SEVEN YEARS of preparation to reach agreement on the Doha round of world trade talks has ended in failure following nine days of non-stop negotiation in Geneva. It was a deeply disappointing outcome and represents a major setback for trade liberalisation at a critical time for the world economy.
Once again, the real losers in these negotiations are the world's poorest countries. They have been deprived of potential gains envisaged when talks began in 2001. The brave hope then was for a World Trade Organisation (WTO) agreement that would combine free trade with fair trade. Such an accord would have offered the poorest countries a path out of poverty towards economic development. The hope never materialised. And for these countries, an opportunity to switch from excessive economic dependence on international aid to greater reliance on trade has been lost.
In a global economy increasingly beset by difficulties in the form of soaring commodity prices and credit constraints that have raised inflation and depressed growth, a WTO agreement was never more necessary. In the end, however, the outstanding differences between developed and developing countries, mainly between the US and India, could not be accommodated and the talks collapsed.
WTO director general Pascal Lamy, in attempting to finalise the round, took a calculated gamble. It was worth taking and almost succeeded. But given that the US presidential and congressional elections will take place in November, and that next year may see a new government in India and will bring the appointment of a new European Commission, then 2010 seems the earliest date for a revival of these talks. In the interim with protectionist sentiment on the rise, as Peter Sutherland - a former head of the WTO's predecessor - has warned, the big trading blocs may press for a range of bilateral trade deals.
For Ireland, the collapse of the Doha round is of particular concern given that our small open economy relies on growth in world trade to sustain economic expansion. The Government had sought to secure a balanced agreement that would reconcile the competing claims of agriculture and the services sector. In the circumstances it is hard to fault that negotiating strategy and difficult to understand the Irish Farmers' Association (IFA) at times unjustified criticism of the Government's handling of the WTO negotiations.
The national economic interest may have been synonymous once with farmers' interests - but not any more. Today, agriculture accounts for some 5 per cent of the work force while two thirds of those in employment work in the services sector. Ireland was the tenth largest exporter of services internationally last year. For the services sector, as for the overall Irish economy, the failure of the Doha round is a serious setback. It has left Irish companies with more limited commercial opportunities in emerging and developing markets just when the economy has become more reliant on the export of services as an engine of economic growth.