BIZCHINA> Review & Analysis
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BIZCHINA> Review & Analysis
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Failure of WTO big six is bad news for everyone
By Zhang Ming (China Daily)
Updated: 2006-08-03 09:16 Six key members of the World Trade Organization (WTO) - the United States, the European Union, Japan, Australia, Brazil and India - decided to bring an end to the Doha Round of trade talks on July 24. It ended a two-day ministerial meeting on which six important economic players were unable to bridge their disputes and, therefore, failed to reach an agreement. The Doha Round, started at the Fourth WTO Ministerial Conference in Doha, Qatar, in November 2001, was supposed to conclude on January 1, 2005, but failed to meet the deadline. This was because the WTO members could not reach a consensus on agriculture matters at the Cancun Ministerial Conference, Mexico, in September 2003, thus beginning a lengthy impasse. At a meeting held in Geneva on August 1, 2004, trade representatives of the WTO member states agreed to allow the Doha Round go on until the end of 2006, offering more time for the members to patch up their differences. But the failure to reach an agreement on farm subsidies on the part of the United States and the European Union very much eroded the confidence of the WTO members and, in turn, helped precipitate the end of the Doha agenda. Two primary factors lie behind the breakdown. First, the developed countries have employed double standards at the negotiating table. On the one hand, these nations were reluctant to cut down on the subsidies to their farm producers and put a brake on their agricultural-product dumping in the developing world. On the other hand, they pushed developing nations to acquiesce on matters such as tariffs, policies on investment and competition, and transparency in government procurement. Second, the stances of developed countries on the reduction of farm subsidies are widely inconsistent owing to lobbying by domestic interest groups. The United States and the European Union, for example, constantly wrangle over the reduction of subsidies. The devastating effects of the Doha Round's breakdown on global trade should not be underestimated. People's enthusiasm for free trade, for instance, is dampened and could turn into indifference. But the conclusion of the Doha Round talks does not necessarily mean the end of global free trade. The examples set by East Asian economic entities such as Hong Kong and Singapore demonstrate that bilateral open markets bring greater benefits than those brought by multilateral trade talks. The negative impact of the booming bilateral trade in the long and medium term is that countries will gradually have less and less confidence in multilateral trade and, therefore, turn increasingly to bilateral dealings. (For more biz stories, please visit Industries)
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