Doha Talks: Dead Trade Deal Could Be a Sign of the Times

The Doha trade talks, once heralded as a solution to many global market problems, collapsed last week after nine days of negotiations. As expected, fingers are pointing in every direction, and speculation on the impact of the failed negotiations is running rampant.

The reasons for failure seem to boil down to a single word “protectionism.” Thrown around by leaders of both “rich” and “poor” nations, it seems as though everyone, even the most global-minded, were caught up in looking after their own interests.

Representatives from India and China, called the “biggest villains” of the talks by economist C. Fred Bergsten, refused to give up trade barriers that protect their agricultural products. On the other hand, nations like the United States were criticized for unwillingness to cut agricultural subsidies, while trying to “pry open” the markets of other countries.

What Pascal Lamy, the director general of the World Trade Organization (WTO), called a “massive blow to confidence in the global economy,” the ending of the talks marks the first failure of a major international trade negotiation since the 1930s.

Some speculate that post-WWII free-market trends and the effectiveness of the WTO should be questioned. Seen as taking place in a unique window of opportunity with high food prices and a weak U.S. dollar making exports viable, the Doha talks and the era of major multinational trade may be at an end. Regional and bi-lateral trades, much easier to negotiate and tailor, may be the trend of the future. According to a Wall Street Journal article, the real battles will now be between those who want to expand the era of global trade and those who want to carve out their own “protected niches.”

According to a New York Times article published July 30, economists and trade experts predicted that “negotiators, having come this close, might not find the conditions for a broad deal among the 153 members of the trade organization for years, if ever again.” While some, including Brazil’s President Luiz Inacio Lula da Silva, still hope that an agreement will occur, most agree that the talks are finished, especially with the U.S. election on the horizon.

Bob Stallman, president of the American Farm Bureau Federation, issued a statement on July 29 expressing his disappointment at the opportunities lost at the conclusion of the talks.

“The United States made a significant offer to reduce domestic support levels contingent on an offer of commercially meaningful reductions in tariffs and other barriers from the developing countries,” Stallman said. “It is regrettable that India and China were not prepared to negotiate improvements in agricultural trade for themselves and other developing nations.”

Stallman went on to thank U.S. Trade Representative Susan Schwab for her efforts at the talks and made clear the Farm Bureau’s support of the WTO and its global efforts.

Will the rocky conclusion of the Doha negotiations truly signal the end of 70 years of increased global trade? How could this future shift of the world markets impact U.S. farmers? Let me know your thoughts. Please comment below.