Another one of those seemingly big stories that you would expect to be all over the news but strangely isn't is the failure of the latest round of World Trade Organization negotiations this weekend. It's a big story since WTO agreements are the basis for most of the international trade in the world, but they're also big and complex, which is probably why there has been so little coverage of them in the press.
In short, negotiators from around the world were meeting this past week to try and finish the Doha round (named for the city of Doha where these talks began seven years ago) of agreements to eliminate a whole range of tariffs that the WTO claims restrict international trade. Going into the negotiations those involved decided that the talks would be all or nothing - either countries would agree on all 20 points to be discussed, or there would be no agreement at all.
They got pretty far, but things fell apart when the United States refused to drop subsidies to cotton farmers in the US, while China and India were unwilling to give up their right to impose tariffs to protect selected domestic markets. The European Union's top negotiator said it was like "an irresistible force meeting an immovable object".
Developing countries have long complained about subsidies that the US and EU pay their farmers, saying that it makes it impossible for their indigenous farmers to compete, even in the domestic markets. I once worked with someone from The Gambia (a small nation on the west coast of Africa). He told me once that all of the eggs in the local markets in The Gambia came from Europe - because of the subsidies paid to poultry farmers in the EU it was cheaper to buy the eggs abroad and ship them to The Gambia then it was to buy them from local farmers.
Subsidies do make for an uneven playing field, but considering how much India and China have benefitted from free trade policies recently, their opposition is a little hard to take, especially in China's case. China has reaped enormous benefits over the past few years from their government's efforts at keeping the Chinese currency (the yuan) artificially low. In other words, the yuan is much cheaper to buy with dollars or euros than it should be. In turn then its much cheaper to buy Chinese-made goods then it would be if the market were truly free - so our stores are awash in $10 Chinese-made toasters, alarm clocks, and any other home appliance you can think of.
There's enough blame to go around on this one; the US, EU, China and India all deserve a share. What happens next is anyone's guess. Negotiators talked about continuing the talks and trying again, but it has been seven years since the initial Doha agreement was outlined, but still it is no closer to going into force then it was almost a decade ago. It's hard to imagine that more talking is going to yield a different outcome. Some analysts think that the latest failure of Doha could result in countries turning away from global agreements like the WTO and instead focusing on agreements between or among smaller groups of nations. The losers, they warn, could likely be the world's poorer nations who could find themselves frozen out of these bilateral agreements.
3 days ago