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Friday, September 19, 2003

The Economist on Cancun

This cover says it all.

The article inside on the breakdown of the trade talks doesn't just blame the greedy Western governments for refusing to budge of protecting their farmers and others, but also dishes out some criticism to the intrasigent poor nations for causing the talks to crumble. The leader (subscriber link) on the subject makes the point most succinctly:

"Yet the rich countries did not wreck Cancun by themselves. Many poor countries saw the Doha round, and its promise to be pro-poor, as an excuse for making demands of the rich world while doing nothing to lower their own trade barriers. They forgot that trade talks require compromise. Egged on by a bevy of activists, too many third-world politicians got carried away by the thrill of saying no—ignoring the fact that poor countries actually have more to gain from lowering their own trade barriers than from persuading rich countries to lower theirs. According to the World Bank, over 70% of the benefits that poor countries might see from the Doha round would come from freeing trade with each other. By refusing to compromise, poor countries have come away with nothing."

Where to go from here? Doomsayers claim this forebodes the end of the WTO as an effective force for trade liberalization. Optimists say delays arose during the Uruguay Round (8 years to completion) as well. Poor countries, interestingly enough, claim they'll bring disputes against the West's agricultural policies once the goodwill window agreed upon in Doha expires soon. They feel this may push the rich countries toward real concessions:

"As part of the trade round before Doha, the Uruguay round, countries pledged not to file formal WTO complaints over the dumping of farm products as long as each country stuck to its (limited) farm-trade commitments. That peace clause runs out at the end of this year. The ensuing flood of disputes, claim some Brazilians, will at last force the Americans and Europeans to negotiate seriously on farm trade."

However it happens, I just hope talks can resume because we can't give up on the goal of multilateral trade opening--the costs would be far too great. More Economist:

"According to the World Bank, a successful Doha round could raise global income by more than $500 billion a year by 2015. Over 60% of that gain would go to poor countries, helping to pull 144m people out of poverty."

As if this all weren't depressing enough, the Economist also runs a gloomy survey of the world economy in this week's issue. The lead article's subhead reads: "America can no longer propel the global economy. Unless other countries take over, argues Zanny Minton Beddoes, the economic outlook is grim and globalisation is at risk."

Brad DeLong is dubious on the Economist's claim of a potential dollar crisis for Europe. He's also posted a sobering assessment of the US current account deficit, envisioning potential dire consequences when the lack of sustainability catches up with us.