CNN:

Global free trade talks collapsed on Monday after nearly five years of on-off haggling and resuming them could take years, officials and diplomats said.

The suspension of the World Trade Organization’s (WTO) Doha round, which was expected to be announced formally by WTO chief Pascal Lamy later on Monday, came after major trading powers failed in a last ditch bid to overcome differences on reforming world farm trade, which lies at the heart of the round.

“The WTO negotiations are suspended,” Indian Commerce and Industry Minister Kamal Nath told journalists. When asked how long the suspension could last, he replied: “Anywhere from months to years,” he said.

UPDATE: There doesn’t seem to be much to say. We all saw this coming. And there’s plenty of blame to go around. You could attack Susan Schwab for not accepting a minimalist outcome or the US for not being willing to move first so as to put the focus on countries who are clearly more protectionist or those nations for being the worst offenders or the special interests for being special interests or Bush for being Bush.

Regardless, no allocation of blame is likely to restart the negotiations. It’s time to start pursuing other strategies.

This IHT article about the G8 meeting in Russia suggests that France remains a holdout:

Chirac said the United States should reduce agriculture subsidies and stop export aid. He said concessions made by the European Union trade commissioner, Peter Mandelson, on Oct. 28 were the most the 25-nation bloc could offer. Chirac also asked large emerging countries like Brazil, China and India to make “a significant effort.”

It’s not surprising that France is the most hostile opponent of reforming the Common Agricultural Policy. The nation receives three times the number of payments and twice the funds of any other European country. The top recipients are profiled here.

The Times article above alleges that many of the French recipients are politically powerful and connected to Chirac. That’s not obvious from this page, as the top recipients appear to be corporations. By the way, Fermes Francaises SA, the top French recipient, receives a pittance in comparison to some of the top UK beneficiaries.

To effectively tackle the issue, we need to highlight those corporations’ political connections, as well as other relevant political actors that have an interest in maintaining the CAP. In December, Richard Baldwin of the Graduate Institute of International Studies exposed (pdf) the British royalty as some of the biggest winners in a reverse-Robin Hood scheme. I’d like to see a similar investigation of the well-connected recipients in France.

What’s the best article you’ve seen on the political economy of the CAP?

Bhagwati nailed it. Susan Schwab is being a maximalist:

Those countries’ chief antagonist was the United States, which was represented by Susan C. Schwab, recently appointed U.S. trade representative. Schwab repeatedly maintained that the Doha round, named for the Qatari capital where the WTO started it, must achieve an “ambitious outcome.” That would mean tariff cuts that are deep enough, and with few enough exceptions for special products, to generate significant new trade around the world, including in big developing markets such as India, Brazil, Indonesia and South Africa.

She did not dispute that the United States had emerged as the outlier in the talks, in opposition to most of the WTO membership. “Isn’t that what leadership is about?” she said in an interview. She said she was “dismayed with the number of countries that just seem willing to settle for some least-common-denominator solution.” [WaPo]

“There’s no need to pretend that this has not been a failure.” — Kamal Nath, India’s trade minister, prior to departing early and skipping an afternoon session.

Pascal Lamy’s outline of negotiations has excluded the possibility of a new peace clause that would exempt farm subsidies from legal challenge at the WTO dispute panel for a limited time. US farm lobbies have characterized such a provision as critical, and the government has sought this immunity, arguing that it is necessary to protect farmers implementing reforms. I’m glad to see it off the table.

The International Centre for Trade and Sustainable Development quotes Pascal Lamy as describing “green room” meetings that will happen tomorrow.

I thought that such a procedure was no longer used. T.N. Srinivasan implied so:

[T]he “Green Room” process no longer exists! The last time it was used was at the Seattle Ministerial. At Doha, the chairman structured the discussion around six topics with a “friend of the chair” leading informal discussions on each, with all delegations welcome to participate. The “friend” reported regularly to the full heads of the delegation. At Cancun, the chairman appointed five “facilitators” who played the same role as the “friends” played at Doha. [PDF]

But Martin Khor worries that the green room will cause trouble in Geneva:

Questions still abound as to whether Ministers who come to Geneva can attend the “Ministerial Green Room” that will be convened by Pascal Lamy, presumably in his capacity as Chair of the Trade Negotiations Committee (TNC). Or whether, as expected, the Green Room will accommodate Ministers from only invited members.

