WTO Doha Talks Collapse Without Agreement
The Wall Street Journal reports that talks between the 30-some countries almost collapsed last week, but a midnight handshake on Friday between Brazil and the U.S. kept talks going. The U.S. agreed to cap its farm subsidies at $14.5 billion and Brazil accepted cuts in its industrial tariffs. Over the weekend, however, India and China refused to compromise with the U.S. China and India insisted on a safeguard rule that would allow them to impose special tariffs if imports surged in certain products such as sugar, cotton, and rice.
The New York Times reported that the U.S. argued that the safeguard rule, which is not permitted today, would involve moving backwards on existing world trade commitments. Susan Schwab, the United States Trade Representative (USTR), said that success had been "so close" on Friday, adding that, "The U.S. commitments remain on the table, awaiting reciprocal responses." Ms. Schwab challenged the claim of India and other developing countries that the U.S. was the chief obstacle to concluding the deal. "It is unconscionable that we could have come out with an outcome that rolled the global trading system back not by one year or five years but by 30 years," she stated.
The New York Times reported:
The proliferation of bilateral deals and the continuing expansion of exports from both developing and developed countries have raised doubts among some Doha skeptics about the necessity of a global agreement. But experts said it was important, particularly as a bulwark against rising protectionist sentiments.“There are people who argue that no Doha outcome is better than a weak Doha outcome, but I don’t agree,” said Katinka Barysch, the chief economist at the Center for European Reform in London.“With the world economy slowing, you have growing protectionist pressures in many countries,” she said. “You want to bind the hands of governments to what they have already agreed to.”Deep skepticism about the advantages of open trade with China and other rising economic powers, on vivid display during the Democratic primaries in the United States, is a growing threat in Europe as well, particularly as France, Italy and other countries have fallen into an American-style economic swoon. A trade deal, economists said, would have been a valuable tonic.
It is now unlikely that there will be any future success for the Doha round. Instead, it is more likely that bilateral agreements will continue to proliferate in the absence of a world trade agreement.