Washington/Geneva: The collapse of global trade talks for the third time in as many years may be only a bump in the road for world commerce, which continued to expand while negotiations sputtered.
While negotiators and some experts depicted the collapse as a setback for the global economy, others said the decades already spent lowering trade barriers, along with technological innovations and an explosion of bilateral agreements, suggest such predictions may be overstated.
“World trade will be the same as it was before,” said Andrew Freris, chief Asia economist at BNP Paribas SA in Hong Kong. “The talks have been going on for 10 years now and aren’t going anywhere. There’s always going to be an issue of subsidies from the US and European sides.”
When the Doha talks started in November 2001, the World Bank predicted a deal would inject as much as $850 billion (Rs36 trillion today) annually into the world economy. The World Trade Organization (WTO) estimates the value of an agreement now is $50-100 billion, a rounding error in a global economy of about $54 trillion.
The average tariff on manufactured goods among developed nations dropped to less than 5% today from 40% in 1947, according to the International Monetary Fund.
Trade grew by almost 6% a year over the past decade, topping global output by 2 percentage points, according to the WTO. The rate will probably fall to 4.5% this year, not because of the impasse in talks, but because of “financial market turbulence”, it had said in April.
“In the short and medium term, this won’t have any impact on trade volumes,” said Claude Barfield of American Enterprise Institute, a research body in Washington that supports free markets.