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Jay Louvion/World Trade Organization
Over the past several years, the possibility of a grand bargain that would produce major trade liberalization in manufacturing, services and agriculture has steadily diminished and has now disappeared. As this piece is written during the “dog days” of August, trade ministers and bureaucrats from World Trade Organization member states are engaged in a final desperate drive to come up with a face-saving “mini-package,” or Early Harvest, of trade concessions to present at a climactic meeting of WTO ministers in December. The goal of the package is to salvage benefits for the world’s poorest countries such as tariff-free, quota-free trade with developed countries, drastic reduction in subsidies for cotton, exemptions from major services trade liberalization, and trade facilitation programs such as logistical aid to move goods from farm and factory to air-and seaports.
The prospects for even a small package are dismal. The United States, through its ambassador to the WTO, Michael Punke, stated in July that a “so-called Early Harvest package is not happening and is not going to happen.” Punke urged WTO negotiators not to spend more time on this effort, but rather concentrate in the lead up to the December Ministerial on issues that look beyond the current Doha stalemate and forward to the future of the WTO itself. Punke is halfway to a sensible position-but unfortunately, he and the Obama administration stopped short of biting the bullet by calling for a definitive end to the Doha Round.
“…keeping talks alive with no prospect of success will wreak further incalculable damage on the WTO…” — Claude Barfield
Such a move would face up to reality and would receive bipartisan support in the United States. Susan Schwab, who headed the office of the U.S. Trade Representative under President Bush, has asserted bluntly: “The Doha Round has failed. It is time for the international community to acknowledge this sad fact and move on.” She is backed by all U.S. business sectors. The Doha Round for the service industries “holds no promise,” states Robert Vastine of the U.S. Coalition of Service Industries: “Why are we wasting our time?” His views are echoed by the U.S. manufacturing industry, whose spokesman, Frank Vargo, of the National Association of Manufacturers, asserts “The Doha Round has failed miserably in generating new market access.”
Economic historians will have plenty of time to debate how the trading system got into this mess-and there will be lots of recriminations that will accompany this “conversation.” But the short-term question is how to move on. The argument advanced here is that a decisive act to formally end the Round is the best solution and means for a viable path forward.
Part of the resistance to a clean break comes from trade diplomats and some political leaders who recoil at the supposed stigma of presiding over the first failed trade round since GATT was established after World War II. This is understandable but in the end misguided. For those who care about the future of the multilateral trading system and the institution of the WTO, nothing could be worse than a continuation of the debilitating stalemate, combined with increasingly feckless calls by world leaders at every summit gathering for negotiators to settle their differences and wrap up the round. The lack of “political will” starts right at the top of the political ladder.
There is also fear of the unknown. As one veteran trade policy analyst queried: “If the WTO talks go into hibernation, there is no telling when, or if, they will wake up.” True: but keeping talks alive with no prospect of success will wreak further incalculable damage on the WTO; and in any case, given the realities of the U.S. election cycle, serious negotiations after December will be off the table until well into 2013 or beyond. Whether at some distant time there are ongoing vestigial negotiations or not, new actors and new issues will have moved to center stage, requiring a wholesale recalibration of priorities and tradeoffs.
In that regard, there has been a good deal of muddled discussion about a new agenda for the WTO, including calls for rendering the current round more relevant by adding new issues. Among the candidates for new negotiations are climate change, food security, labor, environmental questions and competition policy. The problem with this fantasy agenda is that no nation or group of nations can just willy-nilly add items to the negotiations. The WTO acts by consensus, and the history of past rounds has demonstrated that negotiations to produce a “balanced” package to tee up for tradeoffs are as difficult as the actual negotiations during the rounds themselves. This is particularly true now that WTO rules go well “beyond the border” and deeply impact domestic rules and customs.
The WTO’s able and indefatigable Director General, Pascal Lamy, has acknowledge that after a decade of intense deliberations, Doha Round negotiations are in “paralysis.” Rather than picking over the bones of Doha, the December Ministerial should be devoted to clearing the decks and then beginning the complicated process of planning for a future agenda-if and when the elusive “political will” ever reappears among the political leaders of WTO members.
Claude Barfield is a resident scholar at AEI.
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