It seems that there is a great deal of synchronicity between the global economy and the Doha trade talks. Both of them were in their nadir last summer and now both of them seem to have found their green shoots. Of course, there may be a plethora of explanations why such synchronicity exists. Many politicians tend to regard free trade a liability or a hard sell even in a normal economic situation. Free trade inevitably involves some “churning effects” which connote job losses and dislocation. Gains of free trade are thinly spread and very few people would appreciate the fact that they can save money for most of their everyday amenities thanks to free trade. In contrast, negative consequences of free trade tend to materialize quickly and easy to attract media attentions. Some scholars study this asymmetry from the standpoint of social psychology. (e.g., Simon Kemp, Psychology and Opposition to Free Trade, 6 World Trade Review 1 25-44 (2007)) Given this innate asymmetry between gains and pains (yes, they rhyme) of trade, it may be even a tougher sell under these economic woes. Perhaps that explained why Obama as a candidate was harsh on trade issues. Yet with some stimulus packages in action and new signs of hope, might now be a good time to resume trade talks?
It seems that there is a great deal of synchronicity between the global economy and the Doha trade talks. Both of them were in their nadir last summer and now both of them seem to have found their green shoots. Of course, there may be a plethora of explanations why such synchronicity exists. Many politicians tend to regard free trade a liability or a hard sell even in a normal economic situation. Free trade inevitably involves some “churning effects” which connote job losses and dislocation. Gains of free trade are thinly spread and very few people would appreciate the fact that they can save money for most of their everyday amenities thanks to free trade. In contrast, negative consequences of free trade tend to materialize quickly and easy to attract media attentions. Some scholars study this asymmetry from the standpoint of social psychology. (e.g., Simon Kemp, Psychology and Opposition to Free Trade, 6 World Trade Review 1 25-44 (2007)) Given this innate asymmetry between gains and pains (yes, they rhyme) of trade, it may be even a tougher sell under these economic woes. Perhaps that explained why Obama as a candidate was harsh on trade issues. Yet with some stimulus packages in action and new signs of hope, might now be a good time to resume trade talks?
Ironically, the current crisis itself augmented the cause of a successful trade round to some degree. The whole world was shocked by the fact that global trade had contracted for the first time since the World War II. Protectionist measures, be they WTO-illegal or WTO-legal, mushroomed. Suddenly, we were witnessing a déjà vu of interwar economic balkanization. In a more positive tone, Pascal Lamy enthusiastically presented that completing the Doha Round would be one of the most effective “global stimulus packages.” Finally, world leaders turned more serious about the idea of completing the Doha Round in the near future, say by the end of 2010. Captain Kirk demonstrated his zeal for a successful Doha Round and was warmly received in Geneva. The negotiation engine in Geneva also seems to have revved up again. Negotiators have now begun to prepare for the post-modalities stage, i.e., scheduling.
Enough for feel-good stories. Let us counter this rosy picture with some pessimistic observations. First of all, big players, such as the United States and India, are still ambivalent on their genuine commitments to a successful Doha Round by the end of 2010. Many trade pundits observe that President Obama is not spending much political capital for the cause of free trade in general. (See Claude Barfield’s article in The American.) Obviously, the heath care reform seems to usurp all his political energy. In addition, the current U.S. Congress is notoriously protectionist. The U.S. businesses want more tangible Doha benefits, especially from emerging economies, such as India, China and Brazil. So, USTR Ron Kirk wanted to replace the current modalities deal by direct bilateral negotiations, which was strongly resisted by developing countries. Markedly, these developing countries’ domestic political situations are not necessarily more susceptible to trade liberalization than developed countries. So, the initial optimism which the new Indian Commerce Minister Anand Sharma brought might have to be put into perspective.
All told, what do you think will happen to the Doha Round in the end? Will it be delivered by the end of 2010 deadline as scheduled? Or will we have yet another collapse? To some, “the future is not ours to see” (Que Sera, Sera), but we international trade lawyers/scholars might be more clairvoyant than that. So, bring your crystal balls and share your visions with us! We might be right or wrong, but the point is that we can learn from each other’s observations.
Ironically, the current crisis itself augmented the cause of a successful trade round to some degree. The whole world was shocked by the fact that global trade had contracted for the first time since the World War II. Protectionist measures, be they WTO-illegal or WTO-legal, mushroomed. Suddenly, we were witnessing a déjà vu of interwar economic balkanization. In a more positive tone, Pascal Lamy enthusiastically presented that completing the Doha Round would be one of the most effective “global stimulus packages.” Finally, world leaders turned more serious about the idea of completing the Doha Round in the near future, say by the end of 2010. Captain Kirk demonstrated his zeal for a successful Doha Round and was warmly received in Geneva. The negotiation engine in Geneva also seems to have revved up again. Negotiators have now begun to prepare for the post-modalities stage, i.e., scheduling.
Enough for feel-good stories. Let us counter this rosy picture with some pessimistic observations. First of all, big players, such as the United States and India, are still ambivalent on their genuine commitments to a successful Doha Round by the end of 2010. Many trade pundits observe that President Obama is not spending much political capital for the cause of free trade in general. (See Claude Barfield’s article in The American.) Obviously, the heath care reform seems to usurp all his political energy. In addition, the current U.S. Congress is notoriously protectionist. The U.S. businesses want more tangible Doha benefits, especially from emerging economies, such as India, China and Brazil. So, USTR Ron Kirk wanted to replace the current modalities deal by direct bilateral negotiations, which was strongly resisted by developing countries. Markedly, these developing countries’ domestic political situations are not necessarily more susceptible to trade liberalization than developed countries. So, the initial optimism which the new Indian Commerce Minister
