The internet silence following the collapse of the Doha Round on 30 July last has been striking. It appears not only the negotiators but also the commentators feel the need for a well-earned August break. In a piece for last Sunday’s Irish Sunday Business Post, I tried to summarise my own views on why the Round collapsed.
Essentially it comes down to the political economy of trade negotiations. Those likely to lose out from trade reform, whether farmers in developed countries or industrialists sheltered from competition behind import-substitution tariffs in developing countries, are easily identified and have a huge incentive to lobby to prevent a successful outcome.
On the other hand, those likely to gain, including consumers in general as well as exporting firms and potential exporters, are much more diffuse, more difficult to organise and individually are not likely to see the Round as worth fighting for. Even though collectively their gains will outweigh the losses many times.
In the Uruguay Round, a number of well-organised exporting interests, including big pharma, Hollywood and financial services as well as some farm commodity groups in the US, could see sufficient direct benefits from a deal to make it worth their while to lobby for a successful outcome.
But in the Doha Round, these exporting interests were simply not motivated, and the Doha Round died by default.
This political economy of trade negotiations took a grotesque turn in Ireland, where the farm lobby, despite accounting for just 2 percent of GDP, claimed a successful round would lead to the loss of 100,000 jobs in the agro-food sector and a €4 billion loss for the national economy. Despite the far-fetched nature of these claims, these concerns were echoed by opposition politicians who berated the government for its unwillingness to use a veto to prevent a successful outcome to the negotiations.
The government, of course, while claiming to work for a balanced outcome, was an active member of the Group of 14 led by France which seemed intent on undermining the efforts of the EU trade negotiator Peter Mandelson. The Deputy Prime Minister, Mary Coughlan, who led the Irish team at Geneva in her capacity of Minister for Enterprise, Trade and Employment, expressed a much more nuanced view after the negotiations collapsed, but by then it was too late.
