Reports of Doha Development Roundís demise greatly exaggerated

ìInterim Trade Triumph Short on Hard Details: Envoys Reach Agreement to Agree in Time on Scaling Back Farm Subsidies,î by Elizabeth Becker, New York Times, 2 Aug, p. C1.

ìFarm Accord Spurs WTO Trade Talks,î by Scott Miller and Scott Kilman, Wall Street Journal, 2 Aug, p. A3.

ìPoor Nations Need Trade Talks to Succeed,î by Neil King Jr., WSJ, 2 Aug, p. A2.

Thatís what I love about the WTO and its earliest common denominator approach to decision making: sometimes all they can do is agree that theyíre going to cut a major deal by such-and-such a time, without deciding many of the details, but you know what? Thatís juuuuuuuuuuuust fine. If all you can do is agree to agree, then thatís your interim agreement, damn it!

Compare that sort of consensual approach to the sort of partisan gridlock we so often see in DC, and you have to be more optimistic about the Doha Development round than the federal deficit. Whatís so laughable about so much of the protest movementís anger against the WTO is that it imagines it to be this shadowy super-powerful cabal, when in reality itís a very weakly empowered entity that lives and dies by consensus of the whole. Thatís why the WTO is constantly being described as virtually in collapse and near death, only to be resurrected in the next meeting, as if by some globalization ìmiracle.î

A quick rundown of the proposed new rule set, courtesy of the Journal:

∑ Export subsidies: Are to be eliminated. U.S. export-credit and food aid programs face constraints.

∑ Production subsidies: Imposes limits on how much rich nations can give farmers.

∑ Tariff: New tariff-cutting formula with deepest cuts for products with the highest tariffs. Details to be decided.

∑ Cotton: African nations drop demands that U.S. cotton subsidies be treated separately. But a new WTO panel will look into potential reforms.

The toughest nut may yet be the big promised reductions in tariffs on everything from corn to cars. Roughly two-thirds of all global trade involves manufactured goods, and the Old Core especially wants the Gap to reduce their tariffs so that more exports will flow. In return, the Gap demands that the Core let its agricultural products in, which means stopping the heavy subsidization of national farming sectors in the U.S., Japan, and Europe.

For now it looks like both sides blinked to get this agreement-on-an-agreement done, but in reality, itís the Gap and the New Core pillars that need this mega-deal to happen far more than the Old Core. If thereís no global deal, then the Gap states are left on their own to cut deals with the major Old Core groups, and individually none of them possess enough clout to make the tougher deals happen. Thus the WTO is crucial for the Gap to flex its muscle en masse, as it has been for the New Core states that have emerged as their own lobbying bloc within these contentious negotiations. Bottom line: the WTO does help level the playing field for the Gap states and the New Core pillars.