Not with a bang but with a whimper. The failure of the latest efforts to revive the Doha Round hardly came as a surprise; the fact that farming (what else?) was the sticking point was not exactly shocking either. And you could argue that little was immediately at stake. The talks were partly about tariff and subsidy limits, as opposed to tariffs and subsidies actually in place (these are typically well inside their WTO bindings). The breakdown does leave the system more vulnerable to future setbacks, but no great imminent surge of trade will be blocked because of it.
The dispiriting thing is that the talks could founder over the refusal to compromise, when the costs of compromise were indeed so low. (The political costs, I mean. When a country binds itself not to resort to protection, the economic costs are not just low but negative.) Governments no longer judge a successful Doha Round to be capable of delivering them a net political gain. Since that was the reason for the WTO in the first place, the game appears to be up.
Multilateral trade liberalization brought the world an awfully long way after 1945, but that era has come to an end. The trade-reform agenda is unfinished--especially in the developing world--but future progress, if any, will come from unilateral unreciprocated liberalization, or from discriminatory bilateral (or plurilateral) agreements, or some blend of the two. There has been a lot of the first lately, which is good. The danger lies with the second. It is a trend that the United States pioneered with its proliferating (until recently) regional FTAs. A rationale often offered for that approach was that regional FTAs were building blocks for broader multilateral liberalization, with the WTO presiding over the subsequent assembly. Skeptics said no: regional FTAs would complicate the system and create frictions that would make broader trade reform more, not less, difficult. I'd say the skeptics have been proven right.
The FTA tendency is capable, given an enfeebled WTO, of eventually unwinding some of what has been achieved over the past half-century. (On this, see Jagdish Bhagwati's new book.) If a growing China, India and Brazil follow the US example and use their muscle to develop their own hub-and-spoke networks of trade preference, the eventual costs in forgone trade and income could be great. The logic of trade protection never sleeps.
Could it be that one of the hundreds of Americans on this leaked list of "fake experts who purchased fake diplomas" now collecting tax funded salaries was involved in the WTO discussions that imploded?
http://www.spokesmanreview.com/breaking/story.asp?ID=15898
Anyone clueless as to why our fake experts can’t operate our Federal government, budget, economy and fake wars for oil successfully?
It is a trend that the United States pioneered with its proliferating (until recently) regional FTAs. A rationale often offered for that approach was that regional FTAs were building blocks for broader multilateral liberalization, with the WTO presiding over the subsequent assembly. Skeptics said no: regional FTAs would complicate the system and create frictions that would make broader trade reform more, not less, difficult. I'd say the skeptics have been proven right.
How? The same people who oppose the regional bilateral trade deals oppose WTO liberalization.
The chances of passage for bilateral and regional deals started declining before the WTO negotiations. The Congress that made it clear that a FTA with South Korea or Colombia would never be passed is the same one that decided to massively increase agricultural subsidies yet again and corn to biofuel subsidies. It's not a case of people saying that "the US-dominated NAFTA is great, with the US being the hub, so let's not liberalize." Instead, Sen. Obama wants to renegotiate NAFTA.
Why have the skeptics been proven right? It seems to me that protectionist forces are opposing all deals. The logic of trade protection never sleeps indeed; maybe they're just winning on all fronts.
In what sense in which NAFTA, or CAFTA, or any bilateral or regional trade deal that the US is in could possibly be said to have tanked Doha? (Other than people deciding, after experience some somewhat more free trade, that they hated free trade.)
Agricultural subsidies were of course a sticking point, but let it be noted that the current Congress raised agricultural subsides (over a veto) in the face of record high farm profits. Blaming regional FTAs seems to me to be lacking logic.
There are some senses in which regional deals may hurt the chances for broader agreements. But they mostly deal with situations where re-importers in one country develop cozy relationships with their protected compatriots in another. But the US deals have spawned very little of that. (The only thing I can think of are some examples of cotton exported to textile mills in the Caribbean, which CAFTA could encourage.) The sticking point in these negotiations are agricultural subsidies, and the US lacks anything like the imperial preferences for former colonies that many EU nations have.
No, for the US, the sticking point in agricultural subsidies is not Chiquita/United Fruit Company growing bananas in Central America. It's products grown right in the US itself. If anything, CAFTA ought to diminish the power of the sugar growers in the US, not increase it.
Good points Mr. Thacker.
Clive could you please expand on how FTAs have hurt the WTO? Frankly, I was of the mind that they were building blocks, rather than impediments.