This week talks in Geneva aimed at liberalising global trade collapsed.
Pascal Lamy, the director general of the World Trade Organisation, confirmed the failure, which officials have blamed on China, India and the US failing to agree on import rules.
The talks were launched in 2001 in Doha and were seen as providing a cornerstone for future global trade. EU Trade Commissioner Peter Mandelson said the result was “heartbreaking”.
The main stumbling block was farm import rules, which allow countries to protect poor farmers by imposing a tariff on certain goods in the event of a drop in prices or a surge in imports. India, China and the US could not agree on the tariff threshold for such an event.
Washington said that the “safeguard clause” protecting developing nations from unrestricted imports had been set too low.
The talks have repeatedly collapsed as developed countries failed to agree with developing nations on terms of access to each others’ markets.
The US and the European Union want greater access to provide services to fast-growing emerging countries, including China and India. Meanwhile, developing countries want greater access for their agricultural products in Europe and the US.
The collapse of the Doha talks, the failure to bridge differences, could symbolise an end to multilateral trade agreements. Instead, nations may pursue dual agreements with partner nations, preferring to focus on their own requirements rather than a more common negotiating goal.
While, as Mr Mandelson pointed out, the collapse is a “collective failure” the “consequences [will] not be equal”. It will be countries that most needed help that hit hardest.
“They [the consequences] will fall disproportionately on those who are most vulnerable in the global economy, those who needed the chances, the opportunities most from a successful trade round.” he said.
The Doha development round of trade talks initially started in 2001 to remedy inequality so that the developing world could benefit more from freer trade.
Not only has this not been achieved but seven years of hard negotiations have been lost with no guarantee on the starting point of a future round.