Progress toward unfettered international commerce stumbled last week with the collapse of the World Trade Organization's Doha talks, a seven-year effort to establish new global trade rules. The lengthy talks, which commenced in Doha, Qatar, and ended in Geneva, were complicated by the rapid emergence of China and India as major economic powers with commercial and strategic interests to protect, and the clout to do so.
It was far from clear in the aftermath of the collapse that the talks would resume in the foreseeable future. Some negotiators wondered if an agreement among so many nations -- the WTO has about 150 members, each with veto power over any measure -- is even possible. "The fundamental reality is that it has become too complex," WTO director-general Pascal Lamy told The Financial Times.
The talks were tripped up over a last-minute proposal by China and India to be allowed to raise tariffs on key crops -- such as cotton, rice and sugar -- if domestic growers were suddenly battered by imports. Western economic powers could not agree with the emerging powers on how much those imports could surge before the tariffs could be applied.
Trade will continue, of course. The Doha round aimed to make the rules more inclusive of emerging economies and to help the world's poor by dropping barriers such as tariffs and reducing or ending subsidies paid by wealthy nations to their farmers and manufacturers. Many observers say the talks' collapse is a setback for those poorer nations, which need access to larger markets in order for their economies to grow.
Wharton management professors Stephen Kobrin, whose research interests include globalization, and Marshall Meyer, an authority on China's economy, recently spoke to Knowledge@Wharton about the collapse of the talks, global commerce and China's interest in the rules governing trade.
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