The world is again ready to talk trade. A year after India was accused of putting the World Trade Organisation’s negotiations on the Doha Development Round into deep freeze, New Delhi last week succeeded in getting 35 trade ministers to agree to resume discussions in Geneva from September 14. The development should be read with the usual disclaimer. The entrenched positions that caused the deadlock still prevail. The principal characters involved in the more contentious haggling — the United States, European Union, Brazil and India — have not yet signalled a softening of their stance. Yet, India has brought everybody back to the table after walking off last July and the new Obama administration has indicated it does not want to re-invent the Doha round.
Good. But is it good enough to make the horse drink? The standoff is over cuts in subsidies and taxes on farm produce in the West, in return for emerging economies taking in more of their industrial goods. India has an added concern over dumped food. This has held all other aspects of the Doha round to ransom. The principles are not being contested, the degree of accommodation to reach a deal is. A wider body of view is seeking to take less knotty issues — the treatment of extremely poor countries, for instance — onto a different track. And there is growing realisation that talking in smaller groups has more chance of yielding acceptable outcomes.
A world sobered up by shrinking trade is trying to stitch together a rule-based system by 2010. It is also a world where Asia is emerging as a competitor to the US as the consumer of last resort. Both events will have shaped attitudes around the negotiating table. For example, trade is exerting an inordinate influence on India’s growth momentum although it has less than a 2 per cent share of global exports. Nomura Research reckons that net exports contributed half of the 6.1 per cent GDP growth in the last quarter because imports shrank twice as fast as exports on falling oil prices. This makes the domestic demand argument slightly wobbly. The rash of bilateral trade treaties being signed across the globe cannot hope to match the gains of a multilateral framework. The New Delhi meeting was an admission of this reality. Now it’s time to get cracking. The world is losing an estimated $250 billion every year after the lapse of the original deadline of 2005 for completing the Doha round.