Courtesy Reuters

Rescuing the Doha Round

WHAT AILS DOHA?

Virtually all observers concur that the Doha Round of multilateral trade negotiations in the World Trade Organization is faltering badly. Agreement may have been reached on the principle (although not the date) of eliminating export subsidies for agriculture, but very little else has been resolved since the talks were launched four years ago. Almost nothing of note has been proposed, let alone settled, in the crucial services sector. Even the necessary procedures for handling integral parts of the negotiations, including agriculture and non-agricultural market access, have yet to be worked out, although the target date for finishing the round is only a year away. Deep uncertainty prevails despite the decision in 2003 to ease the negotiations by removing two critical issues, investment and competition policy, from the agenda. Moreover, the round has never even attempted to seriously address the two largest problems facing today's global trading system: security concerns since the attacks of September 11, 2001, especially the risk that world trade would seize up in the wake of another major terrorist attack, and the absence of effective control over the increasing number of preferential pacts involving many of the world's largest trading nations.

The Doha Round may thus become the first major multilateral trade negotiation to fail since the 1930s. The collapse could even take place, or be clearly heralded, at the ministerial meeting in Hong Kong. Such an outcome could mark a historic reversal in the irregular but steady progress toward liberalizing world trade over the past sixty years. Since history clearly shows that trade policy must move forward continuously or risk sliding backward into protectionism and mercantilism (which at present also means accelerating the tendency toward bilateralism), the consequences of Doha's failure for international security as well as economic relations around the world could be enormous. At this point, the best possible outcome would be a mini-package that would achieve modest real liberalization; by nature of its small impact, however, it might not sufficiently motivate a coalition able

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