In the coming week we will be able to read the report which plans to mend our broken economy. Those few enlightened individuals have been tasked with finding and securing a path to future growth. Will they succeed? My concern lies in the idea that we may have reached our peak and only a steep decline will insure that we are able to really start climbing again.

The economy is the biggest story in my lifetime and yet, most of us barely understand the numbers let alone the politics behind most of the decisions that are made. A case in point would be the state of the Doha round. On the 15th of December a meeting in Geneva will be convened to determine what will happen in the future. Some are already predicting a scaled down Doha deal, with most of the promises being failed and a significant amount of u-turns.

We could look towards the Asian experience in aid for trade.

Doha can boost world economy by some billion dollars by providing non market agriculture access to the number of countries involved in the latest round of talks. The negotiations need political decisions but many are sceptical of agreements being reached. Let us not forget that most domestic audiences are already feeling the pinch and politicians prioritise global trade at the expense of their constituents at their peril.

A scaled down deal is better than no deal at all. If we fail to agree on the first plan of action, plan b could include a kind of duty free trade facilitation which will benefit the bottom level countries but middle countries gain very little. The World Trade Organisation (WTO) treats large and small countries alike, which causes some tension.

Reforming the negotiation machinery should be the main concern of countries like the UK to ensure that free trade agreements are being shared out equally creating conditions for growth like the example of aid for trade. Those regional approaches could be backed by national strategies thus blending resources to benefit the countries strategic interests.

The mess we are in.

Some will argue that Doha’s troubles are not down to the mechanics of negotiation, rather the members that matter cannot agree on anything like G20 and climate change talks. The post-war multi-lateral model no longer works like it used to. The foundations were laid down by a strong US with hegemonic values. The US and global interests in a long term frame rather than short term optimism which had a focus on not just economics but security was another motivating factor.

The declining of the dollar, along with the rise of economic powers across the world has shifted bargaining power but who will shoulder the responsibility of global leadership? Countries now muddle through with a range of agreements but no one is really in charge.

The changes in the economic system, like direct investment from foreign governments and the rise of multi-national corporations, have contributed to the high structural unemployment in industrialised countries that is not being sorted out. Similarly China’s competiveness overwhelms countries with its exports and trade liberalisation is suffering from reform fatigue.

Has Doha failed?

The WTO only really started to care about development after the Seattle protests and remember that most trade is mainly about self interest. Nobody has left the WTO even though the global financial crisis has gone on. There is protection for agriculture which remains a problem and governments do not cut spending in this most wasteful area.

Most of the important issues are not even on the Doha round which has an agenda from 1999. The various agreements also at times conflict between each other, examples including climate, trade, regional, and security issues. The Doha round came to soon after the Uruguay round, the other was an administrative issue where everything was not tied up before they started the next round. This gives rise to the criticism that there are many talks leading to no action.

There has been a change of the power relations at the WTO with the food crisis and the financial crisis creating the rise of regionalism. People and countries are able to achieve things on a regional level rather than the multi lateral level. Why would the US support a trade agreement that opens up trade in Brazil for example? Countries were suggesting to developing countries to implement action that they would not implement in their own countries. Highlight the flaws in the terms that the liberalisation takes place.

A serious political crisis will occur if the Doha agreement produces nothing as they have been negotiating for the last 10 years. The negotiations that matter are with the domestic audience rather than the negotiations that happen in Geneva. There is not a great interest in pushing of unilateral liberalisation, only China has really gone for it. Unilateral liberalisation is only used to raise productivity so until countries feel the pain there is no incentive.

Like I mentioned earlier the negotiation machinery needs to be changed to resolve the next generation issues for business. Attention should be paid towards the concentration of power in corporations and NGOs. The national employment and social development issues have to be taken to the decision makers. Agreements have to be discredited so instead of what ifs, we need to be asking how we can get things done.

If those plans are not looked at, our trump card should be for nations to think if the WTO really matters and not do any negotiating for a while.