Trade. Talking the talk

Don't blame the rich world if trade talks collapse again

WHEN global trade talks broke down in Cancun last September, many commentators - including this newspaper - worried that they would be hard to resurrect. America would be too distracted by its presidential election and the European Union too preoccupied with its new members to bother with tricky negotiations whose main purpose was to help the world's poor. In fact, the elephants of world trade have shown a remarkable dedication to the Doha round over the past ten months. It is the minnows - the world's poorest countries - that have been threatening to kill any deal.

Crunch-time comes at the end of this month when trade ministers meet in Geneva. At issue is whether they can agree on a “framework” for how to conduct the trade talks. Success on that front would not mark the end of tough negotiations; the trade talks would still have a long way to go. But if the Geneva talks do end in failure, then the prospects for the Doha Round, at least in its current form, are bleak.

The good news is that the world's big traders, both rich and poor, have a deal within their grasp. The EU has given up on ambitions to expand the Doha agenda to new areas, such as investment. It now wants new negotiations only on rules for trade facilitation, simplifying paperwork and reducing corruption. No one, except perhaps the politicians who benefit from corruption, should object to that.

On farm trade, the giants (America, the EU, Brazil, Australia and India) are inching towards compromise. It will not be a perfect outcome. Laudable boldness, such as the EU's willingness, despite French opposition, to eliminate export subsidies on farm products, will be tarnished by lamentable timidity, especially on tariff-cutting. There are still potential flash-points. But the skeleton of a global farm-trade deal certainly exists.

Even a farm breakthrough might not put the talks back on track. For the poorest and smallest have been talking tough, particularly African and Caribbean countries. Since the WTO works by consensus, any one of them could block a deal.

The demands of the smaller countries are disparate and often hard to pin down. Some want the rich world's cotton subsidies treated as a special issue, outside general agriculture negotiations. Poor countries with preferential access to rich-world markets want to make sure that freer trade will not reduce those preferences. If it does, many want cash compensation. Some of them plainly do not want the Doha round to succeed. Many sugar and banana producers in the Caribbean, for instance, reckon they are better off with preferential access in a distorted system.

Freedom, not preferences

This logic is misguided and shortsighted. Trade preferences are no route to long-term prosperity. Evidence that they help at all is decidedly mixed. And since these preferences are granted unilaterally by rich countries, they can easily be removed or rendered redundant by other policy changes. The EU's upcoming reform of its sugar system, for instance, will erode many of the Caribbean countries' preferences, regardless of the outcome of the trade talks.

Good sense may yet prevail. At a meeting in Mauritius this week, the poorest countries showed signs of becoming more flexible. But even if they do now derail the Doha round, a few small, poor countries will not hold the global trade agenda hostage indefinitely. Eventually the Geneva negotiators will have to find a way of bypassing the recalcitrant poor countries; or global talks will give way to more regional and bilateral deals. Either way, the biggest losers would be the poor people that the Doha Round was designed to help.

Editorial says 'Don't blame the rich world if trade talks collapse again'. Preview of the challenges facing Trade Ministers as they meet for important WTO meetings in Geneva, July 2004, to try and advance negotiations on a new trade round.

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