Trade: Five minutes to midnight

Will politicians realise the global trade round is worth saving before it is too late?

TRADE ministers look upon negotiating deadlines much as Italians treat the rules of the road: useful in principle but almost always worth ignoring in practice. So a depressing inevitability hangs over negotiators' scorn this week for yet another self-imposed deadline in the Doha round of global trade talks. No matter that at their gathering in Hong Kong last December ministers solemnly declared that by April 30th they would agree on a framework to free farm trade and slash industrial tariffs. April 30th is here and a deal is still as remote as ever.

At what point does the inability to strike a deal mean the Doha round has failed? History is a poor guide. Previous trade rounds have all eventually succeeded, often after dragging on for years. But the Doha talks do not have this luxury. To negotiate a deal that cannot immediately be picked apart by Congress, George Bush needs trade-promotion authority. TPA runs out in June 2007 and congressional scepticism about globalisation means it is unlikely to be extended. In short, any Doha deal must be ready by the end of 2006.

Pessimists reckon the Doha round is already dead. The differences between America and Europe are "irreconcilable", says Bill Thomas, the most influential Republican voice on trade in the House of Representatives. Mr Bush's decision to move Rob Portman, his main trade negotiator, to another job running the budget is a signal to some that the White House has abandoned all hope of a Doha deal. Many gibe, with some reason, at Peter Mandelson, Europe's main trade man, for spending more time dishing out blame for the impasse than suggesting ways out of it.

In fact, it is not too late for Doha to succeed. Although time is short, the negotiators probably have until the summer to thrash out the framework of a deal so as to settle the details by the end of the year. The technicalities prevent presidents and prime ministers from clinching a Doha deal at a single sitting, but the technocrats in Geneva cannot get much further without a big political push. Doha's prospects, therefore, depend on politicians shaking off their complacency.

Do the Doha shuffle

The stakes are high, but subtle. The world economy will neither collapse if the Doha round fails, nor will poverty be eradicated if it succeeds. The direct economic gains from Doha are well worth having, but the long-term consequences of failure should give the politicians most reason to act. If Doha fails, the world will, at best, shift towards bilateral and regional deals. At worst, the multilateral system would wither.

This threat alone ought to dispel today's reckless complacency. Some emerging economies, such as Brazil, have much to gain from freer global farm trade. India could be a big winner from freer trade in services. Both will lose from a tangle of regional deals. The cuts in industrial tariffs asked of them are not politically hard--and would be economically good. India and Nigeria have been slashing their tariffs unilaterally, rightly recognising the gains from openness. It is brinkmanship more than scepticism about trade that has driven the emerging world to demand the right to keep high tariffs.

America's reason to rescue Doha is different, but no less powerful. Since its tariffs are already low, America's main contribution to this round is to cut farm subsidies. The need to cut government spending means these handouts are likely to fall anyway over the next few years. Moreover, the Bush White House needs an economic-policy success. With entitlement reform dead and tax reform going nowhere, a Doha deal could be one of the few achievements of Mr Bush's second term.

Europe--and especially France--poses the biggest problem. After Jacques Chirac's recent retreat over labour-market reform, there is little political appetite to take on French farmers. The best hope is for other Europeans, led by Britain and Germany, to join America and the big emerging markets to isolate France and shame it into a deal. That will take courage; and the clock is ticking.

Editorial asks 'Will politicians realise the global trade round is worth saving before it is too late@