Talks to slash barriers to global commerce collapsed Monday after senior World Trade Organization players failed to agree on scaling back farm trade protectionism — the core issue in this ill-fated round.
It was the second major failure in five years for the so-called Doha round of WTO talks: Liberalization measures that the World Bank had estimated could generate $96-billion (U.S.) in annual economic gains if completed.
“We are in dire straits,” said Pascal Lamy, WTO director-general, after six major trading powers failed to make progress in Geneva this past weekend on liberalizing trade in farm and manufactured goods.
He called for a halt to the five-year-old talks — launched shortly after the 2001 terrorist attacks to help unite the world economically — and said there was no timetable for completing the round. Mr. Lamy added that he didn't intend to propose any new deadlines or a date to resume talks.
Some consider the talks dead, and while officials refused to bury the round yet, they warned it could take months or even years to resume.
“It is somewhere between intensive care and the crematorium,” India's Trade and Industry Minister Kamal Nath said as the finger pointing began.
The 25-country European Union blamed the United States for being unwilling to sufficiently cut farm subsidies, while the Americans criticized India and Brazil for balking at reducing industrial good barriers and EU negotiators for failing to agree to deeper reductions in farm import tariffs.
Observers said the trade talks are likely over until the next U.S. presidential election in 2008, because U.S. President George W. Bush's so-called fast-track authority to negotiate deals expires next year and Congress is unlikely to renew it.
Trade watchers predicted the Doha round's failure will drive countries to forsake broad-based WTO efforts and instead sign more bilateral free-trade deals, creating a “spaghetti bowl” of different, one-on-one agreements that hamper global commerce.
The debacle also cast doubt on the WTO's reputation and its ability to expand world trade.
The WTO has not persuaded member countries to agree to a new deal since its inception 12 years ago. “Does it have a future as a negotiating body? That remains to be seen,” said Peter Clark, a veteran Ottawa trade consultant.
The Canadian government said Monday it was disappointed that the talks had been “suspended,” but the collapse of negotiations also means the Conservatives will not have to cope with a WTO deal that could have undercut the supply-managed farm sector that is heavily protected from global trade.
However, the collapse means a setback for more export-oriented Canadian farmers such as grains and oilseeds growers who face depressed global prices because of U.S. farm subsidies.
The breakdown left the EU and the United States — whose co-operation is essential to concluding the round — sniping at each other.
“Unfortunately it became clear Monday that ‘Doha Lite' seems still to be the preferred option of some of the participants here,” said U.S. Trade Representative Susan Schwab, adding later that European officials “have not been a profile in political courage here.”
Brussels accused Washington of folding its tent.
“The U.S. has judged that it would be better for the process of negotiation to be discontinued at this stage,” said Peter Mandelson, the EU's top trade negotiator.
International Trade Minister David Emerson signalled in June that Canada intends to ramp up its bilateral trade deal negotiations even if WTO talks are stalled, noting that this country has signed one deal in the past five years while the U.S. has approved seven agreements with 12 countries since 2001.
Some predict countries will start launching more legal actions against other nations at the WTO instead of holding out hope for trade reforms in a future deal. “They will aim to get what they want through litigation instead of negotiation,” said Marc Busch, a professor at Georgetown University's School of Foreign Service.
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