We all know the importance of international trade, but imagine trying to do business globally if there was no traffic cop. Fortunately, 134 nations got together and created the World Trade Organization (WTO), which has been instrumental is the growth of globalization. We need a traffic cop, a big burly one!
In 2001, it began the Doha round of trade negotiations. This round was called “the development round” with the purpose of improving access for the emerging economies to the huge markets in the U.S. and Europe. The theory was bringing prosperity to those nations would reduce the breeding grounds for terrorists. Then, the emerging nations of Brazil, Russia, India and China started growing rapidly, maybe too rapidly. Under the auspices of the WTO, they hammered us for better access to the U.S. market. We resisted, and nothing has been accomplished in ten years.
The last time trade negotiations like this failed was in London in 1933, which was supposed to end the Great Depression. It obviously didn’t, and the Nazi economics minister advocated Germany invade Africa to improve their economy. It is not good when trade negotiations fail!
In order to prevent the Doha round from failing, the WTO is meeting today and tomorrow in Geneva to agree on something, almost anything, to prevent a failure. For example, it will likely require that foreign aid to emerging nations be allocated first to infrastructure needed to do international trade, such as ports and roads. Personally, I think this would reduce overall foreign aid by the developed nations, but I’m anxious to read more details.
The late Senator George Aiken (R-VT) once said the solution to end the war in Vietnam was simply to declare victory and come home. The WTO is apparently taking his advice by declaring victory and living to fight another day.