Because of the increasingly global nature of trade, when the current financial crisis struck it was felt across the world. Domestic and international trade have suffered as a result, because economies have shrunk and currency has rapidly lost value. Part of current recovery efforts includes a reexamination of international trade barriers.
The Doha Development Round, a series of negotiations of the World Trade Organization (WTO), is seen by many as the key to lowering trade barriers and increasing the flow of goods between cooperating nations. The negotiations began in 2001, and continued yearly until the talks broke down in 2008 because countries were unable to resolve conflicts dealing with agriculture regulation. Some see the breakdown as merely a pause in the negotiations, and hope that a renewal of talks this year will lead to compromise and resolution.
The American Enterprise Institute (AEI) featured a panel on March 23rd to discuss whether or not the negotiations can be effectively salvaged, and what they might achieve. The panel featured Christopher Padilla, the managing director of C&M International, and former Under Secretary for International Trade in the U.S. Department of Commerce.
Padilla advised that “allowing the talks to simmer along” is the best available option. “It is very tempting, in light of where we are with Doha, to throw up our hands and look at various options including ditching the talks, changing the talks significantly, or formally postponing them,” he said. Changing the talks will not work because the list of topics for discussion is already too long, and the proposed changes would involve adding things like environmental protection and currency to the negotiations. Making the discussion more tense and complex is certainly the wrong way to approach Doha.
Abandoning the talks altogether will not work either. Ditching the talks now “would upset a very careful balance between the interests of developing and developed countries,” Padilla said. He compared abandoning the Doha negotiations to building a house, disagreeing on the type of shingles, and then tearing down the entire house to build condos instead.
What we truly need in order to get things working again, Padilla said, “is a reinvigoration of political will. And there is some reason to be optimistic here.” Because the EU leadership is changing, as well as the leadership in many key countries like India, new trade leaders may bring to the table a commitment to see some results.
Robert Vastine of the Coalition of Service Industries echoed Padilla, saying that this “has to be given one more try with greater ambition. The problem in this round comes from a very low level of ambition.” But he added that there is a serious need to restructure the specifics of the Doha negotiations. Political will and ambition for further trade compromises will not be generated unless the government demonstrates that it is going into the talks with fresh ideas, and strong plans to get real results.
The most intriguing argument against Doha in its current form is that it does not address the very real, pressing problem of protectionism. “We have today a round of negotiations that does not address in any way the research into protectionism,” said Aaditya Mattoo of The World Bank. He suggested that the world trading partners might want to consider an alternative to Doha. Rather than taking the next meeting as an opportunity to hash out new plans and make new demands, countries should consider it a “crisis round” where the “main object would be to lock in current policy for a fixed period of time.”