It is time to face reality: the current round of multilateral trade talks is doomed. Rather than try to revive it, argues a former U.S. trade representative, world leaders should salvage a few smaller agreements and study what went wrong in order to do better the next time around.
SUSAN C. SCHWAB served as U.S. Trade Representative from 2006 to 2009.
A Foreign Affairs discussion on the future of international trade and development policy.
Despite the claims of its champions, the fair-trade movement doesn't help alleviate poverty in developing countries. Even worse, it is just another direct farm subsidy of the kind most conscientious consumers despise. In the long term, the world needs free trade, not fair trade.
It is time for the international community to recognize that the Doha Round is doomed. Started in November 2001 as the ninth multilateral trade negotiation under the auspices of the General Agreement on Tariffs and Trade and its successor, the World Trade Organization (WTO), the talks have sought to promote economic growth and improve living standards across the globe -- especially in developing countries -- through trade liberalization and reforms. Yet after countless attempts to achieve a resolution, the talks have dragged on into their tenth year, with no end in sight.
To be sure, world leaders, negotiators, and commentators have expressed their unanimous support for a successful outcome -- the “balanced” and “ambitious” agreement called for by so many summit statements. But concluding a trade agreement is like pole-vaulting. Everything must come together at once -- after the extensive preparation and the building of momentum, there is that one giant leap -- with the hope that the entire body will sail over the bar. Most trade agreements survive several failed attempts before success is achieved. But the Doha Round keeps crashing into the bar...
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The United States is addicted to dollar devaluation. As a result, America has a false, euphoric sense of progress in its competition with Japan for key markets.
The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
After the Cold War, everyone believed the world was going capitalist in a hurry. Developing countries followed America's advice to them--"free your markets and strengthen your money." In fact, the gains from both free trade and sound money were overstated. But the force of conventional wisdom ostracized cautious voices. The result was a speculative binge in emerging markets. With the Mexican crisis, the bubble has burst. Politicians in developing countries could continue their reforms only so long as investment poured in. Sooner or later, a reality check was inevitable. Disappointing growth and statist retrenchment may lie ahead.
