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By Philippe Legrain 1 COMMENT

The world’s trade negotiators cannot seem to agree on much these days, but on one thing there is near-unanimity: the United States is responsible for the collapse of the WTO’s Doha Round.

Peter Mandelson, the EU’s trade commissioner, told the FT:

the US continues to demand dollar-for-dollar compensation in market
access [cutting agricultural tariffs] for reducing domestic support, no one in the
developing world will ever buy that and the EU will not either.”

Kamal Nath, India’s fork-tongued commerce minister, said of the US:

“Everybody put
something on the table except one country who said ‘we can’t see
anything on the table’.”

This is nonsense. Whenever negotiations fail, all sides must take
some of the blame. And the US, for good reasons and bad, is guilty
mainly of being too ambitious to free up world trade – which is meant to
be what the WTO is about.

For sure, America’s agricultural subsidies are harmful and
wasteful, but the US was prepared to slash them if other countries were
willing to lower their farm tariffs, thereby giving its farmers access
to new export markets. Multilateral trade negotiations are never pretty, but they have the
potential to harness exporters’ interests to overcome the lobbying
power of producers that fear foreign competition.

But the likes of Nath were not interested in a
meaningful Doha agreement; they just wanted to entrench India’s farm
and manufacturing protectionism, which hobbles the country rather than
helping it. India’s new-found success, after all, is in the IT sector, which the government has not yet got round to "protect".   

The flexibility that
the EU and India wanted the US to show was a willingness to settle for
the status quo rather than pursue the benefits of freer trade. The main
culprits for Doha’s failure are those who refused to budge on freeing trade, not those who set their aim too high. We may all come
to pay the price for their cowardice.

Posted 27 Jul 2006 in Blog
  1. ignatius says:

    Yes, and the victims of this collapse are the smaller developing countries now subject to the arbitrary economic and political power games not only of the US and EU (the CAFTA’s, and EU “association agreements” of this world) but also of the bigger developing countries. And of course the world’s consumers have got a lot to lose as well the hundreds of millions of unemployed Indians. How sad things are…

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