On May 7, GMF held Where's the Leadership?: Trade Policy and Politics in the European Union and the United States, a lunch discussion with Patrick Messerlin, director of the Groupe d'Economie Mondiale de Sciences Po (GEM), a Paris-based political institute.

The European Union is playing a key role in current multilateral trade negotiations. But this is more a consequence of sheer size in the current world economy than because of EU leadership based on innovative initiatives. The Doha Round of talks at the World Trade Organization (WTO) have repeatedly run up against an EU negotiating position that is simply out of touch with the rest of the world-whether it be foot-dragging on agricultural market access to the tabling of schemes, such as competition policy, that are much too complex and demanding for most of the very heterogeneous WTO membership. European ambiguity vis-à-vis developing countries make the EU's self-proclaimed "multilateralist" credentials look more like a way of bickering with the United States than an accurate description of a consistent and coherent position. In addition, the rapid emergence of large economies in Asia threatens to cast a shadow over the relative size and importance of European economies.

As the U.S. and Europe are confronted with growing international competition and a WTO still struggling to adjust to changing patterns of global trade and an increasingly diverse membership, how should they be orienting their trade policies in order to promote a pro-development trade agenda? What role might preferential trade agreements play? And how can the U.S. and EU minimize the risks created by the rapid proliferation of such arrangements?

At the event, Mr. Messerlin took a long term view of the Doha Round and the WTO in drawing conclusions about future trade policy in the U.S., Europe, and at the multilateral level. He suggested that the Doha Round is far behind previous trade agreements that were able to be completed in fewer months.  This has been the result of a multitude of factors, the most prominent being that the WTO has expanded its membership to include a two-thirds majority of developing countries. However, this analysis does not take into account the "productivity" of trade rounds, which Mr. Messerlin proposed to measure on the basis of the average tariff cut achieved. When compared to previous negotiation rounds, if Doha is completed by the end of 2007 with its final outline mirroring what most observers viewed to be a likely outcome, then it will have achieved a productivity much higher than most of its predecessors (excluding the rounds of Kennedy and Geneva I).

In addition, Mr. Messerlin discussed public opinion and the current political situation in the U.S. and Europe as it relates to trade policy. He refuted what many claim is a decline in public support for trade, arguing that Europe, in particular, given the impact of "Old Labor," Social Democratic and Communist parties who were bitterly opposed to trade liberalization, has had more consensus around trade openness. He referred to GMF's survey Perspectives on Trade and Poverty Reduction as evidence of the relatively strong levels of political support for trade on both sides of the Atlantic at present.

Instead of eroding public support, Mr. Messerlin proposed as an explanation for current difficulties the significant change in "capacity to govern," a declining political capital. There has been a widespread erosion of margins of electoral victory, resulting in slim governing majorities and the increased vulnerability of officeholders to small but powerfully-concentrated special interest groups. Politicians with fewer votes behind them are less and less able to stand-up to anti-trade interests intent on blocking progress in trade rounds and related domestic policy reform processes.

Seeking to place the claim of a recent "rush to bilaterals" - the negotiation of preferential trade agreements (PTAs) - in its proper perspective, Mr. Messerlin  turned to his proposed solutions. Given the diminishing capacity of national governments, there needs to be both a compensating improvement in the multilateral negotiating process, and a recognition and acceptance of the institutional limitations of the WTO itself. He challenged the category of "agriculture" as a negotiating area, pointing out that there is much more room for aggressive cuts in tariffs on semi-processed "food" (as opposed to "farm") products, and proposed a variant of the Swiss formula being used in the negotiations on Non-Agricultural Market Access for Agriculture (NAMA), rather than the current tiered formula. The benefits of this would be that it would allow for a result close to EU demands on "farm" products while approximating U.S. ambitions on "food" products. He also claimed that his Swiss variant formula would produce better results for developing countries.

In closing the discussion, Mr. Messerlin recommended a "rethink" of the WTO process. He proposed a serious discussion about shorter rounds, which would help to overcome domestic political restraints, including the limitation to two four-year terms of the U.S. President. He also proposed a "back to basics" refocusing on market access, and a reconsideration of the WTO's Single Undertaking, which is threatening to become an impossible straightjacket on trade negotiations.

To view a PDF of Messerlin's paper, please click on the link below:
A Long Term View on the Doha Round and the WTO (PDF 1.29 MB)