President Bush told European Union leaders in Vienna Wednesday Washington will do all it can to revive the stalled global negotiations on reducing trade barriers. The pledge met with skepticism among trade analysts.
After meetings with European Union leaders, Mr. Bush said the trade negotiations aimed at opening world markets have to succeed. "My pledge to our European counterparts is that we'll do the best that we can to reach an agreement that satisfies all parties desires. But make no mistake about it, it is hard work. My view is that we can't let this round fail. A failed WTO round would be a missed opportunity, particularly to help people who are impoverished," he said.
The Americans and Europeans are at odds over how to reduce farm subsidies, while richer developing countries like Brazil and India are refusing demands to open their relatively closed markets. The trade talks were launched in Doha, Qatar in 2001 and were to have been completed last year.
Daniel Ikenson, a trade specialist at the Cato Institute, says the Doha Round is likely to fail. "The bottom line is that there simply is not enough interest across countries in trade liberalization at this point. More specifically, there isn't enough interest in trade liberalization that commits countries to new rules and new requirements," he said. Ikenson, who advocates free trade, spoke at a Washington trade forum Wednesday.
Jagdish Bhagwati, an economics professor at Columbia University, also advocates free trade. He says there can no longer be any doubt that trade liberalization boosts economic growth and lifts people out of poverty. Recent market based reforms in China and India, he says, are case studies for how trade liberalization reduces poverty. "Poverty declined after all these reforms and shift into outward oriented policies, which is why the two countries are busy trying to do even more of that rather than less of it," he said.
But free trade is resisted in many developing countries, which fear that their industries are too inefficient to compete with imports from developed nations. While in Europe and North America, trade unions and some politicians oppose free trade, saying their mature industries cannot compete with imports from low-cost producers.