Is the Doha round dead?

Despite months of discussion, the international trade negotiations remained completely deadlocked. As a result, a few days ago, Mr. Pascal Lamy, the director general of the 149 member World Trade Organisation formally announced the abandonment of yet another deadline (April 30, 2006) "to agree on precise formulas for cutting tariffs and subsidies on farm and industrial trade."

This was going to be an important step towards the conclusion of the world body's Doha round of negotiations which started with much hope and fanfare in the capital of Qatar in 2001. The principal objective of the Doha round (also known as the Development round) was to help millions of people in poor countries to lift them out of poverty by eliminating the wrongs of unfair trade. Unfortunately, now it is widely feared that the Doha round is dead. There are, of course, good reasons for this fear.

Although both the US and the EU have made vague proposals to cut agricultural subsidies and tariffs, in reality they are more spin than substance. In fact, according to Oxfam, if implemented, these proposals could lead to increased spending in the EU on these items. Yet, in return they wanted market access to health, banking, telecom sectors in poor countries.

Five years after the launch of the Doha round and a series of missed deadlines, it is evident that the developed world has failed to appreciate the growing frustration of the poor nations about the sincerity of the rich nations' mantra that free international trade would help spread the benefits of globalisation among the rich and the poor in an equitable manner.

Regrettably, the international political situation does not seem to be conducive to making concessions in trade negotiations. The current low approval rating of the Bush administration, mid-term elections in November, and a growing protectionist sentiment among American politicians are making the situation more difficult.

In July 2007 "fast track voting" in the Congress will run out. This procedure would have obliged the Congress to accept or reject any trade deal as a package. After this date, the US Congress will get back the power to examine individual parts. It is highly unlikely that the Bush administration, whose focus is now directed elsewhere, would approach the Congress to extend this extraordinary Trade Promotion Authority.

The transfer of Robert Portman -- until recently America's high-powered trade negotiator and the person who concluded the landmark deal allowing China to enter the WTO -- to oversee America's federal budget does not bode well for the Doha round of negotiations.

The situation on the other side of the Atlantic is not very encouraging either. According to Ken Ash, the deputy director for food and agriculture of the OECD, the overall levels of protection given by Europe to its farmers is higher than that given by the United States. The French farmers, in particular, are the principal beneficiaries of the EU's very generous subsidies and the powerful French farmers' lobby is not willing to make any concessions in this respect.

The growing protectionist sentiment in France and the coming elections do not allow its politicians to make bold decisions. A new factor -- a sense of insecurity linked to energy -- has recently been added to this already complicated situation.

According to Christine Lagarde, the French trade minister, some European countries are now viewing agriculture not only as a food source but also as a "potential alternative energy source," i.e., bio-fuels; hence it deserves greater protection and not less.

It is a pity that the rich nations have once again failed to realise that by developing the poor countries where two-thirds of world's population live, they would eventually create huge new markets for their manufactured products. Until they can overcome their reluctance or fear to expose their farmers to competition, trade negotiations will remain deadlocked and in the long run it will have negative effects on them as well.