Leading article: Failure need not mean catastrophe

The seven-year long Doha round of world-trade negotiations has been so peppered with "break or make" crises and "do-or-die" showdowns that the average consumer could be forgiven for wishing that they would just expire so that he or she might never again feel obligated to read about the latest spat between President Sarkozy and the EU trade commissioner Peter Mandelson or get to grips with the finer arguments over banana preferences.

But there are two reasons why this time the talks cannot be so easily ignored. One is that free trade is too important to be left to the competing interests of the major countries, to the impoverishment of the rest. It has been the process of dismantling trade barriers that has helped to propel growth on the longest sustained period of expansion that the modern world has seen over recent decades. Stop that process and the fear is that the world's economy could go into reverse as countries put up the barriers again. The other reason for care is that, for all the tendency to cry wolf as the negotiations have stuttered on, this time the deadline would seem to be real. Should the Geneva talks fail, then the chances of reviving them once the US elections are under way would be virtually nil.

That does not mean that failure would necessarily bring about a reversion to general trade war. The reason this round has been so long in the debating is partly that the developed countries – France and the US in particular – have been so reluctant to reduce their agricultural subsidies. It is also that the developing countries, for understandable reason, see the need to keep some protection in services and manufactured trade whilst their economies achieve take-off. That is how the West industrialised in the 18th and 19th centuries. Surely they deserve the same consideration, argue China, India and Brazil.

Yet all the parties are committed to the concept of free trade. It's the last lap that concerns them. A time of tightening credit, falling growth and rampant inflation in both developed and developing regions is hardly the best moment to push for great final concessions, although it might be considered all the more appropriate.

Clearly, an agreement at Geneva would be in the best interests of the world at large. But if it cannot be done, there is no reason that the momentum for tariff reduction and the removal of trade barriers should be stopped in its tracks. There is still a lot that can be done bilaterally, as the US and the EU have both shown in regional talks. It just needs the political will and that old-fashioned virtue of convincing your public to go along with you.

Comments