Washington DC - The political problem with trade negotiations is that while the benefits of lowering obstacles are diffuse, the losses are concentrated. The owners and workers of companies that are adversely affected by lower trade barriers are fewer but far more motivated to mobilize than the many consumers who would benefit from greater liberalization.
Right now most Western leaders, with the notable exception of the German Chancellor Angela Merkel, are dead men walking. Leaders of the large developing countries' democracies -- Brazil and India -- who are important players in global trade talks also face difficult politics and fierce lobbies at home. So, there's not sufficient political will to sell a deal to publics who feel economically insecure and are all too easily seduced by self-defeating protectionism. Harsh words were exchanged between Europe and America over the collapse of the talks but the truth is that there was likely secret relief in both the Elysée and the White House that they would not have to face down their vocal farm lobbies. Hopefully, next year's elections in France, the ascent of Gordon Brown in Britain, and the inauguration of a new president in 2009 will provide the political leadership that is currently lacking.
The tragedy is that those who will be hurt most by the collapse of Doha are the poor--in both the developing and developed worlds. Who suffers most when the European Union slaps tariffs on cheap children's shoes from China? Or when food prices are kept artificially high? The World Bank estimates that greater liberalization would grow the world economy by $287 billion and propel more than 60 million people out of poverty. It turns out, the world can look a gift horse in the mouth.
The good news is that -- with or without agreements at the WTO -- trade is booming. Since the last big trade agreement in 1997, world trade has gone from $7 trillion to $13 trillion. While the negotiations over the Doha Round have stumbled and stalled since its launch in 2001, total world trade has soared by more than $5 trillion. And that is not counting illicit trade, which continues to boom and in some segments is growing far faster than legal trade.
Some will seize on the demise of the Doha Round to pronounce globalization dead or under threat. Such pronouncements often reflect interests rather than dispassionate analysis. By now, one would have hoped that it is patiently clear to all that there is far more to globalization than just trade: Think culture, politics, terror, crime or technology. And that's to say nothing of other economic measures like foreign investment -- which continues to grow. Even trade will continue to grow despite the fecklessness of our leaders. There are, after all, forces at work that are far more powerful than governments.
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