THE BLOG

What Are the Consequences of Not Doing Doha?

01/03/2008 08:26 pm ET | Updated May 25, 2011

[Since 2001, the Doha Round trade negotiations initiated by the World Trade Organization and its member nations have been working towards the development of a global trade agreement that would liberalize global markets, primarily in the areas of agriculture, manufacturing and services, in order to reduce poverty and promote economic development in the developing world. Central to this negotiation has been the elimination of 'trade distorting subsidies' to farmers and manufactures in the U.S. and E.U., that provides them with a daunting competitive advantage in the global marketplace. While the Doha Round has met some resistance, in October 2007, U.S. Trade Representative Susan Schwab indicated that the U.S. and E.U. were willing to be 'flexible' on agricultural subsidies, and according to WTO Director-General Pascal Lamy, the completion of the Round was 'within reach'. More recently however protectionist sentiment has re-emerged as part of the U.S. presidential race, where globalization and global trade agreements have been seen as a threat to American jobs. This has put added strain on the Doha Round since it requires full endorsement from the U.S. in order to be completed.]

In a recent interview with the Financial Times, Senator Hillary Rodham Clinton said that she wanted a more "thoughtful and comprehensive trade policy for the 21st Century," and one, within the context of the Doha Round that would build in stronger environmental protections than what were currently on offer. She closed by saying, "I think we need to take a long hard look at this (at the Doha Round) and do it in the right way."

I do not think that Senator Clinton meant what she said. I do not believe this because what is on offer with Doha is not only "thoughtful and comprehensive" but it creates an opportunity to help both the world's poor and the environment.

We have to ask, what are the consequences of not doing Doha? And we have to ask political leaders what will be the future consequences of not combating poverty throughout the world, or of not attempting to spur development in poor nations through trade, cultural understanding, education, and technical assistance?

Recently at the 2007 Global Creative Leadership Summit, Robert Hormats of Goldman-Sachs said that it was important to make Americans aware that an economically strong China made a strong America, that a strong India made a strong America and that a strong Brazil made a strong America. This is because of the great interconnection between these countries, and indeed with the global economy, in respect to trade and industry. To put this in perspective, according to Greg Rushford, China sold the U.S. $27 billion worth of clothing and fabric during the first nine months of this year.

In today's world we are truly interdependent, and we need to seek mutual benefit across national boundaries and borders. We need to make an effort to understand that with globalization, poor people, and those with different histories and from different cultures are living with us, here, in our garden. We have to ask, how can we ensure that this relationship is one of harmony and peace, as opposed to antagonism and destruction?

On a recent trip to Johannesburg, it was visibly clear to me that the gap between rich and poor is becoming greater and greater. So, too, in China, India and South America. A new segregation is occurring, and this gap is threatening to become a chasm.

Closer to home, it is apparent that our freedoms are being eroded under the banner of 'security.' Anyone who has gone through a major international airport is aware that it is no longer possible to pass through the border without being held under suspicion and treated like a criminal. The border now has become a site to differentiate and divide, rather than welcome and include.

If we truly care about people from different parts of the world, and if we would like to ensure peace and stability for our children, we can no longer think only of ourselves and of our national self-interest. With the interconnectedness globalization brings, we need to recognize "my problems are your problems, and my opportunities are also your opportunities.' This recognition and respect must be carried over into politics, education and business. Contrary to protectionism, the embrace of cultural difference allows a society to become more diverse, creative and dynamic.

The Doha Round is a positive and hard-fought step in the direction of mutual support and mutual benefit. It has to be acknowledged that World Trade Organization Director-General Pascal Lamy, through his tenacity and deft touch, has woven together a trade document that includes agriculture, manufacturing, services and the environment, that will work to benefit all 151 WTO members. The Doha Round provides a rare and valuable opportunity to establish a new global trade framework that has at its heart principles of development, poverty reduction and equity. It is an opportunity that cannot be missed.

A completed Doha Round will have concrete and visible effects in terms of poverty reduction, economic development and will help to put developing nations on the road greater economic freedom. It will also provide the opportunity to develop new middle classes, whether in China, India, or Brazil that will lead to a greater distribution of wealth and greater empowerment within the citizenry. A failed Doha Round, or rather the maintenance of the status quo will only result in partial and fragmented gains in these areas.

While the Doha Round would decrease the amount of subsidies available to 1/4 of American farmers -- a difficult, but bold political decision to make during an election year -- it would open up markets and provide hope for millions of farmers within the developing world. The World Bank has estimated that a realistic Doha agreement would bring 32 million out of extreme poverty by 2015, and raise a further 64 million out of the $2 per/day bracket by the same date. This is because the 63% of the gains to be made by the developing world are in agriculture.

