Do Not Go Gentle Into That Good Night...
Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.
The Economist's choice of title (from a poem by Dylan Thomas) for its analysis of the collapse of the WTO talks is apposite indeed. Think of what you might, for better or for worse the WTO is now the light that failed.
The historic chance to truly liberalize the world economy looks like it has eluded us, and at the end of the day those who will suffer most will be the poor and the deprived. Europe's ludicrous and insane Common Agricultural Policy will continue to screw people in Africa and elsewhere:
This is a tragedy, especially for the developing world. Last year, the World Bank estimated that global gains from trade liberalisation would equal roughly $287 billion, of which $86 billion would accrue to developing nations, lifting at least 66m people out of poverty. Activist groups including Greenpeace and Oxfam were quick to condemn both Washington and Brussels for intransigence over agricultural subsidies, saying that rich-world self interest is leaving the poor to suffer.
For the benefit of a few French farmers, cheap subsidised grain will continue to flood the world market putting local producers out of business and ultimately creating the conditions for famine. As Amartya Sen correctly says, it's not just drought that triggers starvation - it's economics.
It's not often that I spring to Bush's defence, and this is not one of those times, but The Economist has a point:
The collapse will probably be blamed on America, which has been pushing for bold action on agricultural tariffs, and resisting a modest compromise deal that includes caps on its own agricultural subsidies. This is ironic, because America has been one of the grave men pushing hard to revive Doha after the round’s first collapse at Cancún in 2003. Despite high-profile deviations, such as slapping tariffs on imported steel, Mr Bush has largely been a committed free trader.
The truth is that while there have been grave men and wise men, the good men have had no real voice. And I too think that the blame lies squarely with our very own beloved EU.
What has not been said, so far, is who else will gain from this. I think there's going to be one big beneficiary... it's coming... China. Without demands to relax trade tariffs on manufactured imports etc. China may well continue to resist becoming the 'world's largest market', as so many expect it to be.
On the other hand, if the West begin slapping tariffs and quotas on imports from China, the whole edifice of the PRC could swiftly begin to crumble. I don't think it'll come to that, but it could be one of a cocktail of factors that lead us further down that dark road, burning and raving at the close of day.
The dying of the light
After years of hard negotiations the Doha round of trade talks—that were supposed to boost world trade and help poor countries in particular—have apparently ended in failure
IT IS nearly five years since the latest round of World Trade Organisation (WTO) negotiations was born in the brilliant daylight of Doha, Qatar. For much of that time, however, the sun has been setting on ambitious plans for agricultural liberalisation, economic development, and global poverty reduction. As in Dylan Thomas’s poem, the wise men and the grave men have raged against the dying of the light, but their struggles have come to naught. On Monday July 24th, Pascal Lamy, the director-general of the WTO, said he would suspend discussions after a marathon 14-hour negotiation session between the big trading powers—America, the European Union (EU), Japan, Australia, Brazil, and India—failed to produce agreement on the contentious issue of cutting agricultural protections.
Though there are wan hopes of restarting the round, at best it looks likely to be years before the sun rises again on the WTO talks. With Monday’s collapse, there is not enough time to get the details of an agreement hammered out before George Bush’s fast-track trade authority expires in July next year. This forces Congress to vote “yes” or “no” on trade agreements without amending them. Without it, no substantial agreement would survive the approval process. Given his administration’s myriad political problems, it is unlikely to be renewed, even if his party manages to hold onto both houses of Congress in the autumn mid-term elections.
The collapse will probably be blamed on America, which has been pushing for bold action on agricultural tariffs, and resisting a modest compromise deal that includes caps on its own agricultural subsidies. This is ironic, because America has been one of the grave men pushing hard to revive Doha after the round’s first collapse at Cancún in 2003. Despite high-profile deviations, such as slapping tariffs on imported steel, Mr Bush has largely been a committed free trader.
But his successor may well not be. Protectionist and anti-immigration sentiment is rising in both big parties in America, thanks partly to stagnating median wages. This will make fertile ground for protectionist politicians. Even those who are committed to free trade may find it wiser to suppress their liberalising urges. Mr Bush has found it difficult, politically, to expand trade and bring illegal immigrants into legal jobs. And whatever his instincts on trade, the next president will face a Congress much more hostile to open markets than those that gave Bill Clinton and Mr Bush authority to negotiate deals at the WTO. Without leadership, and concessions, from America, it is hard to see how the WTO can go much further.
This is a tragedy, especially for the developing world. Last year, the World Bank estimated that global gains from trade liberalisation would equal roughly $287 billion, of which $86 billion would accrue to developing nations, lifting at least 66m people out of poverty. Activist groups including Greenpeace and Oxfam were quick to condemn both Washington and Brussels for intransigence over agricultural subsidies, saying that rich-world self interest is leaving the poor to suffer.
Without further progress at the WTO, those keen on liberalising trade will focus on regional and bilateral agreements. These are already proliferating (see chart): just about every one of the WTO's 149 members is a party to a regional trade agreement of some sort.
But these smaller agreements are a poor substitute for global progress. While they improve flows within the deal, they distort markets by favouring certain countries over others, even if their goods offer less economic value. The proliferation of special regulations, which companies must spend time and money to understand, does nothing to free up trade generally. And such deals sap the will for broader progress in multilateral talks. This is particularly harmful to smaller and poorer countries, which lack the economic muscle to win concessions from behemoths like America and the EU unless they are part of a broad negotiating consortium. With the sun finally setting on the hopes for Doha, there may be very dark times ahead for trade.
