The End to Global Free Trade Agreements: Long Live Free Trade
By James P. Moore, Jr.
For almost seventy years now the world has completed eight global free trade agreements. Over time they have become more comprehensive, more technical, and a lot less likely to succeed. It is clear that the old ways of negotiating trade treaties has come to an end and that a new era has arrived.
In launching the original General Agreement on Tariffs and Trade in 1947, 23 countries completed their work in 7 months. Today the Doha Round, the ninth being negotiated by 159 nations, has been on life support for 160 months and counting. Late last year in Bali, Round negotiators forged an agreement to reform customs procedures and permit some agriculture subsidies to cover food security concerns. They effectively stripped away from the overall negotiations a fraction of the agenda that was easiest to pass, giving the Doha Round a boost and more time to conclude. No matter how WTO officials framed the positive outcome, however, it is clear that Doha will be the last such deal of its kind.
The cumbersome nature of negotiating agreements, having them agreed to by executive and legislative branches in each country, and passing them unanimously within the WTO has become a near impossible task. The sophistication, dynamics, politics, and inherent stakes of modern-day trade among perceived haves and have-nots have created almost irreconcilable fissures.
At the same time, more manageable bilateral and regional free trade agreements have become an easier route for countries in which geography, mutual interests, and historic ties are in play. But even then, hurdles can be daunting as Senate Majority Leader Harry Reid showed when he announced his opposition to supporting any fast track authority for President Obama that limits legislative oversight. Congress, he argues, should be allowed to amend any deal the Administration puts together. Multiply that approach by the number of nations engaged in trade talks, and the bottleneck of accomplishing anything becomes clear.
And yet, the very existence of an international organization with rules and regulations effecting global trade developed over almost seven decades, imperfect as they may be, have provided the world with a more orderly and expansive economy. With the law of comparative advantage reinforced, they have helped to "sharpen competition, motivate innovation, and breed success," according to the WTO. Tariffs today on industrial products are now less than 5% in industrial countries compared to an average of over 25% just after World War II. Global economic growth, no matter what financial or other crises may erupt, is clearly dependent on a healthy trading system.
Trading nations now have a framework built on the tortuous but successful rounds of past years. That should give the world some comfort. The concept and practice of freer trade has become the world standard, and bilateral and regional trade agreements will continue to be negotiated in the future. The seemingly endless machinations of the Doha Round, however, have provided the world with a reminder of how far it has come, what the realities of today are, and how a new era of forging more focused, manageable negotiations and narrowed outcomes has arrived.
The day for sweeping changes across broad economic sectors and functions concluded in the course of just one round of negotiations has come to an end. Future trade agreements will lie in more focused, manageable negotiations and narrowed outcomes - globally, regionally, and bilaterally. The world cannot do otherwise.
James P. Moore, Jr. is the former U.S. Assistant Secretary of Commerce and negotiated a number of trade agreements for the United States, including the successful launch of the Uruguay Round.