TORONTO — A win for U.S. president Barack Obama in the Nov. 6 presidential election would kill any chance of a World Trade Organization deal for half a decade, says a respected American analyst.
Thomas Prusa, a prominent economics professor at New Jersey’s Rutgers University, told a trade conference Sept. 29 that the Democratic administration during the past four years has shown little interest in international trade issues and no appetite for making concessions necessary to reach a deal.
“I think the great recession (2008-09) killed the Doha Round (of WTO negotiations), and it may have been dead already,” he said.
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“There is not going to be a Doha Round deal if Obama is re-elected because it is not on his radar.”
U.S. polls then showed Obama with a lead over Republican challenger Mitt Romney.
Prusa was speaking to the annual meeting of the Canadian Agricultural Trade Policy and Competitiveness Research Network.
Doha negotiations, started in 2001 in the Qatari capital, have been in stalemate since 2005 with little sign of movement. The United State must be a key player and sign on if a deal is to be struck.
“At this point, the U.S. is willing to devote zero political capital on trade,” said Prusa. “And if they were, they feel they already have given away a lot so if they were to make any move on agriculture, they are going to expect a lot in return.”
In a later interview, he said the legitimacy of the 12-year-old Doha Round is ebbing away.
“I think they would do better to declare it dead and start over with a new agenda,” he said.
“But a lot of negotiators have a lot of political capital tied up in this so I doubt that will happen.”
Prusa said regional and bilateral agreements are proliferating in the absence of a multilateral trade agreement and may be replacing the Geneva process.
He said the WTO concentration on tariff reductions also diminishes its relevance because credit restraints and currency fluctuations have more impact on trade and competitiveness than formal tariffs.
“You negotiate for 15 years in the Uruguay Round (that ended successfully in 1993) and get a reduction in tariffs,” he said. “A quick currency adjustment is so much bigger.”
He said negotiators who wrestle for years over small tariff reduction agreements “have too much time on their hands.”
Protectionism uses more sophisticated tools these days, he added, such as country-of-origin labelling and biotechnology restrictions.
Meanwhile, G20 group, which has a strong contingent of developing countries, has proposed at WTO talks that countries need not wait for a final agreement to make agricultural progress.
Led by Brazil, it said negotiations on tariff quota administration and export subsidies could be concluded without an overall deal, despite the traditional WTO mantra that “nothing is decided until everything is decided.”
Reactions from other countries, including Canada, have yet to be registered with the WTO, but many have rejected the idea of hiving the easier topics from the more difficult ones.
