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Cotton workers in Burkina Faso
Sunday, Jul. 30, 2006

Open quoteThere was something unseemly about the way Europe and the U.S. blamed each other for the collapse of global trade talks last week. Like two bullies standing amid the wreckage of their brawl, they looked a little ridiculous, especially when their squabbling turned so quickly to who was responsible for the breakdown. Almost five years after the launch of the World Trade Organization's 404 Not Found

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Doha round, which set out to boost the developing world's share of global trade, poor countries don't really care which rich country is to blame for the breakdown.

"Everyone is saying: 'It's not me. It's not me,'" says Miriam Omolo, a trade specialist at the Institute of Economic Affairs in Kenya. "But instead of spending so much effort figuring out who's responsible, we should be looking at the implications of the talks failing. Because those implications are frightening."

Just how frightening depends on how much you think free trade, especially trade in agricultural products, would help the developing world. For the past few years, "trade not aid" has been seen as a kind of silver bullet for the problems of many developing nations. The argument goes like this: if rich countries dropped their tariffs and cut their agricultural subsidies, and Africa, say, could sell its vegetables and cotton and flowers freely to the U.S. and Europe, then the continent could begin to trade its way out of poverty, rather than having to rely on foreign aid.

But as the Doha round has progressed, such dreams have been scaled back, as farmers and politicians in the E.U. and U.S. made it plain that their belief in free trade has serious limits. The World Bank reduced its estimate of the potential benefits to the developing world of the Doha round from more than $500 billion to less than $90 billion. Some of that is due to a new methodology, but the number also shrank as reality set in.

There are already mutterings in Washington and Brussels that the breakdown of negotiations isn't really a disaster, because the benefits to the poor world were never as great as first touted. Economist Jeffrey Sachs, a special adviser to U.N. Secretary-General Kofi Annan, warns against a trade-only focus. He has argued for a few years now that places like Africa need "trade plus aid" rather than one or the other, and that the biggest beneficiaries from liberalization of agricultural trade would be large food exporters such as Australia, Brazil, Canada and the U.S.

Other economists, such as Leon Louw, executive director of the Free Market Foundation of Southern Africa, even see a silver lining in the collapse of the talks because it will force developing regions to concentrate on getting their own domestic policies right. "If everyone sits around hoping Africa can become a major agricultural exporter simply because of what the first world does, then Africa will continue to stagnate," Louw told me a few days after the trade talks were suspended indefinitely. "The focus is Africa as this pathetic place that needs a big brother to help us. That's just nonsense. We've got to start helping ourselves."
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That's all true. But it's also true that freer trade in agricultural products would have given places such as Africa a much better chance to help itself. That doesn't mean that countries can ignore the other issues that help growth: good governance, stability, education. But "to suddenly go back to thinking that trade doesn't matter is ridiculous," says Celine Charveriat, of Oxfam's Make Trade Fair campaign. "It's a nondebate. You need aid, obviously, but you also need to have fair trade rules."

And not just because of economics. Ninety billion dollars is a big chunk of change for the developing world. But potential economic gain was not the only thing hurt by last week's failure. With the U.N. stumbling in Lebanon and the trade talks stalled, multilateralism took a couple of hits as well. "This can only lead to more cynicism in the developing world and people losing faith," says Kumi Naidoo, head of the international umbrella group Global Call to Action Against Poverty, which backs the Make Poverty History campaign. "It's a very big blow to multilateralism and sends worrying signals about the state of global governance."

Indeed, the biggest outcome of five years of negotiations is a sad irony. The next time the rich world lectures a developing nation about the need for reform and for good governance, perhaps it should remember that last week the two most powerful global economic blocs allowed small domestic lobby groups to dictate trade policy.Close quote

  • The collapse of the Doha round of trade talks will likely create cynicism
Photo: DANIEL PEPPER/ GETTY IMAGES | Source: The collapse of the Doha round of trade talks will likely create cynicism