Can WTO trade talks be put back on track?

By Editorial staff Simon Wilson Nov 24, 2005

After a frantic, frustrating couple of weeks of failed trade negotiations in Geneva and London last week, prospects for the World Trade Organisation ministerial summit in Hong Kong in mid-December are looking grim, said Guy Sebban in The Straits Times (Singapore).

The Hong Kong meeting offers the “last best hope” of reaching agreement on cutting tariffs and freeing up world trade in goods and services – and thus saving the entire Doha round of trade negotiations, launched in late 2001. But as things stand, the chances of success are receding fast.

The Doha round, which takes its name from Qatar’s capital where it began in late 2001, has appeared near-death before, most notably at the 2003 meeting in Cancun, Mexico, which collapsed in acrimony. But whereas that failure left time to try again, the “prospective Hong Kong fizzle” is creating a real sense of dismay, said Peter Alford in The Australian. The key factors are time and US domestic politics: Doha “becomes entirely impossible” if President Bush hasn’t told Congress by April 2007 that he’s signing a WTO agreement (his term ends in 2008). For that to happen, a final deal needs to be in place by mid-2006. If the Hong Kong talks fail, that looks unlikely.

International institutions like the WTO are never actually allowed to “fail”, said the former WTO boss Mike Moore in The Independent. Instead, they just “adjust their objectives to meet the lack of results”. So all the talk among negotiators in recent weeks – of lowering ambitions, increasing the timeline and widening the agenda – is ominous indeed. A successful round would boost the world economy by $3,000bn, lifting 300 million people out of extreme poverty. “These are big stakes.” So why aren’t the talks working? The biggest sticking point, it seems, is agriculture: the US and EU have offered the biggest cuts yet in their subsidies, but it is not seen as enough by agricultural exporters in poor countries. Unless a compromise can be found, little good will come of the round.

The West’s ongoing love-affair with subsidising its farmers is “economic madness”, said The Guardian. Why on earth does the US give farmers cash handouts to grow cotton, a labour intensive job that could generate millions of jobs in Africa? And why does Europe subsidise its cows by $2 a day – a sum larger than most of the world lives on? Tony Blair’s speech this week pledging to throw himself into reviving the stalled talks was all well and good. But what’s needed are deeds, not words.

And that’s the hard bit. In France, Jacques Chirac is in thrall to politically powerful farmers and his worsening domestic position in the face of the national crisis sparked by widespread rioting mean that any compromise from him is unlikely. Right now, developing countries are “digging their heels in” – insisting on big cuts in agriculture subsidies before they talk about reducing their own industrial tariffs and subsidies. Quite right too.

Up to a point, said the FT. What would help get things moving again is a bit of negotiating sense on all sides. “The big emerging market countries should put on the table aggressive offers of liberalisation in industrial tariffs and services”, conditional on a breakthrough on agriculture.

That would “galvanise” pro-free-trade forces within the EU and broaden out the talks from the too-narrow focus on agriculture. The alternative is failure – a slide into bilateral deals, a system of preferential tariffs, and a huge blow to global growth, especially in the developing countries themselves.

Published in Economics | More articles by Simon Wilson

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