Saving Doha

Wednesday, June 11, 2008

YOU HAVE probably never heard of Pascal Lamy, but he might be able to save the world. The only question is when he should do it.

Okay, so we're exaggerating a bit. Not about Mr. Lamy's obscurity: The veteran French bureaucrat is director general of the World Trade Organization (WTO), which hardly makes him a household name, even though he is a remarkably talented and persistent international public servant. It's not precisely true that he is the only person who can save our troubled planet. But he might just be the last possible savior of global trade liberalization.

And that's pretty important. Ever since the post-World War II establishment of the WTO's precursor, the General Agreement on Tariffs and Trade, negotiations among nations have gradually removed tariffs and other barriers to commerce, with huge benefits for the world economy. The latest "round" of tariff-reducing talks began in Doha, Qatar, in 2001; it was billed as the "development round," because it was supposed to lead to a grand bargain between rich and poor countries that would open the former's markets to the goods of the latter, especially in agriculture. At a time of rising food prices, a successful Doha round could add billions of dollars to the earning potential of farmers in the developing world -- as well as to that of businesses and workers around the globe. The vast majority of poor countries are on board for an agreement.

But the Doha round has drifted and stalled, to the point where many now believe it will produce a modest agreement or none at all. The United States and Europe have contributed to the impasse by clinging to wasteful agricultural subsidies. The greatest outstanding issue, however, stems from a development that designers of the Doha round did not quite anticipate: the phenomenal economic growth of large countries such as Brazil, India and China. Now rapidly industrializing, they are reluctant to subject their nascent industries -- including, in the case of India, services -- to freer competition from imports. Driving a hard bargain at Doha is one way of flexing their new economic muscle in global politics while also pleasing key domestic constituencies.

Interestingly, the developing world's big new economies may actually be more worried about imports from other developing countries than products from the West and Japan. Yet until the big developing countries compromise on industrial protection, the United States and Europe cannot be persuaded to give more on agriculture.

That's where Mr. Lamy comes in. If the participants in the round cannot bridge their differences in the trade ministers' meeting that he envisions for this month or July, he would have the option of devising a proposed settlement of his own, backed by the knowledge and authority of his office. Until now, Mr. Lamy has, reasonably, stayed neutral, preserving his political capital. But the time is fast approaching when he must step in, lest the Doha round fail, taking the once-promising World Trade Organization down with it.


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