Rousing Doha from its doze
The recent uproar in Europe over the ‘Buy American' provisions in the US economic stimulus package has turned the transatlantic trade dialogue into a divisive, finger-pointing exercise aimed at forestalling protectionism rather than a collaborative effort to broaden trade liberalisation.
If global commerce, which is shrinking at a near-record rate, is to be revived, advocates of trade must stop playing defence and re-double their efforts to finish the Doha round.
But engaging the United States in such an effort will require convincing President Barack Obama that there is enough in a prospective deal for it to be economically worthwhile for the US and therefore worth the White House making it a political priority. To do so, the European Union needs to help Obama put enough of his own imprint on a final accord to call it his own.
This will not prove easy. US business interests are now telling the White House that what was left on the negotiating table at the World Trade Organization (WTO) talks in Geneva last July, when the long-running Doha round talks broke down, is no longer acceptable.
The Bush administration's offer to cap US farm subsidies, for example, came at a time of record commodity prices that raised hopes that US farmers might not need as much financial support. But crop prices have fallen dramatically since then and a lower ceiling on government farm payments is now a hard sell.
Similarly, US service providers claim that existing and prospective negotiating offers do not provide sufficient opportunities to enter new markets.
But, as Pascal Lamy, the WTO's director-general, has warned, "if the United States needs a re-doing of the July package, that would be a ‘killer'".
So any effort to revive the Doha talks must be cast as fleshing out the July proposals rather than scrapping them. Fortunately, there is a new-found readiness among many governments to finalise the accord, if only because the cost of failing is greater than ever.
Chinese negotiators now say they are willing to consider zero tariffs for specific goods, a demand long sought by US manufacturers. And Beijing claims it will not require as much special protection for its farmers against imports, a demand that had irritated US soya bean growers.
Indian Commerce Minister Kamal Nath, whose obstructionism has long driven US negotiators to distraction, now claims that he is ready to accept what was on the table last summer. And EU trade officials seem more anxious than ever to cut a deal.
China's self-proclaimed new-found flexibility needs testing. As does Nath's assertion that he would now accept an agreement on terms he once rejected. Most importantly, the EU's desire to strike a deal is seen in Washington as a cynical effort to close the negotiations before Brussels is asked to make more cuts in the Common Agricultural Policy. And European service industries are seen as lacking ambition.
Brussels will need to show resolve to open up manufacturing and services markets. To ease the immediate concerns of American agriculture, a long phase-in period for any cap on US farm subsidies may be needed. And Obama may need some leeway on anti-dumping rules, a major concession by the Europeans given recent victories in WTO dispute-settlement proceedings against US anti-dumping practices. But such flexibility may be needed to quell US domestic opposition to the Doha round by organised labour and manufacturing interests.
Whether such a package would be enough to make finishing the Doha round worthwhile for the White House is still a long shot, but there is no Doha round without the US. So if the EU is truly sincere about trade liberalisation, not simply interested in bashing alleged US protectionism, it has no choice but to help Obama get a ‘Yes' on Doha.
Bruce Stokes is a transatlantic fellow of the German Marshall Fund and a columnist on economics for the National Journal.