deadline is theoretically possible, but this effort will lack credibility unless there is a serious effort to close the negotiating gap over the next six months, which is unlikely. The mourning period for Doha should be short, and the WTO members will need to think seriously about finding new ways to generate a common purpose and to reach consensus in order to launch a new effort at multilateral trade liberalization.
Kent A. Jones is an economics professor at Babson College.
