Sealing Doha Round is a must for global trade

If negotiations on international trade fail, it could lead to significant economic losses across the world.

Finding agreement within the World Trade Organisation is crucial for global economic growth, economist says [Reuters]

The Doha Round of Multilateral Trade Negotiations (MTN) is the first negotiation to take place under the auspices of the World Trade Organization (WTO), founded in 1995. The eight previous rounds of global trade talks were conducted under the General Agreement on Tariffs and Trade (GATT), following its creation in 1947.

The previous MTN, the Uruguay Round, took nearly eight years to complete, causing some to quip that GATT stood for the “General Agreement to Talk and Talk”.

But the jokes about the Doha Round, which is in its tenth year, are far worse – akin to the classic Monty Python sketch in which a customer holds up a dead parrot in a cage while the shopkeeper insists that the parrot is only “resting”. When the parrot drops off its perch in the cage, the customer insists that it is now clear that the parrot is dead. The shopkeeper, however, insists that the bird is only “stunned” by the fall.

Increasingly, political leaders like British Prime Minister David Cameron, German Chancellor Angela Merkel, and Indonesian President Susilo Bambang Yudhoyono, who spoke eloquently for the Round at the World Economic Forum in Davos this year, are emphasising that the Doha Round’s failure would cost the world significant gains in prosperity, halt progress for the poor in developing countries, and reduce workers’ real incomes in developed countries.

A Doha failure would also deal a lethal blow to the credibility and future of the WTO, which has been an almost unique example of effective and democratic multilateralism. Just as the economist Lester Thurow famously declared at Davos in 1988 that “GATT is dead”, the current refrain is that the WTO is Monty Python’s parrot.

Given the stakes for the global economy, the Doha Round must be saved. The High-level Trade Group, co-chaired by myself and Peter Sutherland, argued at Davos that this can best be achieved through a high-stakes gamble of announcing a date – such as the end of 2011 – by which the negotiations are declared completed or the parrot is knocked off its perch.

But the next question is this: How do pro-trade, pro-Doha leaders such as Cameron and Merkel bring the foot-draggers on board? While many players, including Brazil, China and the European Union, must make marginal concessions to close Doha, the focus will have to be on the principal naysayers.

The talks broke down in mid-2008, owing to US refusal to reduce agricultural subsidies further and India’s refusal to ask its subsistence farmers to compete with subsidised US farmers. But the main problem since then has come from the US.

President Barack Obama is presumably sympathetic to openness in trade. He cannot have spent a decade teaching at the University of Chicago without being persuaded that trade is beneficial. Even during his campaign for the Democratic Party nomination, when his main rival, Hillary Clinton, was pushing to suspend trade negotiations and had embraced the protectionist narrative, Obama kept his cool and promised instead to reopen NAFTA – a tactic designed to amount to nothing, as it has.

But the Democrats in Congress who won in 2008 were financed by labor unions, which are fearful of trade, chiefly with developing countries. They have constrained Obama’s willingness to embrace trade deals. Obama’s loss of support from his party’s left wing, which has been alienated by his compromises over Guantánamo, Iraq, Afghanistan, and even health-care reform, has also played a part.

Few of these officials are willing to battle for trade, having reconciled their supposed concern for the poor with a deplorable willingness to deny developing countries access to the US and other rich markets that can help them earn their way out of poverty. Indeed, they now claim, astonishingly, that trade actually harms the poor in poor countries!

Last November’s elections changed for the better the politics of trade, as the Republican Party is now in the majority in the US House of Representatives. Trade negotiations are supposedly acceptable again. Obama has already offered a pre-emptive concession on a free-trade agreement with South Korea. With this FTA practically in the bag, the Republicans now want to see FTAs with Colombia and Panama put into that bag. Regrettably, neither they nor the President have asked that Doha also be put into the bag.

At long last, this is surely the opportunity for pro-Doha statesmen worldwide to pressure both Obama and the Republican leadership into doing so. To neglect this window of opportunity would be tragic.

Jagdish Bhagwati is University Professor of Economics and Law at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations. He was Economic Policy Adviser to GATT Director General Arthur Dunkel and is Co-Chair of the High-Level Expert Group on Trade appointed by the Governments of Britain, Germany, Indonesia, and Turkey.

The article above was first published by Project Syndicate.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.