US foot-dragging dims hopes for world trade deal

Chances of world trade deal look remote in part because the US has other bigger priorities.

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    Pascal Lamy is director general of the World Trade Organization. The US has not made world trade a top priority under the Obama administration.
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Prospects for reaching a deal in the eight-year old Doha Round of global trade negotiations were remote; now, they’re truly distant.

On Nov. 30, trade ministers of the 153-nation World Trade Organization (WTO) hold their ministerial conference in Geneva , but their agenda doesn’t even mention negotiations. It is officially defined as a “housekeeping” session. Since they only meet once every two years, that’s a little like hosting an Olympics without scheduling any sporting events.

An impediment to a deal is the United States , which is a switch from the past. The Geneva session will open precisely 10 years after a similar ministerial meeting in Seattle exploded with violent protests outside and disagreement inside on starting the current trade round. Despite that resistance, the US pushed for and other nations agreed to launch the Doha Round in late 2001, amid widespread sympathy fostered by the 9/11 terror attacks two months earlier.

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Part of the problem today is that the Obama administration is up to its neck in other issues, including healthcare reform, financial-markets regulation, labor issues, global climate, and what to do with the Bush tax cuts when they expire, says Harald Malmgren, a Washington consulting economist who helped negotiate the successful Kennedy Round of trade talks decades ago. So trade matters are going to have to wait.

But the US is also hanging tough, pushing developing nations to open up their financial markets to competition from foreign companies, a difficult pitch considering the world's financial crisis. "We have said flat-out that there will be no deal without a solid result on services which would result in new market opportunities, but we believe that a positive outcome is still achievable," US Trade Representative Ron Kirk said last month at a meeting of service industry officials in Washington .

Trade liberalization is never politically popular. Mr. Obama and probably more than 60 new members of Congress ran partly last year on trade reform platforms. Some campaign messages directly opposed the Doha Round. Obama talked of renegotiating NAFTA and CAFTA.

Nonetheless, Mr. Malmgren does not regard Congress as truly protectionist. Most members recognize the economists’ argument of “comparative advantage,” that nations are better off if they export goods and services they can produce at a lower cost than other countries, and similarly import cheaper goods and services.

Activists are also pushing countries to refocus their trade agenda, but not in the way the US wants. Lori Wallach, director of Public Citizen’s Global Trade Watch, hopes the WTO will start to address proper regulation of the financial industry, the climate crisis and related energy matters, and the excessive concentration of food production in relatively few nations. Some 56 developing countries have become net importers of food to feed their populations since the Doha Round started, she says.

“Junk that old [WTO] agenda,” she says. It’s a “totally different world” since the Doha Round was launched in 2001.

-- David R. Francis is the Monitor's economics columnist.

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