When the Doha Round of multilateral trade negotiations was launched, in 2001, the price of oil was $25 a barrel, a ton of rice cost $170, China's current account surplus was two percent of the country's GDP, U.S. financial institutions were at the vanguard of globalization, and the term "sovereign wealth fund" could have been mistakenly thought to refer to the retirement kitty of an aging monarch.
As of November 10, 2008, oil was going for $65 a barrel, and rice for $515 a ton. China and the oil-producing states have trillions of dollars at their disposal.
As all these changes have unfolded, the governments involved in the Doha talks have, Nero-like, spent too much time dwelling on minor issues while ignoring the burning questions. After the failure of the recent round of negotiations this past July in Geneva, the international community will be tempted to resuscitate the Doha process. Indeed, as part of calls to reshape the international financial system-under a proposed Bretton Woods II -British Prime Minister Gordon Brown has pushed for the completion of the Doha Round.
But this effort to revive Doha seems inadequate because the existing Doha agenda does not respond to the challenges posed by increasing global integration. Going forward, a new round of Bretton Woods talks is needed to develop a more ambitious agenda than Doha has and to involve a broader set of institutions than just the World Trade Organization (WTO).
A stalled conversation
Since the mid-1990s, world trade has grown rapidly, at a pace of approximately six percent a year-twice as fast as global economic output. During that time, however, WTO members have not adjusted the maximum levels of tariffs and other barriers that they can maintain on goods and services
Trade has grown throughout the world because many governments have increasingly come to believe that openness promotes long-term development. Many unilaterally liberalized their regulations on goods and services. Tariffs on goods have declined from a worldwide average of over 25 percent in 1980 to less than ten percent today. Many states have drastically reduced barriers to foreign investment and international trade in various service sectors, including finance, telecommunications, transport, and retail. Much of this liberalization has taken place in the context of regional trade agreements, such as the North American Free Trade Agreement (NAFTA) and a series of agreements between the European Union and its eastern neighbors. Since the early 1990s, the number of such pacts has risen from under 90 to nearly 400.