Breakdown in Geneva

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Barely a week after the Group of Eight industrial countries pledged in Russia to be more flexible in order to break the impasse over agricultural subsidies and tariffs, the Doha round of multilateral trade negotiations collapsed this week in Geneva. There is now virtually no chance that an agreement can be reached in time for an up-or-down vote in Congress before the 2007 expiration of President Bush's fast-track trade-promotion authority, without which nations will not seriously negotiate with the United States.

Moreover, amid rising protectionist sentiments on both sides of the aisle in both chambers of Congress, the chances that Capitol Hill will renew fast-track authority during the Bush administration are equally dismal. Tthe Geneva debacle jeopardizes the entire Doha trade agenda, which was universally hailed as the eagerly anticipated "development round" of trade negotiations when it was launched in Qatar, shortly after the September 11 attacks. It also represents the darkest moment in the brief history of the World Trade Organization, which was created more than a decade ago during the last multilateral trade round and now has 149 members.

As expected, multilateral recriminations accompanied the breakdown in Geneva, but there is more than enough blame to go around. The United States rightly accused the European Union, Japan and India (to name only a few) of being far more interested in carving out loopholes in farm-tariff cuts than in actually increasing market access for the agricultural exports of their trading partners. In hindsight, for cultural, social and traditional reasons it was too much to expect that France would accept the degree of market access that would require its farmers and its cherished countryside to adapt to the rigors of globalization.

For its part, the United States sent a terrible signal within months of Doha's launch by substantially raising farm subsidies in the 2002 farm bill. That action eviscerated the good intentions embodied in the 1996 Freedom to Farm Act, which had committed the government to eliminate most of the taxpayer subsidies egregiously and disproportionately dispensed to wealthy agriculture interests. In Geneva, U.S. negotiators never unveiled their best offer on subsidies. Meanwhile, India, Brazil and other developing nations resisted reducing their tariffs on industrial goods, which was an important quid pro quo that rich-country negotiators needed to justify the "hit" that their farmers would take.

Earlier this month Greg Mankiw, a former chairman of President Bush's Council of Economic Advisers, advocated unilaterally slashing U.S. farm subsidies to prevent Doha's collapse, although he conceded this "A+" policy advice had "zilch" probability of being followed. Thus, not only does the power of the U.S. farm lobby force Americans to pay higher food prices than necessary, but huge welfare payments to wealthy U.S. farmers also keep billions of people in developing nations poorer than they otherwise would be.

For myriad reasons, the nations of the world regrettably are moving away from prosperity-enhancing trade liberalization.