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The Washington Post,  08/31/08

To the litany of recent sour economic news add this unhappy bulletin from Geneva: The global trade negotiations known as the Doha Round broke up this week without an agreement.

Instead of a new international plan to cut tariffs, which would have boosted economic growth worldwide, members of the World Trade Organization proved themselves unready for such a deal for the foreseeable future.

This result casts a long shadow over the WTO’s future relevance and increases the likelihood that global trade will splinter into competing regional or sectoral blocs.

There is plenty of blame to go around. The growing anti-globalization mood in both the developing and developed countries did not make this the most auspicious moment, politically, for a deal. Then there is the unduly complex WTO process itself, which requires the agreement of all countries on all points in a multiyear negotiating “round.”

When it began in 2001, the Doha Round was premised on the notion that developed countries would sacrifice their traditional protection of agriculture to create more opportunities for farmers in poor countries.

As the talks evolved, developing countries were expected to reciprocate by opening their markets to manufactured goods and services. The United States, Europe and Japan moved modestly in the right direction, but not as much as they should have.

Still, as last-ditch talks moved into last weekend, the United States and European Union had made some concessions on farm supports, and WTO Director-General Pascal Lamy had submitted a compromise plan that seemed to draw at least tentative approval from most participants.

It was at that point that India and China essentially torpedoed the talks, asserting a broad right to raise tariffs to protect their poor farmers from “import surges,” price drops and other vicissitudes of the world market.

China, which had been relatively quiet throughout most of the talks, was particularly vituperative, blasting US arguments as “absurd,” even though Brazil and several other developing countries agreed with Washington.

China’s role in the demise of the Doha Round is particularly dismaying, considering China has reaped huge benefits from global trade in the seven years since it joined the organization – with strong US support.

Chinese exports have quadrupled from $300 billion in 2002 to $1.2 trillion in 2007, thanks in large part to free access to the US market.

US supporters of Chinese inclusion in the WTO argued that drawing China into a system of multilateral give-and-take would mute its nationalistic tendencies.

Evidently, the Chinese see the matter differently. They, and the world, will be poorer because of it.
 

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