The World from Berlin 'WTO Failure Reflects Changing Global Power Relations'

The WTO efforts to strike a new global trade pact ended in failure on Tuesday, after the US resisted what is saw as protectionism from China and India. German papers on Wednesday are gloomy about the impact on the global economy.


Kamal Nath, Indian Minister of Commerce and Industry, after the collapse of the WTO talks in Geneva.
AP

Kamal Nath, Indian Minister of Commerce and Industry, after the collapse of the WTO talks in Geneva.

The negotiations had already dragged on for seven years but nine days of marathon talks in Geneva could not bridge the gap. On Tuesday the current round of World Trade Organization talks -- begun in Doha, Qatar in 2001 and often referred to as the "Doha round" -- collapsed in failure. The result is no trade deal and no good news in a time of increasing economic uncertainty.

In the end, the deal hit a fatal snag when the United States refused to allow China and India a loophole that would have protected farmers from a sudden surge in imports.

The recriminations started almost immediately, with each side blaming the other for what has been widely regarded as a disaster. On Wednesday China blamed "selfish" wealthy Western nations for the failure to free up global trade, while Japan pointed the finger at China and India for focusing on their own interests instead of considering the global economy.

The reality is that a WTO deal is now unlikely for years to come. The crestfallen Brazilian Foreign Minister Celso Amorim said on Tuesday that it could even be three or four years before the talks are revived.

The disappointment was all the more crushing because a compromise which had been painstakingly negotiated was so close to being accepted by all 153 WTO member states. The deal would have allowed poorer countries to sell more produce to rich countries while Western nations would have had access to emerging markets for their industrial goods and services. US officials were reported to be particularly bitter because they had made significant concessions by agreeing to limit US farm subsidies.

The debate over agricultural subsidies and import restrictions had taken on added significance recently amid the recent sharp increases in food prices around the world.

Peter Mandelson, the EU trade commissioner, described the collapse of the talks as a "collective failure," and warned that the consequences would fall "disproportionately on those who are most vulnerable in the global economy."

German papers on Wednesday rue the failure of the talks, and some warn that the WTO could lose its teeth when it comes to regulating global trade.

Business daily Handelsblatt writes:

"In the long term the debacle in Geneva marks a break of immense importance. The rules governing trade will become more inscrutable, because agreements between individual states will replace the framework that had been globally accepted up to now. The WTO will lose its influence as the referee in disputes. The price will only gradually be perceived by businesses, but it will be high. The trade system is losing the dependability that exporters urgently require."

"Above all the failure of the WTO talks reflects the changing power relations in the world. Gone are the days when the US and Europe could set the tone and largely draw up the world trade agreements amongst themselves. China and India took a tough stance. They fight hard for their interests and only support free trade when it suits them. The old industrial powers will slowly realize the bitter truth of this. Geneva was just a foretaste."

The center-left Süddeutsche Zeitung writes:

"On Tuesday in Geneva the hope died that the powerful WTO would be capable of at least getting close to solving the most urgent problems facing people across the world. These are: rising food prices, declining natural resources, the crisis in the financial markets and the economic downturn in the Western industrial countries. A flourishing world trade, according to the WTO, could lead to a greater availability of food, which would decrease the prices of bread, rice and corn, make cars cheap and make it easier for people to make a living."

"However, the old conflicts broke out once again in the negotiations. The US supports its farmers with subsidies, but it wants the emerging and developing nations to get rid of their import duties. but they, in turn, fear that the subsidized corn or wheat from the US could undercut the local products. The growing powers China and India don't provide their farmers with subsidies. These small farmers, who are less productive, have no chance against a flood of US products. "

"As long as these imbalances continue, there is little hope of free markets. And it is fatal that without an agreement on agricultural markets, there will be no free trade when it comes to services or industrial goods. It is all the more tragic as the negotiators from the most powerful trading nations were so close to an agreement."

The center-right Frankfurt Allgemeine Zeitung writes:

"The breakup of the negotiations shows that the critics of globalization have managed to intimidate governments in many countries. Despite all the facts about the positive effect that trade has in increasing prosperity, the propaganda of the anti-globalization movement has had its effect. In many places there is a public impression that whoever opens their markets loses. There is a lack of political courage to tear down trade barriers. That just decreases the opportunities for growth for everyone. However world trade will not be disrupted. Trade and a division of labor will still increase even without Doha, but it will happen increasingly by means of regional trade agreements that will favor the stronger trading partners."

-- Siobhán Dowling, 11:55 a.m. CET

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