Every six months or so, there is some noise on “reviving” the Doha Round of trade negotiations. A few meetings later, the negotiators give up. By now such is the level of pessimism that the mere mention of the word Doha evokes weariness.
Something similar is affecting Pascal Lamy, the director general of the World Trade Organization (WTO), these days. On Wednesday, he informed the members of the Group of 90 countries that there were unbridgeable differences over sectoral issues that this round of negotiations is close to collapse.
The new differences—apart from the long-standing disagreement over agricultural subsidies in rich countries-pertain to the tariffs for certain industrial goods. The US wants Brazil, India and China to reduce tariffs on chemicals, industrial engineering goods and electronic items to close to zero.
The three countries have rejected the US demand, reiterated by US trade representative Ron Kirk on Wednesday. Kirk had said that “Doha can only reach this potential if key partners like China, India and Brazil are willing to recognize their success as exporting powers by agreeing to open their markets to a degree much greater than what is currently on the negotiating table.”
This is an unfortunate argument that raises suspicions that it has been issued with an intent to derail negotiations completely. As it is, there are a number of unresolved issues that have continuously led to the failure of talks from Cancun in 2003 to Geneva in 2008. Since then there have been sporadic efforts here and there to revive the Doha Round, but to no avail.
The case for trade liberalization is as strong as ever. On the one hand, countries such as India are reeling under inflation due to supply constraints. They can do with a dose of cheap imports. On the other hand, countries with abundant agricultural supplies can reap benefits from trading with India and other countries, where demand for food is only going to rise in the years ahead. This simple truth is today hostage to politics. It is unfortunate that this great opportunity for generating wealth and prosperity is being frittered away. The blame lies, for most part, with the rich countries.
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