But the U.S. also stands to gain from a successful Doha Round. Think about the new market opportunities created for American exporters -- with the U.S. being today much more reliant on exports to generate growth than in the past, more trade actually means more jobs. Current and foreseeable high food commodity prices also make it possible for American farmers, who experience a decrease in subsidies, to further profit from their industry.

In a recent meeting between Kalmal Nath, the Indian Minister of Commerce & Industry, and myself - India is a key negotiator in the final stages of the Doha Round -- Minister Kalmal Nath expressed his optimism towards the completion of the negotiation. However, while India's requests for Doha include a hard cap on U.S. farm subsidies at current 2007 levels -- $10-11 billion, down from $24 billion in 1999 -- and the exemption of 'special' Indian agricultural products - soy, corn, rice etc. - are acceptable within Doha framework, they have drawn objections from U.S. counter-parts.

This point of contention must not be one that blocks the Doha Round since, as Greg Rushford has argued "while rich Europeans and Americans actually could afford to walk away from the Doha Round, India would pay a dear price for its failure." Without the gradual trade liberalization brought about by Doha, this failure would be felt not only in agriculture, but in manufacturing and services -- such as IT where India is becoming a world leader.

Our near future is filled with threats and challenges: bio-weapons, cyber-warfare, and environmental calamity brought about by climate change. We can choose to sit-back and take care of our own interests first, or we can actively face these problems, seeking solutions that involve and benefit the greatest number possible. It has to be remembered that the Doha Round was initiated after 9/11 where there was a tremendous feeling amongst member nations that greater collaboration and cooperation was necessary to avoid future catastrophes brought about by inequalities.

We cannot just take the good of globalization, such as wealth and job creation; we have to address all that it comes with. Globalization is what gives us the opportunity to tackle poverty, climate change, and cultural antagonism, as well as help those who are negatively impacted by economic liberalization though training and benefits. It is also allows political leaders to work together to address these issues, on multiple fronts and in multiple capacities. With Doha we can walk closer together in support of one another.

In response to Hillary Clinton, the Doha Round is the "thoughtful and comprehensive" trade policy for the 21st century she is looking for, and it should not be used as a political tool for the campaign trial. Moreover it is agreement that appeals to fundamental American values as part of the U.S. Constitution that privilege participation, compromise and respect for process. In the case of the Constitution, writers Eric Lane and Michael Oreskes have emphasized that it was created in order to take America out of the "gloomy choas" brought about by the pursuit of unbridled self-interest that threatened the social cohesison of the nation. Today, we are not faced with the building of the nation state, but rather the building of new global agreements and the strengthening of global agencies in order to provide a collective good and create a global cohesion that will enable us to face the challenges and opportunities of globalization. This is our new public virtue.

The Doha Round if successful, is a positive and versatile agreement that will establish more equitable conditions for global trade in this century. Doha provides us with a window of opportunity that will both decrease extreme global poverty by 96 million by 2015, and increase economic development for developing nations at the regional and global level. Developed countries won't be left out either since they will have available new markets for export, innovation and exchange.

We can no longer afford to leave those in most need behind. Doha presents us with a win-win scenario. Let us take this chance, together.

Louise Blouin MacBain,

Chairman of the Louise T. Blouin Foundation and the New Globalization Platform, as part of the Global Creative Leadership Initiative

Post-script: Comments on Benazir Bhutto's Assassination

This past week my heart has been saddened by the assassination of Benazir Bhutto where violence was been used in order to seek a political end. In this case the perceived end was to take Pakistan off of the road of political moderation, democratic reform and openness -- long absent from the country -- in an attempt to turn the nation back towards instability and extremism.

However, when we think of the democratic process that may have been halted, we have to place the demands for 'reform at any cost' within the greater socio-economic context of the country. While Pakistan is the 6th most populous country in the world and has witnessed economic growth since 2000 better than the global average, it is estimated that 24% of its population lives in poverty, and its foreign debt, teetering on default, is approximately $40 billion.

This is why development programmes such as the Doha Round are so important. While they are not a panacea, they do provide an opportunity for poor nations, or nations torn by political instability to move towards economic independence, empowerment and hopefully a peaceful coexistence. We cannot eliminate violence but we can reduce it by supporting initiatives and foreign policy that works to create change at the local level, helping those who are in the most need.