Saturday, November 11, 2006
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Sign # 347 that the Doha round is deader than a doornail
The Democratic victories have generated a lot of pessimism in the business press about there being any chance for a revival of world trade talks. I'm certainly not optimistic about a revival in trade talks.
That said, let me offer two counters to this -- one positive and one negative.
The negative is that there wasn't exactly a lot of momentum on trade liberalization before the election. The most symblolic evidence of this fact come from this Reuters story from November 2nd:
Comatose world trade talks showed a possible sign of brain activity on Thursday as World Trade Organization Director General Pascal Lamy arrived in Washington to meet with U.S. officials.Sounds like a cautiously positive story, until you get to the marathon part. I saw Lamy speak when he was on Boston, and it was clear that he had trained rigorously for the marathon. This is great for Lamy, but it raises the obvioius point -- no WTO Director is going to have the time to train for a real marathon if there's progress to be made on a trade round.
[So what should Lamy have done with his time?--ed. Oh, the impasse is not his fault -- the WTO director has practically no power. His ability to train for the marathon is a symptom of the stalemate among the key countries -- not a cause.]
Second, even if Doha goes down, and even if enthusiasm for free trade slows in the Congress, progress towards liberalization can still be made. Consider that in the past week, Vietnam was admitted into the WTO, and the US approved Russia's entry into the organization as well. There are a few other economies on the outside looking in -- Ukraine and Kazakhstan, not to mention a third of the Middle East-- and if the US can facilitate their entry, then the WTO can live up to its name.
There was also the hopes for the Middle East Free Trade Area/Agreement. And there still are hopes for the Andean countries to come on board. Ortega has said that he'll stay in the CAFTA, which seems like a step forward because relatively recently he was against it. The ASEAN and Thai FTAs with the US were coming on apace. Yet, a short while ago there was a post on this blog about the way that there was no difference to be made by a Democrat victory except on Korea.
I don't know if this is because you expect the others to pass anyway, expected them to fail anyway, or don't believe that they make a difference. Could you give us an indication?posted by: James of England on 11.11.06 at 11:38 PM [permalink]
I think this is a move in a more protectionist direction, but I think fears that the world is ending is a little overblown.
The Swiss Bank has already published a paper about our new "Lou Dobbs Democrats", and the danger they present, but it was classifying "trade skeptics" as anyone who voted or "said" anything bad about CAFTA. This was probably the least popular trade agreement ever.
Secondly, it's whole premise was based on things that were said on the campaign trail. Any thinking person knows that what's said on the campaign trails, during populist moments in front of key supporters is not a good indicator of what these people will do when they actually govern.
If you actually look at the records on Trade of the Democrats in congress and senate, you do have some plain anti-trade reactionaries, the types who vote to withdraw from the WTO, who will never vote to expand trade. And even consenting that our new crop will only grow their ranks, their ranks overall are still quite small. You also have a core group of about 40 Free traders who tend to vote for most trade legislation.
The vast swath of the Democrats though are somewhere inbetween and what you might call "fair traders" Democrats overwhlmingly voted against CAFTA & the Oman agreements. But the agreements with Singapor & Chile had broad bi-partisan support, and as for the agreements with Australia & Bahrain, More Democrats voted for those agreements than against them. For reference, consider that NAFTA only got 40% support from Dems in the House.
In fact, considering that Rangel (who voted for The Singapore & Chile agreements) will be incharge of Ways & means, and can negotiate these agreements on more Democratic friendly terms, you may even see increased support from Democrats on trade. Barney Frank has already stated that if the GOP will work with them to increase the minimum wage & strengthen the safety net, Dems would be willing to lower trade barriers "After all" said Frank "We are liberal internationalists."
Combine all that with the fact that 85% of the GOP will always vote to liberalize trade & it doesen't look to me like our trade consensus is too much in danger. But if our trade imbalance keeps spiraling out of control and wages remain stagnant as productivity increases, I don't know how long it will hold.posted by: DRR on 11.11.06 at 11:38 PM [permalink]
A respite might allow American workers tor ecover from all the prosperity they have been receiving, you know, bankruptcy and foreclosure.posted by: save_the_rustbelt on 11.11.06 at 11:38 PM [permalink]
Libertarian's faith in free trade would almost be touching, if the policies it legitimizes weren't screwing our fellow citizens so much.posted by: Mitchell Young on 11.11.06 at 11:38 PM [permalink]
But if Lamy wins the marathon it could be great por WTO image!posted by: Enrique on 11.11.06 at 11:38 PM [permalink]
Unfortunately, we are already seeing the first signs of Democratic protectionism.
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