As the world’s attention and conspiracy theorists turn to Beijing this August, Western nations should not forget China’s role in “The Collapse of the [World Trade Organization (WTO)] Doha Round Trade Talks” in Geneva on July 29. The facts of the failed negotiations reveal a more impotent China than Americans would expect.
Frank Vargo, chief spokesman on trade issues for the National Association of Manufacturers (NAM), viewed the collapse of the seven-year Doha Rounds as a “watershed.” He was one of several distinguished panelists who addressed a crowd at the American Enterprise Institute on August 6. Vargo attended the “Ministerial in Geneva” and provided daily reports to NAM. In his view, the breakdown of the talks reflected a “failure of flawed philosophy.” The flaw was that Doha would be a “one-way deal.”
Hoping to “kickstart” the negotiations, the U.S. and the European Union (E.U.) “advanced new agricultural efforts.” The E.U. offered to cut its subsidies an additional 60%, and the U.S. offered to reduce its “subsidy ceiling to $15 billion.” Brazil “set the tone” for the negotiations by “sneer[ing]” at both offers. Nor was Brazil alone. By day two of negotiations, “the three primary big emerging manufacturers”—Brazil, China, and India—created a three-way pact that opposed both U.S. and E.U. concessions.
Vargo reported that Kamal Nath, India’s Trade Minister, accused the U.S. and Europe of non-competiveness in the manufacturing industry. In response, as an aside on his day-to-day reports, he accused India of “hiding behind [their] huge tariff wall.” Developing countries like China, Brazil, and India, use tariffs as a source of national income, much like the United States did during its rise to preeminence.
Manufacturing, however, was not the only industry in the debate. Agricultural trade policy also came up. “The big issue” was special safeguard mechanisms (SSM). The developing countries want the right to “slap tariffs on” any surge in agricultural goods—even if the new duties are “higher than [the] WTO bound rates.” Any nation possessing that right would “destroy the longest-standing pillars of the WTO.” For United States agriculture, the “protectionist” proclivity of the developing nations makes farmers “extremely concerned,” according to Vargo.
For a week, then, heated arguments filled officially-neutral Switzerland. In the end, according to Vargo, “the failure was the hang-up on India’s and China’s insistence that they and other developing countries be able to break their WTO bindings.” These tariff bindings are “pillars of the GATT-WTO system,” and have been in effect since 1947. Member nations “promise” to not raise tariffs “above the bound rate.” If the rest of the world gave in to Brazil, China, and India, “it would have meant loss of market access for existing food exports,” not to mention “a basic premise of the WTO” being “undone.”
So, even with two other heavy-hitters, China was unsuccessful in its trade negotiations. Perhaps the Land of Yangtze River is not as dominant as the media, think tanks, and politicians would have us believe.