The Doha round became something of a punching bag for those who like to slag on global governance. I wrote a book about post-2008 global governance called “The System Worked,” and even I had some fun at the Doha round’s expense.
I bring this all up because U.S. Trade Representative Mike Froman dropped a bomb in Monday’s Financial Times, just before the next WTO Ministerial meeting in Nairobi. Froman’s op-ed contains a rather serious proposal with respect to Doha: kill it. Kill it with fire:
This week trade ministers from around the world will gather to engage once again in the Doha Round of talks which, for all the initial hopes it represented, simply has not delivered. If global trade is to drive development and prosperity as strongly this century as it did in the last, we need to write a new chapter for the World Trade Organisation that reflects today’s economic realities. It is time for the world to free itself of the strictures of Doha….So, two-way deals are working. Regional pacts are working. Groups of countries have struck sectoral deals. Only multilateralism — the attempt to reach a comprehensive global deal — is stuck. Getting it unstuck begins with acknowledging that Doha was designed in a different era, for a different era, and much has changed since.
To be clear, Froman is not calling for the shelving of the WTO (indeed, one of the biggest misperceptions of the World Trade Organization is that it’s just about the trade rounds) but rather, a different way of negotiating within the WTO. In plain language, Froman wants an approach that does not require consensus on everything before anything can be accomplished.
Shawn Donnan reports in the FT that the global reactions to Froman’s announcement will be somewhat variegated:
Countries such as Brazil, China and India and many of the WTO’s African members insist the [Doha] round needs to continue, because the Doha Development Agenda, as it is formally known, includes issues of vital importance to poorer countries, such as efforts to rein in agricultural subsidies in rich economies like the US and EU….In the lead up to this week’s gathering, other big advanced economies such the EU and Japan have sided with the US in its push for a new approach to negotiations after the Nairobi meeting and a shift to more focused discussions on specific sectors rather than a monolithic global agreement.Although those advanced economies and other supporters such as Australia and New Zealand, represent a majority of the global economy and world trade, they remain a minority in the 160-member WTO, in which decisions are made by consensus.
So we can learn a few things from this announcement and its reaction.
The first is that the United States really likes the Bretton Woods institutions… until the transaction costs of negotiating within them get too high. Which is just a wee bit hypocritical. After all, the United States has frowned on China setting up financial institutions outside the IMF’s purview. This op-ed is the U.S.’s way of saying that Washington is perfectly fine pursuing this approach on the trade front, because it can’t get what it wants through the multilateral trade round.
The second thing is that the developed economies’ support for the U.S. position suggests that key players in the developing world have overplayed their hand. Five or 10 years ago, there is no way the United States makes this announcement without catching all kinds of hell. At year 14, however, it seems that everyone is tired of trying to negotiate trade deals with
India recalcitrant WTO members. To be clear, there should be a bargain that can be completed. The fact that it’s come to this is a partial indictment of the developed economies for not giving more on agricultural subsidies — but it’s also an indictment of developing country trade negotiators showing little recognition of what is politically feasible.
The third thing is that the USTR is taking a big risk here. The U.S. logic is that with the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP) in the works, the United States can just walk away from Doha. Except that there’s no guarantee that Congress will ratify the TPP, and no guarantee that the T-TIP negotiations will even be completed anytime soon. Or, to put it in tweet form:
Froman’s op-ed is the next logical move in the forum-shopping game of trade negotiations. That doesn’t mean it isn’t risky.