June 16, 2010
The Doha Round of trade liberalisation negotiations is well and truly stalled. No one is in any doubt about that. What there is doubt about however is: why? Developing country demands for greater farm subsidy reductions by the European Union and other developed countries, lack of access for European goods and services, US demands for improved market access in developing country markets – these are some of the stated obstacles.
But the real obstacle is a lack of will to move ahead by the major trading nations. With economies under pressure, bankruptcies and unemployment increasing, the last thing any prime minister or president wants to know about is increasing competition from imports. Most important of all it is the lack of interest in the trade round in Washington which is preventing any progress. The general view is that there can be no resumption of talks until after US elections in November, But even that may prove to be too optimistic.
The history of these types of negotiations demonstrates clearly that if the will to achieve an agreement exists among the major players, there will be an agreement – whatever the obstacles. The apparent obstructions to an accord in the Uruguay Round (1986-94) for example, were far more formidable than those which now face the Doha negotiators. In the 1993-4 agreement the EU was effectively forced to abandon major features of the traditional CAP. The sacred principal of Community Preference and the right to subsidise farm exports without let or hindrance were effectively thrown out of the window. The modalities now laid down in the draft Doha agreement are by comparison piffling. Essentially, they involve adjustment of the measures which were laid down in principle in the 1994 Marrakech agreement which terminated the UR.
Without doubt, the major block on any progress now is the attitude of US President Barack Obama. Beset by serious domestic economic problems, an agreement which would give little to the US, but increased advantage to competitors is not a priority. The achievement of the relatively new Administration’s goal of doubling exports within five years will be little aided by any new multilateral agreement.
To the US, along with the EU and other major players in the world trade sphere, bilateral agreements appear to be a much more fruitful area. In particular, the Trans Pacific Partnership is currently the main focus of Obama’s active development of new trade relationships . There are three good reasons for this attitude, seen from a US perspective, Apart from the first of these, the moribund state of the Doha Round itself , second is the increasingly dominant role of China in Asia; and thirdly America’s need to develop its countervailing image in the Pacific zone. The importance of these issues leaves Doha very much on the back burner.