While the failure at the Doha Round of trade negotiations does not mean disaster for world trade, there is a risk that it could undermine faith in the rule-based multilateral trading system, said the International Herald Tribune in an editorial yesterday. Excerpts:
The battle lines of the new world order were exposed at the World Trade Organization last week. The breakdown of the Doha Round of trade negotiations over a clash between the United States and China and India about farm protections underscored how these new economic giants are changing the balance of power. The collapse of the seven-year effort to further reduce trade barriers is regrettable, not least because it aimed to increase the access of the poorest countries to rich-country markets. But it lays the groundwork to develop a better way to discuss global trade.
Perhaps it was inevitable that the Doha Round, as the talks are known, would fail. With a narrow agenda centered on giving market access to poor countries, little incentive was offered to the leading trading nations to compromise. The talks were left behind by the real world, as many developing countries unilaterally reduced trade barriers below their legal commitments and farm subsidies in rich countries fell automatically as food prices rose. While the failure does not mean disaster for world trade, there is a risk that it could undermine faith in the rule-based multilateral trading system. Already, the enormous subsidies that are allowed in the US farm bill this year suggest that Washington is backsliding from its goal of freer farm trade. As the Doha Round of talks limped along for seven years, the United States and other countries rushed to sign preferential trade agreements on the sly, potentially snagging world trade in a spaghetti bowl of competing deals.
