Fate of Doha Round

Seoul to Focus More on Bilateral Free Trade Deals

The collapse of the Doha round of global trade talks has dealt a severe blow to the broad-ranging negotiations to liberalize trade in agriculture, industrial goods and services. The talks broke up without agreement on Tuesday after nine days of tense negations in Geneva, Switzerland. The Doha round now faces its biggest setback since it was launched in the capital of Qatar in 2001 by 153 member countries of the World Trade Organizations (WTO).

Widening differences between some big emerging market economies and major industrialized powers were attributed to the failed negotiations. Especially, India and China refused to make concessions in key issues in a bid to retain the right to protect farmers and manufacturers who their negotiators claim are vulnerable to international competition. On the other hand, the U.S. along with the European Union (EU) called on the developing countries to open their markets wider.

One of the thorniest issues was the so-called special safeguard mechanism (SSM) which allows developing countries to impose temporary barriers to protect farmers from surges of imports. India and China insisted on maintaining the mechanism, while the U.S. tried to remove the barrier. In particular, India wanted extra safeguards to protect against surges.

The U.S. and other advanced economies stuck to their positions that the safeguard mechanism can be put in place when imports surge by more than 40 percent compared with the average of the three previous years. However, India demanded that developing countries be allowed to resort to the mechanism when imports increase by over 10 percent. In the end, the latest Doha round failed to bridge the differences on trade liberalization.

Ministers from 35 key nations among the WTO members participated in the talks. However, the negotiations came to a grinding halt because seven major blocs ― the U.S., the EU, Japan, Australia, China, India and Brazil ― could not compromise on the sticking issues. The five-year program of farm subsidies recently passed by the U.S. Congress and China's imposition of tariffs on cotton imports also helped derail the talks.

It is unlikely that the Doha round will be resumed soon to have further negotiations to avoid total failure. It is expected that negotiators will have to wait at least until a new U.S. president takes office in January next year. The resumption of the talks might be further delayed if Barack Obama wins the November election. There is little doubt that a Democratic president would move toward protectionism, possibly dimming the prospect for the multilateral free trade system.

South Korea might be negatively affected by the deadlocked global trade talks since its economic growth is heavily dependent on exports. But the country has breathed a sigh of relief since the deadlock enables it to delay the opening of its farm market. Against this backdrop, Seoul is expected to focus more on its efforts to conclude bilateral free trade agreements (FTA) with the EU, Canada and India. The country has already singed an FTA with the U.S., Chile, Singapore, the Association of Southeast Asian Nations (ASEAN) and the European Free Trade Association (EFTA). First of all, the government must work to get ratification of the Korea-U.S. FTA by both the National Assembly and the U.S. Congress.