I was on the floor of the Cancun Convention Center when the September 2003 WTO ministerial conference officially ended in failure. What struck me the most about the abrupt termination of the conference was the absolute jubilation with which the Indian trade delegation and its posse of reporters and NGO cheerleaders greeted the news. There were high fives and hugs and ear-to-ear smiles.
At the time, I thought it odd that the Indians should be so gleeful about the failure of the conference, when, after all, India and other developing countries had so much to gain from a Doha agreement. True, the U.S.-European agricultural proposal at Cancun was a farce, and developing countries were right to object. But the negotiations were in tatters on that day and it was highly questionable that they would ever resume – hardly a reason for celebration.
Technically, the negotiations resumed the following summer. But the Doha Round has never fully recovered from the Cancun meltdown. The same divisions exist. The same sense of victimization persists. The same issues remain unresolved. The same preposterous mercantilist arguments endure. And the same outcome should be expected from this week’s “do-or-die” ministerial meeting in Geneva.
Though the stasis has been attributed to United States and European stinginess on agricultural liberalization, there is plenty of blame to go around for Doha’s failure. It occurred to me sometime soon after witnessing the Cancun jubilation that a meaningful Doha deal would remain elusive because too many developing country trade ministers get too much political mileage back home when they are seen standing up to the U.S. and Europe. Kamal Nath, India’s commerce minister, revels in his role as David to the Western Goliath. (Although his portrayal of David as an arrogant, condescending Narcissus makes you want to cheer for the Philistine giant.)
It’s always all about politics, and if the politics of denying progress on trade negotiations pays higher dividends to the participating politicians than the politics of bringing home a deal, then no deal will happen. With each criticism or rejection of a U.S. or European offer, Nath’s political standing at home moves up a notch. He’s tapped into a post-colonial nationalism (southism, really) that has gained confidence with the emergence of his and other developing-country economies, and is energized by the thrill of seeing the West get its comeuppance.
Nath will continue to play this card because he doesn’t believe that India needs a Doha deal. Or, more aptly, he knows there is greater opposition (political cost) to securing a comprehensive Doha deal (which would require India to “lock in” the tariff liberalization it has undertaken unilaterally over the past several years) than there is demand in India (political benefit) for liberalization abroad. The Indian economy has grown handsomely this decade, which is reflected in the prideful attitudes of its political leaders (nevermind the fact that 300 million Indians still live on less then $1 per day).
To compound the problem this has created for the negotiations (which requires consensus from 153 members to reach agreement), since Cancun India has been speaking for most developing countries (and certainly the least developed countries). Thus, Nath’s hard line has become the hard line of 80 percent of the WTO delegations.
The belief that rich-country trade barriers are a primary cause of poor-country poverty, and that poor-country barriers are needed to overcome poverty, remains prominent in developing countries. But what would happen if there were no rich-country barriers, yet poverty remained? How would the politicians explain continued poverty in the absence of repressive rich-country barriers?
Losing the capacity to scapegoat external forces would be another big cost to developing country politicians, like Nath.