Why did it fail?
On the last day (Day 9) of the talks, the core negotiating group (G 7: Australia, US, EU, Japan, China, India, and Brazil), more narrowly the U.S. and India/China/Indonesia, failed to close their gaps in some details (depth) of the “special safeguard mechanism” which would allow developing countries to protect their crops from the surge of imports to secure food (and livelihood) security and rural development. Yes, it is frustrating to see that the once rekindled hope was shattered by this quite technical matter. The deal was so close! Well, of course, this happens all the time in any negotiation…
Most commentators view that the current domestic political situations in major negotiating parties, such as the U.S., the EU, India, have not been amenable to concessions, thereby leading to the lack of political support for a deal in general. Key elections are pending in the U.S. and India. The EU has a new president (Sarkozy), who has not been very cooperative to the Doha round. Also, protectionist sentiments prevail in both sides of the Atlantic.
What would be the impact?
Certainly, it is not the end of the world as well as of the global trading system. The impact would be more symbolic yet systematic, rather than commercial. Pascal Lamy estimated that as much as US$130 billion in potential tariff saving a year ($35 billion saving in agriculture and $95 billion in industrial goods) has evaporated. More importantly, however, it is definitely a blow to the credibility of the WTO as an institution and would undermine the business sentiment all over the world in this depressing era of various economic woes. Protectionism is likely to gather steam. Bilateral deals will continue to rule. Possibly more litigations in the WTO might ensue. Yet, a daily basis of the WTO operation, including the dispute settlement mechanism, will remain largely intact.
What’s the next?
Tomorrow never dies. The trade talks will resume somehow some day. The problem is that nobody knows exactly how and when. Big shots, such as Lamy and Mandelson, all seemed to agree that it would not restart some time in the foreseeable future. Perhaps a “new” round after the U.S. November presidential election?
Could Doha Ever Be Saved?
Well, some argue that there should be yet another ministerial after the August break. But, this is unlikely. Maybe, only maybe, there might be something that our captain Pascal Lamy could do as a last resort. Lamy might combine all those convergences achieved thus far with his own magic bullets (some creative alternative proposals on the last two sticking points (special safeguard mechanism and cotton). Then, this “Lamy Draft” could be thrust upon the concentric circles (from G-7 to the Green Room to the whole membership) for an agreement. Perhaps he should fly to Beijing to meet key leaders on the sidelines of the Olympic opening ceremony. He might be able to pick up some political capital necessary to materialize his Draft. Of course, this would not be easy: nobody thinks it would be. But, it might be worth trying. Any way, his term as a Director-General will expire next year or so.