US results a severe blow to Doha round

EXIM MATTERS

The election results in United States have dealt a severe blow to the prospects of early conclusion to the Doha Development Round. Only a miracle can save the round now.

The multilateral trade talks were suspended at the World Trade Organisation a few months ago as key members were not willing to budge from their well-known positions on the critical issue of farm subsidies in rich countries.

With the Democrats now in majority in both the Houses of the Congress, it will be more difficult for President George Bush to unilaterally soften his stand on farm subsidies or give more concessions.

Quite a few Democrats who have won had campaigned against the trade policies of the Bush administration.

The Democrats have now offered to work with the President on all critical issues and Bush has reciprocated with his own assurances to work with the Democrats-dominated Congress.

In practice it is unlikely that both will find it easy to displease any section of the electorate on any issue relating to international trade.

President Bush is known for his support to free trade but he has failed to either cut farm subsidies or take any bold initiatives to push the Doha round to its conclusion.

The Democrats are of the view that his free trade treaties have not helped United States and that the workers, particularly in manufacturing, have suffered. Protectionist voices will now be heard louder in the United States and the Democrats will demand extra protection on labour standards, and environment and human rights.

The developing countries have already made it clear that the WTO negotiations cannot proceed unless the developed countries come up with unilateral offers to cut farm subsidies.

It is highly unlikely that they will even bother to look at demands to bring labour standards or issues of environment and human rights to the centrestage in the negotiations.

Under threat is also the "fast track" authority that the US Congress gave to the President in 2002. Under the authority, the US President can negotiate with an assurance that the Congress may accept or reject the treaty but not amend any clause.

The authority is likely to expire in June next year and the Democrats are unlikely to renew it. Without the authority, the credibility of the US negotiators will be low and other WTO members may not take them seriously.

The US farm Bill is also due for renewal next year and it is highly unlikely that a much weakened President Bush will prefer to annoy any of his vote banks by agreeing to cut farm subsidies.

Even if he wants to, the Democrats are unlikely to co-operate given the fact that the US will vote in 2008 to elect a new President and that the party primaries to choose the candidate for the elections will commence from mid-2007.

It is likely that many WTO members will turn to bilateral or regional trade agreements in the hope of increasing trade. But more often than not, such agreements distort trade and can hardly bring the kind of results that multilateral trade deals can.

tncr@sify.com