As if the cause of free trade has not absorbed enough in terms of insults and injury, yet another attack on it was launched by the World Trade Organization–this one, through inaction:
The World Trade Organisation has dropped plans to convene ministers to push for an outline deal in the troubled global trade talks - a further blow to world leaders’ promises to combat protectionism.Pascal Lamy, WTO director-general, said a meeting, originally planned for next week, “would be running an unacceptably high risk of failure which could damage not only the round but also the WTO system”.
The decision all but eliminates the chance of reaching a framework deal in the “Doha round” of trade negotiations before George W. Bush, president, leaves the White House, after which most officials expect talks to be put on hold for months.
And why will there be no effort to have a meeting to come up with a deal?
On Friday, Celso Amorim, Brazil’s foreign minister, blamed the stalemate in the Doha talks on the US for insisting on “sectoral” agreements that would open entire industrial sectors in big emerging markets to competition. “I think probably the most appropriate word to apply to that would be ‘greed’,” he said. “The one main reason resides in the excessive demands in relation to sectorals.”Trade officials said the US was almost entirely isolated in demanding sectoral agreements, with even the European Union prepared to soften demands.
So: During a period of global recession, we are going to tempt fate by dipping a toe–and then some–into Smoot-Hawley waters through our collective inaction in promoting the cause of free trade. We will witness a commensurate increase in protectionism as a consequence, of course. And we will do all of this because other parties in the Doha talks don’t want to have emerging countries open their industrial markets to global competition–thus reducing economic efficiency, industrial quality, consumer choice and lower prices.
I look forward to the day when news on the trade liberalization front will cheer me up instead of depressing me–as it now does so routinely. But that day appears to be a long, long, long way off.
A few comments
govprof Sunday, December 14th at 10:13AM EST (link)Pejman, I’m glad you’re bringing up Doha, because it provides deep insight into the politics of trade bargaining. A few points, though:
1. I doubt that the collapse of round will lead to growing protectionism. The demands being made by the United States are just that - demands. Unless bargained over and officially made into trade law, they won’t threaten world trade. And that’s the point of the WTO. It serves to limit countries’ ability to erect protections when times get hard. In fact, one of the outgrowths of the collapse of Doha has been a growth in regional trade agreements, rather than new protections.
2. If you really want to understand why the round fell apart, it’s not our industrial demands. It’s American agriculture. Our farm subsidies and other protections seem to be politically untouchable. They have a huge lobby (e.g., sugar) that is very hard to beat. If we would lower our agricultural subsidies, the whole round would be solved.
3. The other problem with Doha is the structure of the WTO. Its basic rule is that “nothing is agreed until everything is agreed.” In the Doha Round, 18 of 20 articles were agreed on. The other WTO-related problem is the number of countries. There are, I think, 153 countries involved in this round. The more players, the more difficult it gets to form an agreement, especially given the rule that everyone needs to agree.
My usual caveat: I’m a liberal who lurks and sometimes posts on RedState. Please be patient.
You are quite right about the need to get rid of agricultural subsidies . . .
Pejman Yousefzadeh Sunday, December 14th at 2:48PM EST (link)Which is why I called for the phasing out of agricultural subsidies over a five year period two years ago.
“At times one remains faithful to a cause only because its opponents do not cease to be insipid.” –Friedrich Nietzsche