Trade Coalitions of the Willing - by Daniel Altman

Feel

that whiplash? Trade has gone from zero to 60 in the White House’s agenda just

weeks after Barack Obama’s second inauguration. Two blockbuster deals — the

Trans-Pacific Partnership, which Japan will soon join, and a

free trade agreement with the European Union — could finally leave the World

Trade Organization’s ill-fated Doha Development Round in the dust. In fact,

these deals offer more hope for world trade than the WTO ever did.

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At its

founding in 1995, the WTO was the first global mechanism for lowering barriers

to commerce. Since then, it has done very little to fulfill its primary

mission. The Doha Round, projected by the World Bank to raise global economic

activity by $500

billion, has dragged on for a dozen years without agreement. In the

meantime, estimates of its potential economic gains have dropped as low as $84

billion — about 0.1 percent of global output — with just $16

billion going to poor countries.

Any deal

now would be lucky to generate even that amount. The Doha Round is a failure

because of its complexity and the WTO’s negotiating system. Everything except

military hardware is on the table, and it has been impossible to reconcile

every country’s views on agriculture, services, and manufactured goods. Yet

because every country has a veto, that reconciliation is exactly what is

required for a deal.

Throughout

the past 12 years, the WTO’s most ardent supporters have urged

countries big and small to stay committed to the Doha Round, resulting in a

massive waste of resources. This has been especially tragic for poorer

countries that have only small teams of diplomats and lawyers responsible for

pursuing bilateral, regional, and global trade deals around the world. Dozens

of them, from Belize to the Gambia, don’t even have permanent representatives

at the WTO’s headquarters in Geneva, and have to rely on semi-annual “Geneva Weeks”

to touch base with their colleagues.

Yet in

spite of the futility engendered by perennially lower expectations, negotiators

have kept on meeting because, as one put it, “the

problem is no one knows what Plan B is.” Now there is a plan B: the

formation of big trade blocs including big and small countries, which will

eventually find it in their mutual interest to negotiate with each other.

This is

a huge step forward. In global trade talks, a few countries — notably France

and India — have relished the role of spoiler. Deals that don’t insist on

being global don’t have that problem; these big trade blocs are essentially

coalitions of the willing. Their members are the leaders, and the laggards will

have two choices: join, or get the short end of the stick.

When

Japan signaled its intent to sign onto the Trans-Pacific Partnership (TPP) last

week, it joined Australia, Brunei, Canada, Chile, Malaysia, Mexico, New

Zealand, Peru, Singapore, Vietnam, and the United States in negotiations. The

most important aspect of this bloc is its diversity, which will result in big

gains from trade. Together, these countries will lower trade barriers — and

get richer.

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Trade Coalitions of the Willing - by Daniel Altman