)
India looks like the party-pooper of world trade. Really, its refusal to back a global accord on standardised customs just throws sand at an already creaking wheel.
Trade is no longer seen as the growth-booster it was before the financial crisis, particularly in emerging economies. Even politicians normally friendly to business - like Indian Prime Minister Narendra Modi - aren't terribly keen to invest their political capital in dismantling barriers to exchange. For Modi, agreeing to the World Trade Organization deal that lapsed on July 31 would have exposed the country's domestic farm-support policies to challenges by trading partners.
It's hard to lay other trade failures at India's door. The Doha round of trade negotiations is practically dead, while the ongoing Trans-Pacific Partnership discussions aren't faring much better, with even some US politicians questioning the secrecy surrounding the talks. There hasn't been significant global trade reform in two decades.
The prospect for ambitious trade agreements is now rather dim. Rich nations have practically stopped giving new business to producers in emerging economies. Even trade between developing countries is growing much more slowly than before the 2008 crisis. This shrinks the political space available in emerging markets for governments to act as free-trade evangelists.
Even promises of big gains no longer move politicians. The "trade facilitation" accord India killed could have added $960 billion and 21 million jobs to the world economy, according to economists Gary Hufbauer and Jeffrey Schott at the Peterson Institute for International Economics. Even if the estimates are correct, just who would have benefited is not clear. Rich countries are struggling to boost their own consumption and investment demand. That raises the possibility that gains from freer trade could be unevenly distributed - at least in the short run.
One country stamping on one trade deal won't push the world into autarky, but the missed opportunity shows how weak the glue of global commerce has become. The time when trade could bind the world in shared prosperity is not necessarily past - but it may now be well into the future.
