Doha trade talks's failure is part of end for second age of globalisation?
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Version 0 of 5. It’s November 2001. The terrorist attacks on the United States on 9/11 are still fresh and raw. While George Bush plots revenge, a meeting of trade ministers takes place in the Gulf state of Qatar. The gathering has two purposes. At one level, it is intended as a show of global solidarity with the US, a signal that the international community can unite in its opposition to fanaticism. But trade ministers also think the time is right to break down barriers to the free movement of goods and services around the world. After all, the last successful round of trade liberalisation negotiations was completed eight years earlier in 1993. Thus the Doha development round is born, an ambitious and complex agenda that involves negotiations designed to free up trade in agriculture, services and manufactured goods. The word “development” in its name was there to demonstrate that the round would not be the traditional stitch up between the USand the EU but would bring benefits to poor as well as wealthy countries. Related: Borders are closing and banks are in retreat. Is globalisation dead? Trade ministers have been talking (and, for long periods, not talking) ever since. It has taken them double the seven years it took their predecessors to complete the last set of negotiations – the Uruguay round – and they have achieved precious little in all that time. Next month, when the WTO meets for a ministerial meeting in Nairobi, there is a good chance that the Doha round will be put out of its misery. Many will take the view that 14 years is long enough. The failed attempt to put together a multilateral trade deal is significant. When the Doha round was launched, it was seen as marking the start of a new chapter in the story of globalisation. A decade-long process that had begun with the tearing down of the Berlin Wall had culminated with the birth of the euro and the admission of China into the WTO – both seen as evidence that a new borderless world was in the making. The 1990s had been a decade of rapid growth and technological change. Sure, there had been problems. There had been a succession of financial crises in the emerging economies. The tech boom had ended in the dotcom bust. And the first attempt to get a new trade round launched in Seattle had been a messy failure, with protests on the streets and negotiators at loggerheads. At the time these were seen as temporary setbacks to an inexorable process, but that now looks like a questionable assumption. In retrospect, the high tide of globalisation had been reached in the late 1990s, and the attacks on New York and Washington were a better guide to the future than the launch of the Doha round. If the 1990s were largely dominated by the good aspects of globalisation – faster growth, a narrowing of the gap between rich and poor countries, more rapid communications, cheaper goods – the 2000s have exposed a darker side: financial instability, growing inequality within countries, burgeoning corporate power and the rise of the surveillance state. The result has been that the forward march of globalisation has been checked. Take free movement of capital, which was central to the liberalisation agenda that dominated the final quarter of the 20th century. The theory was that removing the postwar curbs on finance would allow capital to move to those parts of the world where it was most needed. Things did not work out quite as planned. There were certainly big flows of capital around the globe, but they tended to go into speculative construction booms rather than into the creation of new productive capacity. Financial globalisation did not raise growth rates – or if it did it only did see through the creation of enormous bubbles – but it did lead to regular and damaging banking crises, culminating in the big crash of 2007-08. The public got the impression that the only real beneficiaries of this Frankenstein’s monster was the financial industry itself. And when it became clear that the cost of failure would not be paid by the bankers but by the public, a backlash began. The IMF admitted that capital controls could sometimes be useful and both Cyprus and Greece deployed them during their sovereign debt crises. A financial transaction tax is about to be introduced by a number of European countries, including Germany and France. The benefits of trade came in the form of the cheap goods that were imported into western markets and this kept inflation and interest rates low. There was a dual boost: higher living standards and cheaper mortgages. The cost in the west was that as goods were imported, manufacturing jobs were exported. It has proved impossible to complete the Doha round. The complexity of the issues coupled with the increased influence of the leading developing countries has made for permanent deadlock, and the impasse has led to a search for alternative ways of cutting trade deals. A drift away from multilateralism has meant greater emphasis on bilateral deals such as the Transatlantic Trade and Investment Partnership (TTIP) being negotiated between the US and the EU. But TTIP has run into a storm of public opposition, particularly in Europe, mainly stemming from the fear that the interests of multinationals are being put before those of citizens. Trade has become intertwined with the broader issues of corporate power and inequality. TTIP will not be agreed any time soon. People are also on the move. Mexicans want to get into the US. Refugees want to get out of Syria and into Europe. Enlargement of Europe to the east has resulted in workers taking advantage of free movement within the EU to seek out higher paid work in wealthier member states. Those migrating to the west tend to be young and well-educated; just the sort of workers that an ageing country such as Germany needs to rejuvenate itself. But free movement of people has always been more limited than the free movement of capital or goods and is likely to remain so. Even before the atrocities in Paris raised fears about Europe’s porous borders, politicians could not help but detect public disquiet about the pressure migration was putting on public services, housing and the wages of those on low incomes. This is the second age of globalisation. The first, also hastened by developments in communication, involved the free movement of capital, goods and people. That era came to an end in 1914 and the next three decades were difficult ones because mainstream politics couldn’t cope with the collapse of the pre-first world war order, and an extreme form of nationalism was unleashed by economic hardship. Those who say history will not repeat itself should pause for thought. There has been a system failure. Everywhere, an extreme form of nationalism is again on the rise. |