The Future of World Trade

After WTO negotiations failed last week, experts worry whether the Doha talks will be continued at all

By Alexander Neubacher

The idea was to create a unified trade regime for the entire globe. But with WTO talks failing last week, the future of trade looks much more fragmented. Myriad bilateral agreements are on the horizon — and bitter trade wars are likely.

The day after the World Trade Organization (WTO) talks collapsed amid squabbling last Tuesday, with the limousines already lined up along Geneva's lakeside promenade, the participants to the conference suddenly appeared to have found agreement after all — at least when it came to their choice of words.

Indonesian Minister of Trade Mari Elka Pangestu said that she was "deeply disappointed." Kamal Nath, the Indian industry minister, also expressed his "deep disappointment." And when US Trade Representative Susan Schwab spoke of a "very disappointing turn of events," European Trade Commissioner and avowed cynic Peter Mandelson couldn't help but echo the general sense of official mourning over the conference. It was "heart-breaking," Mandelson said of the meeting's outcome.

This collective melancholy is certainly appropriate. For nine days, the senior representatives of 153 countries attempted in vain to agree on a new set of rules and regulations to govern international trade. The ultimate failure last week of this most recent effort, may mark the end of mankind's dream of a world without borders and customs barriers.

Confusing Meshwork of Bilateral Agreements

Now, it is unclear whether the talks, which began in the fall of 2001 in Doha, the capital of Qatar, will be continued at all. A senior member of the German delegation summed up the prevailing mood as "over and done with." Pascal Lamy, WTO Director General, was hardly more upbeat. "We will need to let the dust settle a bit," said Lamy, whose term ends next year. "WTO members will need to have a sober look at if and how they bring the pieces back together."

Experts fear that, instead of a uniform body of rules and regulations, what will now emerge is a confusing meshwork of bilateral trade agreements — to the detriment of consumers and the poorest countries of the developing world.

Ironically, it was a relatively petty argument between Indian chief negotiator Nath and his US counterpart Schwab that led to the fracture. The two delegates were fundamentally in agreement that India should allow more US-produced beef and seed into the country. The only point of contention was how much more.

But the two negotiators were placed under too much pressure from the home front. The United States is in the middle of an election campaign. And India's trade minister had to fly home for a short time during the negotiations to fend off a motion of no confidence against the government.

Still, the real reason for the failed negotiations runs deeper. Concerns about globalization have become greater than the hopes it engenders, even in the industrialized nations and the successful emerging economies. Lamy is now referring to last Tuesday's debacle a "collective failure."

Forcing Others to Make Concessions

The roots of the problem lie in the prevailing ascendancy of national egotism and territorialism. Even the representatives of the European Union were incapable of agreeing on a common position. Theoretically, all countries are in favor of reducing trade barriers. But in practice countries are more interested in reducing the barriers of other countries, not their own. The game is that of forcing others to make concessions without having to make any sacrifices yourself.

The United States, for example, wants to sell its agricultural products to the rising economies of India and China, and to do so with as few barriers as possible. But at the same time the Americans refuse to drastically reduce subsidies to their own farmers and, for example, to permit increases in the importation of cotton from countries like Burkina Faso and other West African nations.

Brazil likes to pose as an advocate of the poor and especially of vulnerable developing countries, but in reality has long been one of the world's biggest exporters of agricultural products.