Janet Collins
Billy MDoha Round Trade Talks Doomed from the Start
August 8th 2008 14:08
To presume that representatives from 152 countries could come together and agree on a more open trading model was always more than a little optimistic. In Australia, we can’t even get the leaders of six states, two territories and the federal government to agree on anything most of the time so getting 152 representatives to come to any sort of agreement, would be, I would think, pretty much impossible.
Last week, these trade representatives together with the World Trade Organisation met in Geneva to once again try to come to some sort of agreement on trading arrangements but the talks completely collapsed. These gatherings have been called the Doha Round, date back to 2001 and have had very little success.
Much of the reporting about the failed talks this time focussed on the reluctance of many of the poorer countries refusing to reduce tariffs and protection in areas such as agriculture. Most of the commentary seemed to also concede that although Australia would lose much in terms of trade, the poorer countries would be worse off and had lost the opportunity to pull themselves out of poverty.
In an essay I had read a while ago, published last year – “Protecting the Global Poor” a prominent economist from Cambridge, Ha-Joon Chang, challenges contemporary theory about free trade and the benefits it will deliver the world’s poorer nations. The essay summarises points he made in his book “Bad Samaritans: Rich Nations, Poor Policies and The Threat to the Developing World”.
Chang argues that the richer countries developed their wealth through protectionism rather than trade liberalisation. In this vein he also argues that the less developed countries are ill-equipped to cope with what an open trading system would deal them. His argument suggests that the poorer countries should be allowed to reach a level of development before they are expected to engage in any form of open trading.
Using historic examples including the development of the Japanese car industry, Chang is convincing in his argument that countries need to reach a level of wealth before being expected to open up their trading arrangements. For anyone wanting to view global trade from another perspective, this essay is worth a read and can be found on the link below.
Your text goes here
Given that it is not the first time open trading systems have been declined, it is difficult to believe that our Government could have been optimistic about the talks at all. Every government wants the best trading deal for their own country before anything else and governments, let’s face it, at some time will be up for re-election. For a government to remove protection for its own industries is very risky indeed and was always going to be met with resistance. Add to this the suspicion smaller and poorer countries would have of trading models designed by the larger, wealthier and more powerful ones and you have a recipe for failure.
If we go back to the end of World War II, Australia’s own Prime Minister at the time, Ben Chifley, resisted pressure to dismantle protection of our own industries in favour of an open trade policy fearing it would leave many Australians unemployed. Rather, Chifley decided to stay with the Imperial System of trade that gave preference to Britain and her colonies. Australia was far less developed then than it is now and agriculture and agricultural products were the backbone of Australian industry.
Another point which is confusing to any observer of international trade negotiations is that “free trade” is never really entirely free. We will all remember the furore that erupted over the “Free Trade Agreement” that our former Prime Minister signed with the United States. It had so many exceptions in favour of the United States, mainly in the area of agriculture and livestock, which jeopardised Australian exports and could hardly have been called “free trade” at all.
Our Federal Government moaned about the outcome of the Doha Round telling every journalist how disappointed they were with the result of the talks. Surely, they could not have been surprised. If the larger, wealthier nations include exceptions on their own trading agreements when it comes to agriculture, the smaller, poorer or agricultural dependent countries can hardly be condemned for doing exactly the same.
Last week, these trade representatives together with the World Trade Organisation met in Geneva to once again try to come to some sort of agreement on trading arrangements but the talks completely collapsed. These gatherings have been called the Doha Round, date back to 2001 and have had very little success.
Much of the reporting about the failed talks this time focussed on the reluctance of many of the poorer countries refusing to reduce tariffs and protection in areas such as agriculture. Most of the commentary seemed to also concede that although Australia would lose much in terms of trade, the poorer countries would be worse off and had lost the opportunity to pull themselves out of poverty.
In an essay I had read a while ago, published last year – “Protecting the Global Poor” a prominent economist from Cambridge, Ha-Joon Chang, challenges contemporary theory about free trade and the benefits it will deliver the world’s poorer nations. The essay summarises points he made in his book “Bad Samaritans: Rich Nations, Poor Policies and The Threat to the Developing World”.
Chang argues that the richer countries developed their wealth through protectionism rather than trade liberalisation. In this vein he also argues that the less developed countries are ill-equipped to cope with what an open trading system would deal them. His argument suggests that the poorer countries should be allowed to reach a level of development before they are expected to engage in any form of open trading.
Using historic examples including the development of the Japanese car industry, Chang is convincing in his argument that countries need to reach a level of wealth before being expected to open up their trading arrangements. For anyone wanting to view global trade from another perspective, this essay is worth a read and can be found on the link below.
Your text goes here
Given that it is not the first time open trading systems have been declined, it is difficult to believe that our Government could have been optimistic about the talks at all. Every government wants the best trading deal for their own country before anything else and governments, let’s face it, at some time will be up for re-election. For a government to remove protection for its own industries is very risky indeed and was always going to be met with resistance. Add to this the suspicion smaller and poorer countries would have of trading models designed by the larger, wealthier and more powerful ones and you have a recipe for failure.
If we go back to the end of World War II, Australia’s own Prime Minister at the time, Ben Chifley, resisted pressure to dismantle protection of our own industries in favour of an open trade policy fearing it would leave many Australians unemployed. Rather, Chifley decided to stay with the Imperial System of trade that gave preference to Britain and her colonies. Australia was far less developed then than it is now and agriculture and agricultural products were the backbone of Australian industry.
Another point which is confusing to any observer of international trade negotiations is that “free trade” is never really entirely free. We will all remember the furore that erupted over the “Free Trade Agreement” that our former Prime Minister signed with the United States. It had so many exceptions in favour of the United States, mainly in the area of agriculture and livestock, which jeopardised Australian exports and could hardly have been called “free trade” at all.
Our Federal Government moaned about the outcome of the Doha Round telling every journalist how disappointed they were with the result of the talks. Surely, they could not have been surprised. If the larger, wealthier nations include exceptions on their own trading agreements when it comes to agriculture, the smaller, poorer or agricultural dependent countries can hardly be condemned for doing exactly the same.
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Comment by colocountry
Congrats on a very informative portrait of an extremely turgid scenario. I'm not sure that any of the developed economies can ever claim high moral ground, with their histories all stained with the excesses of the colonial era.
Col