Don’t Cry for Me, Doha Trade Round

The question to be pondered carefully at this juncture is this: Does it really matter if Doha this time does have a stake through its heart — or if it is instead enduring yet another near-death experience?

Some commentators are quick to dismiss the importance of multilateral trade negotiations. After all, during the seven years that the Doha negotiations have limped along so far, annual global trade flows increased 70%, to $14 trillion, while the global economy expanded by 30%, to $54.4 trillion.

In other words, the economy is doing fine. Why worry? According to this interpretation, only bureaucrats in Geneva, Brussels and Washington stand to lose if multilateral trade agreements truly have reached an historical impasse.

In that same vein, there are those who suggest that supporters of multilateral trade agreements must show that these agreements are a necessary and sufficient condition for economic progress.

A high bar, indeed. One would have to look far and wide to find a volunteer straw man who would assert that the world economy will collapse absent conclusion of the Doha Round.

Of course, any multilateral arrangement in a world of sovereign states can only promote and support sensible national policies. At best, multilateral trade agreements enable international trade and investment — but they do not cause it.

Viewed in that light, the importance of the Doha Round is not that it will fuel world economic progress — but that it will create commitments and conditions that make stupid unilateral policies more difficult.

The multilateral trade regime, which the “death of Doha” threatens, creates forward momentum toward relaxation of the self-destructive protectionist policies that have so much popular appeal.

Trade agreements create external constraints that political leaders can lean on in the well of their national parliament — and say “this devil made me do it.” To be sure, these policymakers know perfectly well that the barriers to trade and the domestic subsidies that trade agreements aim to reduce are bad policy anyway.

Just as a commitment to multilateralism in military operations can limit unsound unilateral interventions, a commitment to multilateral trade agreements can limit bad unilateral decisions on trade and investment policy.

The specter of resurgent protectionism is not a fantasy of neurotics. The collapse of world trade in the 1930s, which watered the soil for the growth of fascism, was driven in large measure by bad international economic policy.

The whole point of establishing the multilateral institutions of the post-war period was to reduce the chances of another international meltdown. If we ignore these lessons of history, we may well repeat it.

What the world community is learning in the meantime is that the U.S. political calendar is not all that matters anymore. India, for example, is having elections next year — and the government there is under a lot of pressure to show to the voters what they have done for them lately.

In short, a vital part of the explanation for the difficulties of the Doha Round is the vibrancy of democracy around the globe. There are a lot more stakeholders these days. At the same time, trade issues are becoming ever more complex — and therefore harder to solve.

Eventually, though, the Gordian knot will be cut.