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Commentary (July 28, 2006)

Doha Trade Round: It's Not Over Yet

Mike Moore (former Prime Minister of New Zealand and former Director-General of the World Trade Organisation)

News out of the World Trade Organisation in Geneva that the Doha development round of trade talks has reached a deadlock was hardly new, or news. The director-general said he felt obliged to suspend activities over Europe's summer break because leading nations were in no mood to compromise. That came after the Group of Six - the United States, the European Union, Japan, Brazil, India and Australia - spent 14 hours in deadlock. It was a sad announcement of an obvious reality.

Despite some media reports, the round has not been cancelled. But the momentum created by the 2001 launch of the round in Doha, Qatar, has been lost. It actually moved backwards at the Cancun ministerial meeting in Mexico, in 2003. That unnecessary failure lowered expectations so much that the Hong Kong meeting was declared a success because no one walked out. Last weekend, a meeting of the G6 confirmed that the way forward was all too difficult. Ministers could not agree, and were not prepared to tackle their local, vested interests.

Summit after summit of leaders - from the Group of Eight leading industrialised nations to the Asia-Pacific Economic Co-operation forum and the Commonwealth - routinely call on each other to be more flexible, while leaving their own rigid positions unchanged.

This round of trade talks is not over, but it now faces a problem because, under US law, the president can only negotiate with the approval of Congress, and that approval expires next year. This is the crisis that every trade round goes through. What's different this time is that there are alternatives, and they are being pursued with vigour and purpose. Dozens of bilateral and regional deals are being negotiated, planned, studied and considered. This is an inferior, often dangerous, route because none have a formal, legally binding dispute-settling mechanism.

Who is to blame for the cul de sac the negotiators find themselves in? There's enough blame for everyone to share. The United States will need to offer more cuts in its domestic subsidies. But it's equally true that the EU and developing countries must provide more market access for agricultural and non-agricultural products.

How will serious negotiations restart? Something has to give - although it would be easy to do little, declare victory and agree to come back in a decade. That's a clear danger.

Over the summer break, officials will turn to how to kick-start the talks and rebuild confidence. But a director-general cannot invent a common position where none exists. One area where traction might be gained is the timetable for change: would it matter if an extra five or 10 years were added to the implementation of subsidy cuts or market openings? That would push the decisions past one or two elections.

At the moment, too many governments, knowing their actions are illegal and economically irrational, attack the international body when rulings go against them. The WTO cannot continue to be like a Mexican pinata, which children hit with sticks hoping for sweets to emerge from the beaten body. Destroying the WTO by bypassing it would make a dark world darker, more dangerous and less predictable.

(Originally appeared in the July 27, 2006 issue of South China Morning Post in Hong Kong, reproduced here with permission.)

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