The Blame Game
July 1, 2006
The Blame Game
When World Trade Organization (WTO) Director GenThe blame gameeral Pascal Lamy formally suspended Doha Round talks in Geneva, Switzerland, in July, five years of seemingly fruitless negotiations came to an end, undone by the unwillingness of the world’s leading trade powers — Australia, Brazil, the European Union, India, Japan and the United States — to give an inch.
Billed as a once-in-a-generation chance to free global trade and ease poverty worldwide by lowering trade barriers across all sectors, the talks ended up grinding to a halt when the above-named Group of Six failed to agree on steps to liberalize trade in farm and manufactured goods.
“We are in dire straits,” concluded Lamy, when all had been said and nothing had been done.
Based on written accounts, it seemed that those involved in the talks were more concerned with who was to blame for their failure than their own failure to accomplish anything.
The 25-nation EU blamed the United States for the Doha breakdown, specifically Washington’s refusal to cut billions of subsidies to U.S. farmers. “Surely the richest and strongest nation in the world, with the highest standards of living in the world, can afford to give as well as take,” said EU trade chief Peter Mandelson.
The United States, in turn, blamed the EU for refusing to make deeper cuts in its farm import tariffs, and Brazil and India for being inflexible on cutting barriers to industrial imports.
U.S. Trade Representative Susan Schwab said Washington did not want a “Doha lite” and accused the EU of trying to protect itself by blaming the United States.
Although the major stumbling block to Doha success seemed to come down to the unwillingness of both the United States and the EU to compromise, others of the six major WTO players were not above jumping into the fray.
India also criticized the United States for being unwilling to reduce domestic subsidies on farm products and made it clear that India will not budge from its position until “structural flaws” in the global trading system are corrected. India’s Trade and Industry Minister Kamal Nath didn’t mince words, saying the Doha Round fell “somewhere between intensive care and the crematorium.”
Finger-pointing aside, in this blame game, there are certainly more losers than winners.
Take the developing nations that watched from the sidelines, with little power and nothing to offer in concessions. A major purpose of the talks was to clear agricultural roadblocks to increased exports from developing nations. Without that, the risk is that the wealthy, industrialized countries will resort to bilateral agreements and make trade deals among themselves, putting the poorest countries at a grave disadvantage.
Even the World Bank had argued that the Doha Round was critical to alleviating poverty in these countries, estimating that a successful conclusion to the talks would increase trade by several hundred billion dollars, boosting global growth.
Certainly, the collapse of the talks is a major setback for international efforts to break down protectionist trade barriers and aid world economic expansion, as well as a major blow to the WTO, whose multilateral trading system is based on the principle of non-discrimination among all nations.
But more is at stake here.
According to Jean-Pierre Lehmann, director of the influential Evian group trade think-tank in Lausanne, Switzerland, the collapse of the Doha Round could not come at a worse time.
Given the current situation in the Middle East — the war in Iraq, the conflict between Israel and Lebanon, rising oil prices, and the risk of further turmoil in the Middle East —the United States and the EU should have taken the lead to ease international tensions, he contends, rather than put their vested interest ahead of global concerns.
There is also concern that the acrimony between the United States and the EU during and following the Doha debacle could hinder any joint effort to ease current tensions in the Middle East.
Unfortunately, since the failure of the talks was so total and the implications were so negative on so many fronts, it’s difficult to find positive aspects to the demise.
But perhaps there are some. The possibility of a future Doha has not been ruled out. In fact, the United States, the EU and Japan have all come out in favor of reviving the talks at some point. The talks also highlighted the fact that all developing countries are not the same and should not be treated as one entity. Finally, the debate over Doha has drawn global attention to the trade distortions that are currently in place and the damage they do — and hopefully the recognition that the situation cannot continue indefinitely.