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Monday 19 Mar 2018 | 04:07 | SYDNEY
Monday 19 Mar 2018 | 04:07 | SYDNEY

Doha's demise, and the prospects for resurrection



9 December 2008 10:48

When the Doha round of trade negotiations collapsed last July, I noted that its failure was far from a surprise. Now that trade ministers are trying to resurrect the round one more time, albeit with limited success so far, it's interesting to understand what went wrong in Geneva earlier this year. 

Paul Blustein, Journalist in Residence at the Brookings Institution, has penned a colourful account of July’s breakdown. It explains the collapse of negotiations largely in terms of Indian fears about the political and social consequences of agricultural liberalisation and a US inability to sell domestically the relatively trivial amount of new market access on offer. 

Blustein’s story also has some useful things to stay about the prospects for progress, both positive and negative.

On the upside, he rightly emphasises that the deepening financial crisis has increased the world payoff to a successful Doha round. At a time when both world trade and the world economy were growing rapidly and when many countries were liberalising on a unilateral or regional basis, the economic gains of any likely Doha agreement were so modest that they provided little incentive to make the compromises needed for an agreement. 

Now things have changed. With world trade likely to contract next year for the first time since the early 1980s, and with growing fears about a return to protectionism, the value of locking in existing levels of openness looks significantly greater today than it did earlier this year.

Lest anyone get too optimistic, Blustein also judges that ‘the effort to cobble together a deal in the waning weeks of the Bush administration...smacks so much of legacy-burnishing by a discredited president that even staunch free-traders are questioning the wisdom of the exercise’. In this regard, he cites a recent warning to President Bush from senior US lawmakers, saying that the president should not be rushing to reach what they feel would still be a poor trade agreement. These kinds of comments provide clear evidence of some of the political difficulties facing Doha.

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