On July 24, 2006, Pascal Lamy, Director-General of the World Trade Organization (WTO), declared de facto dead the troubled Doha round trade talks which has been conducted since 2001. This news sounds so disappointing in that WTO Members failed to deliver what they have already prepared, and in a sense achieved, for the last five years. The news is also frustrating in that this fiasco is testimonial to such a low level of their commitment to the multilateral trading system which has served them so well since the end of the Second World War.
In fact, the Doha round has already been doomed. The rising tide of nationalism-cum-protectionism in both sides of the Atlantic has recently poisoned the atmosphere for negotiations, and made it hard for negotiators to offer concessions. Pending domestic elections in major Members, such as the U.S., the EU and Japan, have also discouraged politicians to address market opening which is unpopular to some of their critical constituencies.
Under these circumstances, some might argue that we should embrace the reality and forget the multilateral trade talks for the time being. Perhaps, we had better anticipate with patience the day when the U.S. Congress will grant the next turn of fast track authority. The life still goes on. We do have alternative trade fora, namely those bilateral and regional trade blocs.
No matter how plausible this prospect may sound, it gravely underestimates costs of dispensing with the multilateral trading system. Trade liberalization can be analogized as riding a bicycle. You are soon to fall when you stop. Losing a momentum for trade liberalization inflicts irreversible damages to free trade. Moreover, the alleged alternatives, regional blocs, are inferior vehicles for liberalization. They permit numerous exceptions and exemptions to liberalization. Powerful countries can exploit the powerless more easily in regional deals than multilateral ones. Proliferating blocs eventually fragment and complicate global trade, thereby raising transaction costs for global enterprises.
More seriously, the demise of the Doha "Development" Round is a bad omen to the world’s poor. The collapse of the development round tends to turn the rich’s hitherto bombastic pledge for development aids a sheer hypocrisy. How could we improve the global peace and security when our poor neighbors are still in abject poverty? How could the poor get out of such poverty while they cannot sell their sole products, such as sugar, cottons and clothing, to the rich’s markets?
The U.S. has also lost handsomely in this debacle. The balance sheet of a successful Doha round speaks in favor of the U.S. economy in general. It means cheaper foods and cars as well as more jobs and incomes. Yet, special interests of those protectionists have prevailed, once again. This economic factionism is exactly what James Madison warned two hundred years ago.
Moreover, the U.S. has also blown out great opportunities to exercise its global leadership, especially in the wake of the war on terrorism. A successful development round led by the U.S. would have sent a strong signal to the international community that the U.S. truly cares for the world’s poor and is firmly committed to their welfare. This would have earned the U.S. more allies, and friends.
Of course, all politics is local. One could not anticipate politicians to risk their imminent local elections over such grand causes as national economy and global security. However, costs and pains from this myopic protectionism will remain national and international, with duration. A requiem for the Doha round should be sung both in the U.S. and Geneva.
