Multilateral Trade Pact on Life Support

This really is the do-or-die year for the 10-year-old Doha Development Round trade talks sponsored by the World Trade Organization. Still, that hardly means world powers will react any differently than they have in the past despite the likelihood that passing something similar to what is now on the table would pump some $360 billion in trade annually.

Every effort to get the trade talks off dead center have met with bitter disappointment, and it's usually for the same reasons. Now there is yet another surge in interest provoked by what looks like a renewed interest in trade in the United States, though some skeptics assert little came from President Barack Obama's State of the Union speech that had not been heard many times before. There is a lack of confidence from the latter camp that anything dramatic will be introduced to back up the comments, but there's more hope than in previous years.

The barriers to Doha are simple, yet vexing to those who see the advantages of trade. The focus always has been market access. The United States and Europe want to be able to sell their services into the developing markets as well as access for their consumer and industrial goods. Developing nations want to access the European and U.S. markets for their farm production, consumer goods and their industrial output, which seems simple enough in the theoretical trade sense. The problem is that there are groups in every nation who want no part of that import competition and will fight to the bitter end to keep rivals at bay. For a decade, these forces have overwhelmed those who would benefit from the trade.

A simple trade pact has problems enough, as evidenced by the delays by the United States to complete favorable deals with Colombia, Panama and, until recently, South Korea. When the trade pact is based on a multilateral approach, the difficulty is magnified considerably. Any deal on access to a given market automatically must be offered to any member of the WTO; that includes just about every nation on the planet. Though economic benefits far outweigh the concerns, the trepidation is understandable.

Analysis: The business community typically is more enthusiastic about the multilateral trade deal than the many individual pacts that get signed. It is far easier to develop a trade strategy when the rules are universal as opposed to contending with different sets of tactics for each nation involved in trade. The complexity of the current system means that many companies quit trying to access those markets that would otherwise be prime opportunities. Keeping track of all the rules, regulations and opportunities provided by the various trade deals can be intimidating for the smaller companies. They are the biggest supporters of the larger pact, but their voices tend to get drowned out by those who assume they will be losers in the new trade environment. Supporters of the Doha attempt point out that conditions are ripe to make a push to complete a deal. The possibility for passage should grow steadily worse in the years ahead because of the oncoming elections in key nations.

Source: Armada Corporate Intelligence's Strategic Global Intelligence Brief

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