Impossible to save Doha

AFTER seven years of wrangling and recent marathon meetings in Geneva, which were often acrimonious, world trade talks collapsed on July 29, thus effectively putting an end to the hopes of saving the Doha Round.
After the end of the Second World War, there was a great desire to break down the pre-war barriers and establish a new economic order. The movement to dismantle the complex structure of trade barriers and to promote international free trade owes its origin to the International Trade Conference, held more than 60 years ago in Geneva. There, in 1947, a multilateral treaty called the General Agreement on Tariffs and Trade (the GATT) was signed by 23 countries. The treaty provided an international forum for member countries to pursue a policy of trade negotiations with a view to minimising trade barriers. The GATT members agreed to extend the most-favoured-nation status among all its members.
The World Trade Organisation was established in 1993. It replaced the GATT forum and incorporated all existing GATT treaties. But there was an important difference between the GATT and the WTO -- the WTO was given legal powers to enforce the treaty provisions. Actually, in theory, the WTO's goals are even more ambitious than those of the GATT -- these are to promote and enforce global multilateral trade including trade in services, intellectual property and investment.
With 153 members, the WTO today is a huge organisation. Developing countries constitute three-quarters of the membership of the WTO. So far there have been nine rounds of negotiations. The latest one, called the Doha round, started with much fanfare in 2001. The poorer countries still keep reminding the rich nations like the United States, the EU, Japan and Canada that from the beginning the Doha round had a development agenda.
Actually, the official title of the Doha round was Doha Development Agenda. Its principal objective was to help millions of people in poor countries to lift them out of poverty by eliminating the wrongs of unfair trade. Unfortunately, seven years of arduous negotiations have not produced many positive results. In 2006, after a series of missed deadlines, the director general of the WTO formally announced the abandonment of the last deadline (April 30, 2006).
From the very beginning, negotiations centred on three principal subjects -- gradual elimination of tariffs on high-tech manufactured products from the developed nations to the developing ones, abolition of domestic subsidies to agricultural products in the developed nations, and gradual elimination of tariffs and other restrictions on farm products, textiles and other low-tech manufactured products from the emerging nations to the developed ones.
Under the Uruguay Round, the poor countries took significant steps to lower tariffs on manufactured products from the rich countries. Since then, rich countries have been insisting on further cuts in tariffs on manufactured products. But agriculture has definitely been the most controversial subject in these negotiations. Why? Because on the one hand, the rich industrialised nations "impose tariffs on imported farm products that are eight or ten times higher than those levied on industrial products," which effectively rigs the trade game. On the other hand, they spend billions of dollars on domestic farm subsidies. These generous subsidies generate vast surpluses, which inundate the international markets at prices below the production cost. This policy, which cannot be described by any other name but dumping, ruins the possibility of poor countries ever getting out of poverty.
Immediately before the beginning of the current talks, ministers representing a group of developing countries and food exporters from rich and poor nations held an unofficial meeting in Geneva and urged the United States, the EU and Japan "to open up their farm markets and to eliminate trade-distorting subsidies." According to newspaper reports, the US offered to lower the ceiling to $14.5 billion a year. But the developing countries pointed out that American agricultural subsidies had already fallen sharply because of sky-rocketing food prices all over the world. Therefore, the poor countries demanded deeper cuts in agricultural subsidies to American farmers.
Peter Mandelson, the EU trade representative, made an offer to cut trade distorting subsidies by 80%, and also lower the tariffs on farm products from developing countries. (By the way, the EU's common agricultural policy swallows up approximately 40% of its total budget.) But President Sarkozy of France has already warned that the French government would not approve such a deal.
Negotiations to reduce tariffs on farm products were further complicated by the Chinese and Indian insistence on shielding some of their important farm products from competition and on delaying the implementation of tariff cuts for a number of years in order to protect hundreds of millions of their subsistence farmers. At the same time, China's hugely successful export policy also generated fear in many developing countries because of its aggressive nature.
Referring to a world economy strained by soaring food and energy prices, protectionist tendencies in the United States and France, and a global financial crisis, Robert Zoellick, the former US trade representative and the current World Bank president, said: "An open and fair trading system would give farmers in developing countries a reason to expand production." Then he pointed out that in this manner consumers would benefit from lower prices, governments could save billions of dollars on farm subsidies and, thus, improve their budgets.
In any case, as pointed out by two Democratic Party senators, the US delegation did not have any authority to negotiate a final deal because the president's "fast track" authority to negotiate trade deals had expired on June 30, 2007. This procedure would have obliged the Congress to accept or reject any trade deal as a package. Now the Congress has got back the power to examine individual parts.
So the maximum that could have been achieved from these negotiations was to lock up a deal on cutting tariffs and subsidies in agriculture and manufactured goods before the American presidential election. Now that the talks have failed, analysts fear that the protectionist tendency in the rich countries, especially in the US, will grow, and the next US president would feel free to restart the negotiations on every item from zero. But many developing countries are not particularly scared of this possibility. On the contrary, they feel that this failure would go a long way in putting an end to the West's stranglehold on the current multilateral trading system which, besides being biased, was also utterly hypocritical.

Chaklader Mahboob-ul Alam is a columnist for The Daily Star.