Hufbauer and Lawrence: “Let’s Make a Deal”

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In Foreign Affairs, Gary Hufbauer and Robert Lawrence posit a deal that they think would make concluding Doha feasible:

Many observers blame the complexity involved in getting 153 WTO members to reach consensus on an agenda with dozens of issues, but in fact the matter is far simpler. If China and the United States produced the sort of new offers described below, the momentum for a speedy agreement would be unstoppable.

Yet it appears that political considerations will prevent this from happening. US President Barack Obama pushed trade policy to the back burner while he concentrated on health care and financial reform. He needed nearly unanimous support from Democrats in Congress to enact his domestic agenda; trade agreements, meanwhile, are risky for Democratic politicians because many depend on unions, which wrongly believe that free trade means lost jobs. To counter such arguments, the Obama administration must demonstrate that trade agreements would boost US employment by doubling exports. The White House also needs strong support from Republicans, who tend to be allied with business. So far, US firms are lukewarm about the Doha Round because it seems to offer little from the large emerging economies, especially China…

These proposals could make the Doha Round a political winner: Major concessions by China and a few other emerging countries would be seen in the United States as evidence of greater access in markets that count. And China would advance its status as a full participant in the world trading system, while also positioning itself as the leader that delivered the benefits of the Doha agenda to all developing countries. The world would recover that much faster from the hangover of the Great Recession.

They want China to join the Government Procurement Agreement and liberalize services in exchange for the US recognizing China as a market economy and ending its annual compliance reviews. They also suggest that the US should end its cotton subsidies and ethanol tariffs. I doubt we’ll see these suggestions implemented any time soon.

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