This is a disaster:
The Doha round of global trade talks, now in its seventh year, broke up without agreement yesterday after nine days of tense negotiations.
Divisions between the US, India and China about access to the agricultural markets of the developing world could not be overcome and the talks ground to a halt, scuppering efforts by Pascal Lamy, director-general of the World Trade Organisation, to broker a compromise.
The failure of the talks marks the third summer in a row that ministers have left a high-profile summit empty-handed. Several ministers and officials admitted that any substantive progress would now have to wait until a new US president was in the White House.
The breakdown followed marathon negotiating sessions among ministers from the world’s leading economies, with the talks running on long after their original schedule. Tempers occasionally flared during the meetings, with the US and China accusing each other of not making enough concessions.
Yet, in the immediate aftermath, there was relatively little trading of blame.
Susan Schwab, US trade representative, said the US remained committed to the Doha round, which was launched in 2001. “This is not a time to talk about collapse,” she said. “The US commitments remain on the table.”
Peter Mandelson, EU trade commissioner, said: “I realise that you will ask who is to blame for this failure. The answer of course is that it is a collective failure.” But Mr Mandelson said the agriculture talks had been harmed by the five-year programme of subsidies passed by the US Congress, which was “one of the most reactionary farm bills in the history of the US”.
Mandelson is dead right but what I worry about is that with the collapse of the Doha round, protectionists will be emboldened enough to try to hammer against other parts of the free trade system that has been so painstakingly created over the past few decades. And with the possibility that Barack Obama may become President of the United States and further slow down free trade efforts–assisted, of course, by an economically antediluvian Congress–the protectionists must feel that time is on their side in this fight.
Which it may well be. Of course, many people won’t realize that the protectionists have the argument over trade completely wrong until enough poverty has hit enough places and enough people to remind the world that the protectionist ideology should long ago have gone the way of the dinosaur.