Is Doha dead?

To no one's surprise, the Doha multilateral trade round finally appeared to have collapsed on Thursday. The FT's Alan Beattie reported today that World trade talks collapse in acrimony

The chance of a global trade deal being clinched before President George W. Bush leaves the White House shrank dramatically on Thursday with talks between core negotiating partners collapsing again in division and acrimony.

In a near-exact repeat of events last summer, talks in Potsdam, Germany, between the four partners at the centre of the so-called Doha round of negotiations – the EU, US, Brazil and India – broke up with sides still far apart on cutting agricultural subsidies and goods tariffs.

The collapse makes it unlikely that an outline deal can be agreed before the summer, a step necessary to complete a detailed agreement by the end of the year. ...The failure of the so-called G4 to broker an outline deal will throw the ball back to the entire membership of the World Trade Organisation in Geneva, where the chairmen of the farm and industrial goods talks are preparing draft versions of a deal. But trade officials were pessimistic.

Parties were quick to engage in the blame game, with the US blaming Brazil, and India for failure of G4 talks for being unwilling to open their markets to manufactured products, while Brazil and India charged that the Americans and Europeans were offering too little on agriculture. Meanwhile, US officials are trying to see positives in the trade talks collapse

"By walking away from a bad deal, we are once again able to show the Congress that we can be trusted," U.S. Trade Representative Susan Schwab said on Thursday... Schwab said her refusal to accept an unsatisfactory deal only strengthened the administration's case for renewing "fast track" authority, the law that allows the U.S. president to broker trade deals that Congress votes on with no changes.

Can this really be the end of the Doha round? Most likely - though brinksmanship is a popular strategy in trade negotiations, so one cannot completely rule out the possibility of a last minute breakthrough.

Comments

[Peter Gallagher]

The problem with brinksmanship is that the more you do it, the less it means. And then there's the 'zombie problem'.

It must be very difficult in current trading conditions for Brazil and India to imagine that they are on the edge of a 'brink'. The USA may feel closer to the brink; but the trade deficit is either a cliff of it's own making (consumers! why would you let them run an economy?) or a banal confirmation of the continuing, only-slightly-weakening, attraction of its economy for investors. In any case it's hard to connect the prospective outcome of the Doha round with that "brink". As Nath said, the US has less hope than China that a NAMA coefficient of 20 will have commercial value.

The EC and USA accuse the Brazilians (and India) of making an offer on the NAMA tariff cutting formula (a coefficient of 30) that would offer no new market access. Appalling! Yet the EC, too, offers a market access proposal on agriculture that has zero impact (nominal 65% cuts in the 'upper tier' of tariffs higher than 75% will offer no new access in dairy, sugar or most meat, for example). It's ironic repayment for the EC's 'solidarity' in leading the charge at Doha for 'less than full reciprocity' for developing countries.

After thirty years of these stand-offs (Tokyo Round through Doha) it is past time to acknowledge that the multilateral trade round format doesn't work. We cannot coordinate real changes in trade and investment policies by negotiation. Over and over again it appears that real changes arise only from autonomous measures such as those in Brazil and China in the late 80s and first half of the 90s; the EC ('McSharry reforms') in the first half of the 1990s; Vietnam's and India's first steps to liberalization in the mid-to-late 90s, and also reluctantly; ASEAN, Korea and Mexico in the late 90s. Attempts to wrench such changes from WTO Members in a round of negotiations has a very poor record of success and what changes are won come at a cost to the system.

When multilateral negotiations (Tokyo, Uruguay, Doha) return with bare confirmations (bindings) of these autonomous changes they do so as a near corpse, a 'zombie'. The liberalization objectives of the Round's initial mandate have been strangled by a decade of tortuous haggling. Pinned to the shroud are compromise texts that entrench protection of special interests ('ceiling bindings', 'special treatment (annex 5)', 'minimum access quotas', 'blue box', exceptions and deceptions in services schedules). These 'undead' lie around for a decade or so waiting for ressurection in the next round of negotiations and rise up, at the end, re-embalmed and even multiplied ('sensitive' or 'special' prodcut categories, more 'special' safeguards).

If Doha 'survives' with the current framework, you can be pretty sure it will not be 'alive'; only 'undead'.