Collapse of the Doha Round after seven years of negotiation must have been a major disappointment for the European Commission. As the Barroso team moves towards the twilight year of its five year term a positive result in Geneva would have somewhat alleviated the gloom following the Irish referendum, the suspension of the Lisbon Treaty process and the stormy economic environment facing Europe.
For Commissioner Peter Mandelson it was a bitter personal blow, since negotiation of a new global trade agreement was almost the raison d’être of his five years in Brussels.
Doha was named the WTO’s Development Round. It was intended to reflect the change in priorities which gave more recognition to the needs of developing countries and acknowledged the emergence of new economic powers. Unlike previous rounds, this was not a private party between the European Union and the United States. The powerhouse economies such as Brazil, India and China were major players and the poorer developing countries were expected to be major beneficiaries.
The talks apparently foundered on Indian and Chinese demands for a high level of protection against surges in food imports. The United States was fiercely opposed to these safeguard arrangements. So was Brazil and other agricultural exporters among the developing countries.
Impending elections played their part, certainly as far as the US was concerned, but also in India – see Carl Mortishead’s analysis in the London Times of the Indian political situation.
Failure in Geneva marks the end of an era when policy-makers across the globe pushed to open up trade and when vast numbers of people across the world benefited from rising living standards as a result.
There will be attempts to rescue something from the wreckage, but there are big dangers ahead. Protectionism is a real risk in a time of economic downturn. A new US president could be tempted down the same path as was taken by Bush in his early years, when he rushed to protect US steel and agriculture. Bilateral deals are likely to increase.
Europe has a crucial role to play in this uncertain environment. At least the EU maintains its commitment to an open world trading system and it must play to its considerable strengths to defend it. The fact that European trade policy is set at one remove from the pressures of national politics is a great advantage: even an irritable Sarkozy can be resisted. The Barroso Commission must keep up the good fight through the rest of its term of office.
As Brussels goes on holiday, so does this blogger. Back in September!