By Nand C. Bardouille, a Former Dominican Trade Official

The tempestuous Doha Round of global trade talks suffered a near fatal blow on July 29. A nine-day high-level meeting -- a so-called mini-ministerial -- of select trade ministers gathered in Geneva at the behest of World Trade Organization (WTO) Director-General Pascal Lamy, collapsed.

Dubbed a 'collective failure' by some, by all accounts the meeting seemed to have had more negotiating breakthroughs than it had deadlock—as it made significant headway on all but a couple of the issues (cotton-specific subsidies among them) on the agenda. But towards the end, the talks came apart at the seams.

Although their spirits may have been dampened, ministers expressed a commitment not to abandon the Doha Round.

In a July 21 statement to the WTO Trade Negotiations Committee (TNC), Caribbean Community (CARICOM) members reaffirmed their commitment to the successful completion of a modalities agreement on agriculture and non-agricultural market access, but more broadly to a successful completion of the "entire Doha development project." But the statement also cautioned that there was an expectation "that the modalities emerging from this round will help to underpin ... developmental efforts" as relates to the "special circumstances" of these small developing countries.

The fact that an agreement had so narrowly escaped the ministers' grasp was an especially stinging blow.

This is just the latest in a string of setbacks visited on the Doha Round, now in its seventh year. The original deadline for negotiating the round has long passed, and with it the idealism once prevalent in the early narrative of the round.

What happened?

Seven years on, the fortunes of the round are shaped more than ever before by a select group of countries, ostensibly Australia, Brazil, China, the European Union (EU), India, Japan and the US. Notwithstanding their own differences, the group led by the United States and the EU is pitted against select powerhouse developing countries, namely Brazil, India and China. Deep chasms between the two camps over key aspects of agricultural market access, farm subsidies and industrial tariffs, traditionally the main stumbling-blocks for convergence, appear to have been patched at the high-level meeting.

At this latest meeting, however, it was intractable disagreement pitting the US against China and India over the so-called 'special safeguard mechanism (SSM)'—a mechanism that deals with the setting of tariff thresholds intended to protect developing nations against import surges—that was the deal-breaker.

However, it is worth noting that the fault-lines as regards the SSM did not just pit developed countries against developing countries. Some developing countries sided with the US position. This complexity also resonates in the narrative of the negotiations at large, where some South-South divisions are evident.

What next?

Perhaps because common ground had been reached on an array of issues before the talks unraveled, rather than declare the Doha round be shelved in the immediate aftermath of the meeting various parties called for a period of reflection. Lamy led this call. But he also cautioned that what progress had been achieved must be preserved; a point considered especially salient in the face of growing criticism in some camps over the nature of the concessions extended. Criticism by a group of over half-a-dozen European countries over the extent of EU concessions is especially notable in this context; France's Nicolas Sarkozy having volleyed some of the more caustic criticisms at the European Commission's top negotiators.

Certainly, preserving gains as regards the vexing issue of modalities in agriculture and non-agricultural market access is a top concern—although there was open admission by some in the wake of the Mini-Ministerial that the prospects do not look good for modalities being agreed to by year's end, "or in the foreseeable future."

Consensus in these two areas is widely seen as forming the cornerstone for an outline deal.

"We were very close to finalizing modalities in agriculture and [non-agricultural market access]," Lamy proclaimed to the TNC July 30.

In assessing next steps for global trade talks, there are at least three factors that loom large: (1) the US presidential election, (2) a renewed focus on bilateral trade agreements, and (3) the deep developmental and trade policy divisions between rich and emerging nations.

With WTO talks floundering yet again, the 'elephant in the room' in respect of the immediate prospects for the round is the US presidential election.

It cannot be business as usual for global trade talks until the dust settles with respect to the US presidential race. For this reason, it is far from certain that substantial high-level re-engagement this Fall is feasible, although low-key technical talks will probably continue in some form.

What is immediately apparent, for some, is that any hopes of concluding the round by year's end have been dashed.

Indeed, there have already been indications of an extended hiatus in the WTO process in the coming weeks and months. Instructively, this admission came from United States Trade Representative Susan Schwab, in her address to the WTO TNC July 30.

Come January 2009, if the new US president is not enamored with a renewed US commitment to multilateralism, this will throw open the possibility of shifting US trade policy priorities. The fortunes of the Doha Round, then, hinge more on the dynamics of a post-Bush presidency. Whether the US economy rebounds or it is on track for a protracted period of slowdown, will also likely militate for or against the US's whole-hearted embrace of international trade. On-going uncertainty in the international oil market, volatile food prices and the credit squeeze in the US economy are also indicators to watch for in this regard.

Seven years on, fatigue has long-since set in with respect to global trade talks. Key major players have aggressively pursued bilateral free trade agreements in tandem with the WTO process, and this latest upset in multilateral talks is only likely to reinvigorate interest in this regard. Smaller countries have pressed ahead with these pacts too, amongst them the CARICOM grouping. A recent bilateral undertaking, the region is poised to move forward with the CARICOM-Canada negotiations for a Trade and Development Agreement. Threats to the multilateral trading system would, however, materialize if Doha talks are displaced by major players shifting resources, negotiating energy and political capital disproportionately, with an undue focus on respective bilateral tracks. It is small, poor countries that stand to lose the most if the rules-based multilateral trading system begins to fray, in the face of compromised credibility.

There is growing recognition that there is a new dynamic at play in the Doha Round; one that has a direct bearing on its successful completion. The power dynamic in global trade talks has been irrevocably put on its head by an emerging group of WTO Members led by Brazil, India and China; each important exporters and import markets in their own right. Buoyed by its brisk, prodigious economic rise, China is emblematic of a newly assertive bloc of countries poised to assume a greater role economically and geo-politically.

These countries are attempting to gird their respective developmental paths with a trade policy that seeks to break down rich nation protection and support of agricultural markets, while limiting concessions on their part with respect to rich nation access to their agricultural, industrial goods and services markets. On principle, these emerging economies invoke a moral argument as regards the spirit and letter of the Doha Development Agenda (DDA), one that for much of the Doha Round rich nations have been reticent to buy into. That the two camps were apparently recently able to bridge key differences in these divisive areas is an encouraging sign. But the most recent standoff over the SSM is indicative (and a microcosm) of divergent approaches to and visions for development, which the two camps will probably remain at loggerheads over—failing any systemic change in approach. This collision course is emblematic of a set of developed countries prepared to do all that they can to blunt the competitive threat of fast-growing, emerging economies; in effect, rich nations appear intent—in the words of a leading 19th century German economist, Friedrich List—on 'kicking away the (development) ladder.'