|
|
 |
|
| Feature |
A World Divided
John Ferry
02/01/2007
|
The global free trade system that
has turbocharged the world’s economy for more than half a century teetered on the brink of disaster last July, when the Doha Round of negotiations to reduce tariffs among the World Trade
Organization’s 150 member countries
collapsed in acrimony. In the aftermath, rancorous
finger-pointing between developed and emerging market countries made a resumption of multilateral talks hard to imagine. Instead, countries have turned
their attention to hammering out regional and bilateral trade agreements, a
trend that threatens to carve the globe into a patchwork of rival trade blocs,
reminiscent of the impoverishing cartels that acted as agents of global
contagion for the Great Depression.
 Business owners, free traders and economists have urged politicians to revive
the Doha Round, named after the Qatari capital where it was launched in 2001.
Even the Vatican has weighed in, with a statement from the
Pontifical Council for Justice and Peace opining that the absence of fair free
trade agreements puts "the peace of the entire human family at risk."
Holy hyperbole, perhaps, but there are clear indications that
the multilateral system that has lifted billions of people out of poverty and
unleashed the entrepreneurial talents of millions more is seriously threatened
by the growing enthusiasm for regional and bilateral treaties. Pascal Lamy,
director-general of the WTO, said in a speech last October that there were 211
regional trade agreements in force, and he expected that number to nearly double
by 2010.
The multilateral system is based on the principle that tariff
cuts and other trade-enhancing measures agreed to under the auspices of the WTO
(and its predecessor, the General Agreement on Tariffs and Trade, or GATT) apply
equally to all its members. Economists prefer this global approach to regional
or bilateral agreements, which they believe distort trade patterns and reduce
economic efficiency.
Unfortunately for multilateralists, political willpower is
waning among the developed countries that have traditionally driven WTO
negotiations. In the U.S., the Democratic takeover of Congress means the Bush
administration’s fast-track authority to negotiate trade agreements (which
requires Congress to vote on treaties without amending them) will probably not
be renewed when it expires this summer. The Europeans are equally enfeebled—the
prime-ministerial succession in Britain, the French presidential election,
Italy’s fiscal meltdown and growing strains within Germany’s Grand Coalition
make it unlikely that any of the core EU countries will cross the powerful
domestic lobbies that benefit from trade barriers.
The antiglobalization movement is also gaining important new
adherents. Developed countries’ politically influential white-collar workers are
starting to feel pain from outsourcing and other manifestations of
globalization. While blue-collar workers and their unions have always squawked
about the inequities of free trade, politicians could ignore them, or buy them
off (as the Bush administration did with its steel tariffs in 2002). The worries
of upper-income workers who see their jobs imperiled will be harder to
disregard.
"We may be at a turning point on trade policy," says Gary
Hufbauer, senior fellow at the Washington, D.C.–based Institute for
International Economics and deputy assistant secretary for international trade
and investment policy at the Treasury Department from 1977 to 1979. "The result,
at best, is that the Doha Round comes up with a very shallow conclusion; you
declare a diplomatic victory and go home. That’s a pretty big blow for world
trade, because it means the engine going forward has sputtered."
|
|
|
|
|
|
|
