After Doha: what is the future of world trade?

The failure of the Doha Round of trade liberalisation doesn't mean the end of globalisation, says Morgan Stanley economist Stephen Roach. Global trade volumes are increasing at a great rate. What it does demonstrate is the increasing politicisation of world trade.

Too much has been made of the apparent failure of the Doha Round of trade liberalization. It does not spell the end of globalization. Nor does it signal an imminent threat to the expansion of cross-border trade. Instead, the lessons of Doha bear more on the trust factor - the unwillingness of the world's body politic to buy into the win-win boosterism of globalization. In the rough and tumble arena of global competition, that may be par for the course - but hardly the disaster that the breakdown of trade talks was widely made out to be.

The Doha Round was probably doomed from the start. Conceived in the highly emotional aftermath of 9/11 as a politically motivated endorsement of globalization, there was great hope for a major new breakthrough on the world trade front. However, it turns out that the macro climate made concessions exceedingly difficult for rich and poor countries, alike. The seemingly intractable battle over agricultural subsidies - always a contentious issue under the best of circumstances - was a foil for much deeper-rooted misgivings. A powerful global labor arbitrage put employment and real wages under intense pressures in the developed world - causing great resistance to a further lowering of trade barriers in the industrial world. And rapidly growing export-led developing countries resented being cast in the role of scapegoats - giving them little incentive to offer concessions of their own. For about a year, the handwriting has been on the wall that this round of trade liberalization was going nowhere. By the time the talks finally collapsed, expectations were so low that not all that much was really lost.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.