Just when the global economy could do with a confidence-builder and the increased wealth creation that trade liberalisation always brings, a meeting of trade ministers at the World Trade Organisation in Geneva failed, again, to make progress. More trade ministerial meetings fail than succeed, from Montreal and Brussels to Cancun and, most spectacularly, under my watch in Seattle. Finally, we launched at Doha, seven years ago, what was to be a 'development round'. All trade rounds are. US president John F. Kennedy, who launched the Tokyo round, famously said: 'This will lift all boats and help developing countries like Japan.' Case made, I would have thought.
Trade minister meetings fail often because trade is real. Leaders' meetings and meetings of ministers in other disciplines can release splendid communiques that can mean different things to different capitals; they are never binding. WTO agreements must be ratified by parliaments and are subject, eventually, to a binding disputes system.
Although this meeting narrowed differences to a remarkable degree, ministers couldn't swallow the final differences. Unusually, matters of process and transparency were not such an issue, and amazingly there were no protests.
The desire of India and China to have special safeguards against so-called surges of imports from agricultural exporters was a difficult issue. This would have undone previous WTO trade rounds, and the severe conditions of China's membership of the WTO in my time. The US couldn't sell that at home and, as usual, many other countries hid behind Washington. This will be the conventional wisdom for the collapse of the talks. It's true, but it's not the whole truth. Negotiations never got to other serious issues, such as cotton.
Observers suspect that both China and India, which have made spectacular progress under the old conditions, have difficulty accepting the new conditions. Elections in the US and India are not helpful, because they restrict negotiation space. China is seeking new protection against 'export surges' in its bilateral trade deals; so will India. That's not good. The big guys always have the power; that's why the multilateral system is the best hope for the small and poor.
Trade openings will continue on a regional and bilateral basis, but they seldom advance the issues that stall WTO talks. Instead, they create trade diversion, new privileges and new, dangerous levers that politicians will be tempted to use. None have a binding disputes mechanism. Commentators still talk as though it's the old struggle between rich and poor countries. It's a little bit true but, for many smaller players, the battle is as much with major developing countries as it is with their old colonial masters.
Europe's common agricultural policy, together with US and Japanese farming subsidies, do much harm to unsubsidised producers everywhere. But this is also true of Indian agricultural subsidies. For the bottom billion, things have changed. The historic pathway followed by Britain, the US, Japan, Korea, and now China and India, of textiles to low-cost manufacturing and electronics, and then up the value chain, is not so easy today. Big developing countries vacuum up this business that, years ago, would have gone swiftly to poorer countries. This will still happen, and is happening, very slowly, as wages and costs rise in India and China.
