World trade talks have been on the backburner for months as responses to the recession have taken center stage. Patrick Thomas, the U.K. Embassys policy adviser for trade and agriculture, says that are gains sitting on the table just waiting to be realized. Thomas blogs at http://blogs.fco.gov.uk/roller/economic.
Last week, trade officials met at the World Trade Organization in Geneva to take stock of the state of negotiations in the current trade round, the Doha Development Agenda (DDA). The results were disappointing, if not unexpected. The talks remain stuck with no clear path to conclusion.
To say that the DDA has been a hard road would be an understatement. Talks are now in their ninth year. Critics claim that the world economy has passed the DDA by, that its ambition has been sapped by the maze of compromises needed to keep 153 countries at the table, and that world leaders lack the political will to bring it to fruition.
Criticisms aside, there are clear gains sitting on the table waiting to be taken. Here in the United States, President Obama has announced an ambitious plan to double exports in five years through the National Export Initiative (NEI). The DDA would be an excellent complement to the NEI by opening new markets for US businesses. And further, the Peterson Institute has estimated that the current offers in the DDA could increase U.S. GDP by $38.7 billion.
The DDA would be the largest global trade deal ever negotiated. It would include all 153 members of the World Trade Organization and significantly boost global trade, adding at least $150 billion to the world economy each year through robust tariff cuts and agricultural trade reform. A good chunk of this would go to developing countries — it is, after all, a development agenda. It would also give us a global insurance policy to guard against future protectionism. What is more, the DDA represents a great commitment to openness and to the credibility of the WTO, arguably one of our best-performing multilateral institutions, where smaller countries can ensure that the larger ones play by agreed rules. As Lord Mandelson, Britains Business Secretary, wrote recently, Its also an opportunity for the big emerging economies to show they are not just passive beneficiaries of tariff cuts that they can and should be expected to play a full role in freeing global trade just as they are taking their rightly place around the G20 table.
To be sure, even though a multilateral deal is the best way to liberalize trade, world leaders have also continued to look for additional ways of opening markets. Last October, in the teeth of the economic recession, the European Union and South Korea concluded nearly two and a half years of negotiations and initialled a bilateral free trade agreement. The deal is expected to be ratified this year, and when it goes into effect it will cut 97% of tariffs on trade between South Korea and the EU, saving European exporters 1.6 billion each year and creating up to 19 billion in new market access for them. And the EU is not stopping there: negotiations are under way for ambitious free trade deals with India and the ten members of the Association of South East Asian Nations.
Still, it is worth remembering that while the EU-Korea FTA is the second-most ambitious bilateral agreement ever negotiated (behind NAFTA), it pales in comparison to the potential impact and gains from a successful conclusion to the multilateral DDA.