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Tough Months Ahead for Trade
Trade has many enemies and few friends. This was among the most obvious conclusions from the collapse of Doha. Producerist agricultural interests in Europe, America and India all combined to limit negotiator's room for maneuvre. Meanwhile, countervailing pressure from business groups was weak. Ultimately there should have been few surprises that the political scientists favourie scenario - concentrated costs vs diffuse benefits - scuppered the talks. So its nice this morning to see at least the beginnings of a fight back. The Chairman of Citigroup along with a few other CEOs has written to the President, asking for one last push on the talks. What is at stake? A lot. The value of the talks themselves is not insignificant, put at something shy of 300bn by the World Bank. But much more important is the sanctity of the multilateral WTO framework itself. If Doha is junked and replaced by a range of bi-lateral deals, it imperils the authority of the system of trade dispute resolution that the WTO system built. As NDN's Rob Shapiro said at the launch of our Globalization Initiative this system is central to understanding globalization:
More than ever before, everybody shares the same economic rules regarding both how to treat themselves and how to deal with others. This is largely the result of the WTO process, which requires countries like China and India, that used to be organized around monopoly franchises and state enterprises, to open themselves to foreign investment and domestic competition.
Without the WTO system, America has little leverage over its partners in enforcing fair trade rules. That said, we should treat the run in to November with some trepidation. Trade Envoy Susan Schwabb announced a trip to China shortly to discuss ways forward on trade.More worryingly, the coming months are likely to see more trade flare ups, not less. The return of threatened sanctions against China's currency valuation is likely, unless Treasury Sec Paulson borkers a deal. The CFIUS regulations on foreign ownerships are up for review. And electioneering Congressional leaders are unlikely to take kindly to any new job losses that even sniff of having been caused by trade. All in all, choppy times ahead. But one final push by all concerned remains a better option than no push at all.