The Doha trade round has stalled. Again. In so far as anyone pays much attention, they will probably struggle to stifle a yawn. That is a pity. The deadlock will not see the international trading system crashing down about us. Yet the failure is more than a missed opportunity. It underscores a dangerous inability among rich and rising nations alike to recognise their individual in their mutual interest.
Some, of course, are celebrating. Nicolas Sarkozy casts himself as the French president who will make his country's peace with the 21st century. The embrace of modernity, though, must not extend to anything that upsets a hugely costly agricultural policy designed for the 1950s.
Sarkozy's choice of words gives the game away. A truly confident leader would talk about meeting the challenges of globalisation: about equipping France, and indeed Europe, to draw further prosperity from an integrated world economy.
Instead the French president's language betrays temerity. In spite of all its manifest strengths - economic, technological, cultural, political - France, it seems, cannot stand on its own feet. Europe's leaders must "protect" the continent from the ravages of globalisation.
So indignant was Sarkozy with the efforts of the supposedly neoliberal Peter Mandelson to forge a deal that at one point he demanded that the European Commission's trade negotiator leave Geneva for a public dressing down at the Elysée. Sensibly, Mandelson declined.
Perhaps, though, I am being unfair in singling out Sarkozy. For all the efforts of the indefatigable Pascal Lamy (a free-trade Frenchman) as head of the World Trade Organisation, and Mandelson's decision to negotiate at the limits of the EU mandate, the truth is that most of the big players in Geneva were happy to see the process collapse.
Among rich nations, domestic politics militate against trade liberalisation. The wealthier emerging nations meanwhile are happier to keep the privileges they have got than see them extended to those lower on the development ladder.
Stand-off
In the event, hopes of a deal last week were scuppered by a stand-off between India and China on one side, the US on the other. The rising powers of Asia wanted a special protection mechanism for their farmers. The US refused.
For the NGOs who lined up in the television studios to denounce George W. Bush and all his works, this was a classic case of the world's most powerful nation once again oppressing the poor.
In so far as fat subsidies for rich US (and European) farmers are unconscionable, they have a point. The US Congress has just passed a law pouring even more money into agriculture. The Bush administration's demand for market access in developing countries as the price for cutting its own farm support demonstrates an absence both of economic logic and good faith.
As Mandelson has pointed out many times, the industrialised world cannot talk seriously about a commitment to development as long as it locks poor farmers out of global food markets. But the breakdown was more complicated. The developing world scarcely speaks as one. India and China are as concerned to protect their markets from poorer nations as to keep out US multinationals. Brazil, another of the so-called Brics, was among the small group wanting a deal. Uruguay sided with Washington in demanding China and India open markets. The losers from the impasse will not be the prosperous, but some of the poorest.
For the past few decades the opening of markets and growing economic interdependence have been a force for geopolitical stability as well as of rising economic welfare for the world's poorest. We learned at the beginning of the 20th century that globalisation offers no guarantee against war. But mutual economic dependence does provide a powerful incentive to settle political differences.
The present strains on the world economy, notably the imbalance between supply and demand of raw materials and a rising protectionist clamour threatens this progress. And it threatens it at a moment of huge geopolitical upheaval as the global order adjusts to the emergence of China and India as great powers.
The collapse of Doha, however, speaks to the failure of both sides to own up to the world as it is. On the side of the rich countries, particularly the US but no less many European nations, there is a refusal to acknowledge that globalisation no longer belongs to the west. In previous trade rounds, the rich nations set the rules and the rest could take it or leave it. No longer.
Equally, the new powers now give the impression - and you see this as much in India as China - that they want to be free riders. They are happy to profit from the rules, but unwilling to support the architecture of the system. Doha, in this respect, saw both sides in blindfolds.
-Financial Times
