LAST November marked the start of the tenth year since the epic, stamina-sapping Doha round of trade talks began. It was also when the German chancellor, Angela Merkel, and Britain’s prime minister, David Cameron, joined by the heads of government of Turkey and Indonesia, asked a group of experts to work out how on earth to get a Doha deal done.
Led by Peter Sutherland, a combative former director-general of the World Trade Organisation and its predecessor body, GATT, and by a trade economist at Columbia University, Jagdish Bhagwati, the experts were due to issue a report on January 28th. That will be in the midst of the annual jamboree at Davos in Switzerland, where global bigwigs gather to chew over world affairs.
The report could cause a few attendees to choke on their Glühwein. It urges its sponsors, along with the rest of the leaders of the world’s big economies, formally to commit to finishing the round by the end of the year. It is far from clear how such a deadline could be made binding, but the idea is as much tactical as practical, and received backing this week from the International Chamber of Commerce.
Mr Sutherland argues that his experience during the Uruguay round of trade talks taught him that having a firm timetable is the best way to knock heads together. Those talks took a mere seven years, ending in 1994, and if it is any consolation to today’s negotiators, even the WTO’s official history admits that at times they seemed doomed to fail.
That is a fate that must not befall Doha, the experts insist. They reckon that only a few more steps are needed for an agreement. Richard Baldwin of the Graduate Institute in Geneva, one of the economists in the group, argues that Doha is a lot closer to being done than it has ever been, and than a lot of people realise.
One reason is that agricultural commodity prices are high, so in America subsidies to farmers, which are linked to world prices, have been tapered down. This means that trimming them back should be less controversial than might otherwise be the case. That could encourage Barack Obama to throw his weight behind the talks. Finishing the Doha round could also help his administration flaunt its pro-business credentials, which have been under question of late.
An emphasis on the importance of removing trade barriers in service industries, such as technology, could help to bring the agreement of big service-sector exporters, notably India. That country’s reluctance to make concessions on agriculture was blamed by many for the collapse of the last serious attempt to finish the Doha round in July 2008. And the big emerging economies, the authors argue, need to remember that an umbrella trade agreement that covers almost all countries is far preferable to the idea of trying to strike scores of bilateral deals.
Some Doha doubters argue that the world economy has moved on since the round began—trade in services has become far more important, and many countries have already cut tariffs on their own—making the talks largely irrelevant. But the authors provide some convincing evidence against this view. The proposals already on the table would add $360 billion in new trade each year. They would lead to a substantial reduction in the tariffs paid. For example, the total amount of tariffs paid on manufactured goods imported into America could fall by almost 50%.
The authors do, though, admit that there are growing gaps between 20th-century trade governance and 21st-century trade. A case in point is the growth and rising complexity of global supply chains, which means that today’s protectionists are more likely to resort to targeted rules rather than tariffs; this makes trade negotiators’ traditional goal of tariff-killing less relevant. But abandoning the present negotiations in favour of an entirely new round of talks with a more up-to-date agenda, as some have advocated, has even less chance of getting anywhere than the Doha effort. That is saying something.