The issues of transparency, participation and legitimacy can be expected to arise yet again, as uncertainty swirls around as to who is invited to the Green Room, on what criteria or basis, and on whose invitation. [TWN]

And the WTO itself that the green room plays a critical role in negotiations:

One term has become controversial, but more among some outside observers than among delegations. The “Green Room” is a phrase taken from the informal name of the director-general’s conference room. It is used to refer to meetings of 20-40 delegations. These meetings can be called by a committee chairperson as well as the director-general, and can take place elsewhere, such as at Ministerial Conferences. In the past delegations have sometimes felt that Green Room meetings could lead to compromises being struck behind their backs. So, extra efforts are made to ensure that the process is handled correctly, with regular reports back to the full membership. In the end, decisions have to be taken by all members and by consensus. No one has been able to find an alternative way of achieving consensus on difficult issues, because it is virtually impossible for members to change their positions voluntarily in meetings of the full membership. [WTO]

So it seems that there is still a green room, and that its merits are up for debate.

I attended a Cato Center for Trade Policy Studies event on unilateral trade liberalization featuring Jagdish Bhagwati and Dan Ikenson yesterday. It was quite enjoyable, as both speakers were entertaining and offered scholarly insights.

The case for unilateral liberalization is the traditional case for free trade. Imports are not merely “the price we pay for exports,” but an economic gain that boost consumption, increase competition, and lower input costs. If our trading partners decide to drop rocks in their harbors, that is not a reason for us to follow suit. Ikenson’s new CTPS policy analysis (pdf) outlines the potential gains from liberalization in the context of the current US tariff schedule and the global trading environment.

Although, as Ikenson noted, unilateral action constituted two-thirds (pdf) of the liberalization by developing countries in the past twenty years, “going alone” does not have a very strong history in the United States. Should we expect policy makers to adopt that approach now?

I doubt it. Both speakers pressed the case for unilateral liberalization, but neither claimed that such an approach was likely or politically feasible this summer. Bhagwati conceded that the US won’t “go alone,” but argued that we ought to “convey the lessons of unilateral liberalization” so as to educate people about the benefits of free trade and increase the likelihood of success at Doha. Ikenson was less optimistic about the WTO round’s chances, but one will note that his brief defends the economic feasibility of going alone, not its political palatability. He does not make any arguments that unilateral trade liberalization might win support amongst Congress members who don’t already support significant US liberalization via the multilateral approach. Bhagwati did say that the US ought to relax its demands and provide trade leadership, but that’s been true all along.

Though not able to prescribe a magical elixir for the Doha round’s woes, Bhagwati did offer a few political economy insights. First, he argued that the change in USTR from Rob Portman to Susan Schwab likely hurt the round, as Portman was known as an accommodating representative that would accept a more minimal outcome in terms of US demands. Schwab, according to Bhagwati, has shown a tendency towards the maximalist approach in the past. While not subscribing to the bicycle theory of trade, he clearly prefers that the US salvage Doha and accept a minimalist outcome.

Second, Bhagwati noted in the Q&A session that the business communities and export lobbies needed to push a WTO deal through Congress won’t take the position that a minimalist deal is worse than none and will be on-board for an outcome that keeps the multilateral system alive. Apparently Bhagwati believes that a successful Doha round is necessary to renew the president’s trade promotion authority, which is the basis for both PTA and WTO negotiations. So if the business community wants any kind of trade deals, they’ll back any Doha outcome that gives Bush a win. I may have misunderstood his remarks on this topic, but that was my interpretation of the comment.

Bhagwati remains optimistic about the WTO, while Ikenson is less confident. The next few weeks will be very interesting. Check out Ben Muse’s summary of what’s happening.

If you’ve been under a rock, it’s crunch time for the WTO in Geneva.

I submitted a query for the IHT‘s Q&A with Pascal Lamy, WTO Director-General. It appeared on Thursday:

Q. To what degree have bilateral and regional trade agreements hampered progress in the Doha Round negotiations?

Jonathan Dingel
United States

A. Hello, Jonathan. So far they have not proven a distraction. I can say that all of our members are well and truly focused on the Doha negotiations. But in the back of everyone’s mind is the question of how these agreements will proliferate absent a Doha deal by the end of the year. Bilateral agreements are not in and of themselves a bad thing. But they don’t cover important areas. Trade distorting farm subsidies, for example, will never be covered in a bilateral agreement. Such agreements, furthermore, can create disparate rules which can be confusing to entrepreneurs. Often the poorest countries are left on the sidelines with respect to bilateral negotiations. The bilateral route is open to the US, the European Union, India or China but not for the vast majority of poor countries. Furthermore, developing countries have a limited clout in bilateral negotiations with developed countries. In the WTO by contrast, developing countries have worked together to establish much more powerful platforms from which to negotiate with developed countries. The WTO is a kind of UN for trade but without a security council!

I am not surprised by Mr. Lamy’s reply, as any complaining on his part about distraction due to PTAs would do little to help the WTO negotiations. I agree with his assessment of PTAs’ inability to address a number of vital issues.

Read the full post for answers to questions from other readers.

While I’ve been slacking, Ben Muse has been on top of Susan Schwab’s confirmation and the latest prospects for Doha.