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Commentary (October 14, 2005)

Doha Development Round - Failure is Not an Option

Jean-Pierre Lehmann  (Professor of International Political Economy at IMD, Lausanne, and Founding Director of The Evian Group)

We at the Evian Group are very concerned that the Doha process of trade talks is paralysed. All of us should be concerned. In spite of many appeals from different quarters, policymakers seem both deaf to, and hostages to, narrow political constituencies.

Following the collapse of the talks in Cancun in 2003, a package was formulated in July last year. The comment made at the time was that "the devil lies in the details". Obviously the devil has been successful, as policymakers have not succeeded in rising above the details. They seem oblivious to the far broader challenges and opportunities that confront us. If we stay in this rut, the consequences are going to be costly indeed.

That is the reality. And the key point is that many of the challenges are potentially highly positive. But if they are mismanaged, the opportunities will turn to threats and possibly tragedies. The following are key reasons why it is crucial that the Doha Round is concluded successfully on the basis of an ambitious and courageous agenda.

First, China - the huge new kid on the trading block. A robust system based on multilateral rules is essential for China's entry. There have been a number of tensions and disruptions already over textiles and energy, for example, and inevitably there will be more to come. But the advantages of having China in the system are clearly enormous.

Second, demographics. We have said this over and over again. Although the north may be ageing, the populations in most of the south are booming. Growth and especially job creation is desperately needed.

Third, global inclusion and integration. Why is it that we have allowed ourselves to fall into a pattern characterised by confrontation between north and south, between industrialised and developing countries? This is absurd. For the most part our economies, markets, skills and especially demographics are highly complementary. There are great gains to be made from collaboration and integration; only losses are to be had from confrontation and disintegration.

Fourth, the rule of law. We recognise how vital this is in national markets: We in the north berate countries such as China for not having an effective rule of law. But the sanctity of the rule of law applies as much to international, as it does to national, markets. Thus, the multilateral rules-based system needs to be strengthened.

Fifth, it is time for the European Union, America and Japan to take the initiative and for everyone to drop the reciprocity impasse. We keep hearing how, say, the EU will do one thing if the United States (or whoever) will do another. Initiative and leadership are needed, not brinkmanship.

Finally, we must consider the alternatives. If the World Trade Organisation meeting in Hong Kong in December is not a significant success, if the multilateral system is further eroded, we see two alternative scenarios, which are actually not mutually exclusive.

One is a return to anarchy, the dismantlement of the rule of law in international trade and a resumption of trade wars. The other is a world criss-crossed by a complex web of preferential trade agreements between nations and across regions. Both scenarios are negative in terms of growth, and especially negative for poor countries.

It is time for people to exert pressure on their governments to get their noses out of the details, to rise to the challenges and especially to provide every incentive for the fantastic opportunities that this offers us. The Hong Kong meeting must succeed.

(Originally appeared in the October 14, 2005 issue of South China Morning Post in Hong Kong, reproduced here with permission.)

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