WASHINGTON, Nov. 29 (UPI) -- If the last-ditch effort to save the Doha Round of the world trade talks succeeds, it will be the most remarkable revival since Lazarus. But the hope of breakthrough that liberates trade in services just like trade in manufactured goods may still enjoy just a few weeks of life.
Written off for dead after last summer's impasse over American and European food subsidies, a new joint Anglo-American effort has breathed some life into the corpse. The new U.S. Treasury Secretary Hank Paulsen and Britain's Chancellor of the Exchequer (and almost certainly the next prime minister) Gordon Brown have agreed to make one last heave.
"Nothing is more important to global economic growth than trade," Brown and Paulsen wrote in a joint Op-Ed piece in the Wall Street Journal this week, and the burning issue is "the urgent resumption of the stalled Doha round of world trade negotiations."
"Rather than letting disputes in one area clog up discussions in others, we should move forward as quickly as possible on all fronts," they wrote, stressing the need to broaden the talks from trade in goods to trade in services. "Increased openness in financial services can be a catalyst for growth in all sectors of an economy."
Paulsen and Brown have the energetic backing of Pascal Lamy, secretary-general of the World Trade Organization, and they have all agreed with the Swiss that a new summit of the world's top trade ministers should be held in January, on the sidelines of the annual conference of the World Economic Forum at Davos in the Swiss Alps. Everything really hinges on the Big Six, the trade ministers of the United States, European Union, Japan, Australia, India and Brazil.
Britain's Tony Blair said Tuesday he was "relatively optimistic" that the Doha Round could yet succeed. Even if he is right, President George W. Bush's fast-track authority to negotiate a deal expires in June, and the chances are slim that the new Democrat-controlled U.S. Congress will extend it. The chances are almost as slim that the Democrats in House and Senate will approve the deal, and overcome their own protectionists to vote it through in time. But there is now a chance, and the stage could be set for another grand American drama as free traders and protectionists argue their case.
This debate last took place in the United States thirteen years ago, when President Bill Clinton split his own party and relied on Republican votes to pass the North American Free Trade Agreement. It was the first time that the usually arcane issue of trade caught the public imagination, with Vice-President Al Gore battling the eccentric billionaire (and third party President candidate) Ross Perot in a TV debate.
That debate hinged on Perot's assertion that the deal would lead to "a giant sucking sound" as American jobs decamped to low-wage Mexico. Perot was wrong. American unemployment is lower now than it was in 1993, and the U.S. economy is about half as big again as it was then. Free trade has been a great boon for the U.S. economy, which now exports a greater share of its GDP than does Japan.
The problem is that free trade is not good for all Americans, particularly the low-skilled and the low-paid and those in jobs where cheaper foreign workers can undercut U.S. salaries. These days, those vulnerable jobs are not just on assembly lines, but in the back offices of finance houses and health insurance firms, in the cubicles where computer software gets written and professional tax returns are drawn up and where the boilerplate small print of legal contracts is drafted.
The sense of alarm about the outsourcing of jobs and about the broader impact of globalization was a powerful issue for Democrats in this month's Congressional elections. The Democrats won the Senate on this issue. Ohio's Sherrod Brown, who unseated incumbent Senator Mike DeWine in Ohio, and author of 'Myths of Free Trade: Why American Trade Policy Has Failed' ran campaign ads that proclaimed: "Sherrod Brown stood up to the president of his own party to protect American jobs, fighting against the Mexico and China trade deals that sent countless jobs oversees."
Claire McCaskill won her Senate seat in Missouri with ads that claimed: "Unfair trade agreements have sent good American jobs packing, hurting Missouri workers and communities. We should be encouraging businesses to stay at home, not rewarding them for moving overseas."
The Public Citizen research group found that trade played a big role in 15 of the close House races won by Democrats. In the entire election, Public Citizen pointed out not a single incumbent fair trader was beaten by a free trader.
"Democrats have coalesced in favor of trade policy reform over the past decade as President Bill Clinton's NAFTA, WTO and China trade deals not only failed to deliver the promised benefits but caused real damage," commented Lori Wallach, director of Public Citizen's Global Trade Watch division.
So the politics of Washington are against a deal. And the politics of Europe are hardy friendly to the prospect. France, whose opposition to any serious reform of the European Union's notorious Common Agricultural Policy gave EU trade negotiators very little room to maneuver, is facing a Presidential election in May. The chances of the French approving any big EU concessions are not good.
But at least the rancor and back-biting are out of the way. When the last round of talks failed in June, Europeans and Americans blamed each other for refusing to cut farm subsidies, and developing countries blamed them both. But the United States and EU also blamed India and Brazil for their reluctance to open their markets to Western industrial goods.
The fact is that everyone was partially to blame, and the danger is that another failure of the Doha Round could start to kill off the free trade goose that has laid the golden egg. The unprecedented prosperity the world is currently enjoying, with hundreds of millions of Indians and Chinese clambering out of poverty, did not come about by accident but as a direct result of surging world trade. Most countries know this, which is why Vietnam has just ratified its membership of the World Trade Organization and why Russia has been lobbying to join it for years.
But the impact of the latest U.S. election and the one about to come in France, along with the uneasy coalition politics in India where the government depends of left-wing and "anti-globalization" votes, could scupper Doha's last chance almost before it begins. Lazarus may be stirring, but death still has the upper hand.
