The collapse of Doha: Opportunities and challenges

Mark Engler conducts a post-mortem on the bloody corpse of last month's WTO Doha round of trade negotiations. The reason for the collapse?

Ironically, while the institution was long derided by the left as an imperialist tool, it was also disliked by segments of the right. Bush administration officials who bristled at ever having to submit to a "global litmus test" viewed the one-country-one-vote WTO with suspicion, eyeing it as a potential multilateral check on U.S. prerogatives. Approaching trade talks with a unilateralist outlook, the White House has been unwilling to make the kind of compromises necessary to keep the WTO afloat.

Doha negotiations failed because the U.S., along with Europe, refused to make any significant concessions in ending its protectionism on agricultural issues. Even while demanding that poorer nations open their markets, elite governments channeled tens of billions of dollars per year into subsidies for their own farmers, giving the lie to the rhetoric of "free trade".

Engler asks a very important question: What does this mean for the future of the “free trade” agenda?

There are opportunities from the collapse: "For the world's poor, the WTO's slip into a vegetative state is cause for rejoicing. The indefinite suspension of the trade talks represents a clear victory for the global justice movement, which visibly rallied against WTO ministerials over the past eight years in Seattle, Cancún and Hong Kong. Activists have long argued that, by treating environmental laws, labor protections and safeguards for small producers as meddlesome barriers to commerce, the WTO fostered a trading system that benefited multinational corporations at the expense of working people in wealthy nations and in the global South alike."

A recently released, and exhaustively detailed study by the non-partisan Carnegie Endowment for International Peace confirmed that the Doha round wouldn't have generated development benefits for poor nations as initially promised by the WTO, so perhaps it is a good thing the trade round collapsed.

But even with the fortuitous collapse, there are challenges ahead for global development: "[A]s the WTO unravels, international trade will operate according to "the law of the jungle"—where the strong lord over the weak. That suits White House unilateralists just fine, but it has given some progressives the chills [. . .] Outside of the WTO, the Bush administration has focused in recent years on pursuing one-on-one, bilateral Free Trade Agreements with other countries. In such negotiations, poorer nations cannot seek strength in numbers. They can’t join a negotiating bloc like the G20+, which stood up to the U.S. and Europe at the Cancún Ministerial. The bilateral approach has allowed the White House to broker corporate-friendly deals with such countries as Australia, Chile, Morocco, and Singapore—and the Bush administration is pursuing many others. An FTA with Oman just passed through the House in July, and deals with countries including Peru and Colombia are now in works. [. . .]

Confronting the bilateral FTAs will no doubt present fresh difficulties for activists. Still, that doesn’t mean that saving the WTO is necessarily a worthwhile task for progressives. After all, bilateral negotiations were advancing with or without the multilateral body. And critics of the Bush administration need not accept that our enemy's enemy is our friend."

Meanwhile, Daniel Altman asks the obvious question: Whether bilateral trade deals between rich and poor companies can ever be fair or whether they are just a way for wealthy countries to exploit overseas markets. He provides some interesting evidence that's well worth considering.

Update: More thoughts on the way forward from Doha by Lori Wallach and Deborah James from Public Citizen’s Global Trade Watch.

Update #2: More analysis by Nobel-prize winning economist (and tireless Fair Trade advocate) Joseph Stiglitz:

At the onset of the development round, most developing countries worried not only that the EU and the US would renege on their promises (which they have in large part), but also that the resulting agreement would once again make them worse off. As a result, much of the developing world is relieved that at least this risk has been avoided.

Still, there was a second risk: that the world would think that the agreement itself had accomplished the objectives of a development round set forth at Doha, with trade negotiators then turning once again to making the next round as unfair as previous rounds. This concern, too, now seems to have been allayed.

There remains one further concern: America has rushed to sign a series of bilateral trade agreements that are even more one-sided and unfair to developing countries, which may prompt Europe and others to do likewise. This divide-and-conquer strategy undermines the multilateral trade system, which is based on the principle of non-discrimination. Countries that sign these agreements get preferential treatment over all others. But developing
countries have little to gain and much to lose by signing these agreements, which almost never deliver the promised benefits.

Indeed, the entire world is the loser if the multilateral trade system is weakened. The rest of the world must not embrace America's unilateral approach: the multilateral trade system is too precious to allow it to be destroyed by a US president who has repeatedly shown his contempt for global democracy and multilateralism.