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No-one was confident we would launch a new trade round when Ministers met in Doha when I was Director-General of the World Trade Organisation.  We managed a launch because, in the end, there was so much in it for everyone.  The World Bank suggested, at the time, abolishing all barriers could lift the global economy by almost US$3 trillion, and lift 320 million people out of poverty.  Just cutting barriers by one third would be like adding an economy the size of Canada to the world economy.  Rich countries spend a billion dollars a day to make food dearer for their consumers.  A deal in agriculture would return to Africa 4 to 5 times more than all the aid and debt relief put together.  This is a big deal, big figures.  When President Kennedy launched a new trade round, he said this would help developing countries like Japan.  Case made!

The system works.  WTO agreements have underwritten the most successful period of economic growth ever.  More wealth has been created in the past 60 years than all the rest of history put together.  During this period, the number living on less than a $1 a day has dropped from 40% in 1981, to 18% in 2004, and for the same period, the number living on less than $2 a day has dropped from 67% to 48%.  The rich are getting richer, but so are the poor and they do best in open economies and societies with good governance.  Where they accept trade and competition not only re-allocates resources more effectively, but helps drive out corruption that’s endemic where politicians, bureaucrats and businesspeople conspire.  Why the problem in concluding this trade round?  Politics.  Agriculture, as always, is the black hole of negotiations.  While it’s called the ‘Doha Development round’, it must be about more than agriculture and it’s not just about rich countries opening their markets.  Developing countries ought to gradually open their manufacturing markets and welcome competition and investments in services.  It’s in everyone’s interests.  The evidence is overwhelming.  There are new elephants in the room such as China and India.  They are doing well, 10% growth can double your wealth within 5 years.  Such is the genius of compound growth.  Together they have lifted half a billion people out of extreme poverty.  China has been a good new member of the WTO, but, like a huge anaconda snake that has swallowed a buffalo, seems content just to digest its present, tough obligations of membership. 

The Group of 20, lead by China, Brazil, India and South Africa, has a chance to make poverty history.  It’s good that this group has been formed, it should make negotiations easier, you need tough, disciplined parties who can deliver, to cut deals.  In my day, they didn’t exist as a group.  However, rich countries have needs too.  But they should be the most generous because the system was created by them and they owe much of their success to it.  

No trade round has ever come in on time, none have ever failed, or failed to disappoint.  However, unless in the next few weeks unless there is a movement, things could get very bad.  A proposed April Ministerial meeting may well be cancelled, sorry, postponed, unless parties get closer together.  A meeting last week moved very little ahead.  It’s a minute to midnight in Geneva, again.  Ominous dark clouds are on the horizon, politicians who should know better are sucking up to ugly, privileged interest groups.  Sweden has the strongest public support for globalisation because of their targeted policies to help people adjust to change.  Only last week, they have said they will lead the progressive forces in Europe against the protectionists.  Governments that have strong domestic policies to support workers in time of adjustments, not surprisingly because they are trusted, are able to lead and implement necessary change.  Democrats have sworn to reject a US/Columbia deal unless workers’ rights are protected.   President Bush wants a WTO deal, the danger is, even if a balanced package is agreed, if he pushes it too far down the throat of a Democratic Congress, the deal could be vomited back.  It could be that the final detail is presented after the election during the transition period so both parties can claim the credit which avoids the round becoming politicised to death.  One fear is that the ambition of some politicians who have a short shelf-life means any deal is acceptable to save face.

Senator Obama has one of the toughest, most respected trade advisers, Dan Tarrullo.  Sadly, Senator Clinton has disavowed the North American Free Trade Agreement, one of the great achievements of her husband’s Presidency.  Senator Obama has moved in Ohio, now Philadelphia, to match her rhetoric.  All politics is local, and a possible early election in India is another complication.  India shares Europe’s position on agricultural protection.  Both want little change in agriculture and many are hiding behind the Trojan horse of ‘sensitive products’. 

Someone ought to remind capitals of the cost of prolonged failure.  There will be futher trade liberalisation, but it will be done bilaterally and regionally.  Many deals insult the term ‘free trade’.  We should rename them ‘preferential’ trade agreements.  They offer new privileges, new levers politicians will one day use.  It can mean US beef into Korea, but not Argentine beef.  This creates trade diversion.  None of these deals face up to the hard issues.  The power stays with the big guys, the poor countries are locked out again.  None of these agreements have solid, binding disputes mechanisms.  We all have much to lose if the multilateral system is not strengthened, and moved forward.  The global economy could do with a confidence boost right now.

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