If you missed the headlines, World Trade Organization talks failed on Tuesday – disheartening news for free-traders like us.
The talks fell apart when the US, China and India could not agree on whether protectionist measures to defend struggling domestic products would be included in the agreement. Surely the goal here was to reduce the barriers to trade, not include new ones?
Allowing India, China and the other G33 countries to keep tariffs on agricultural imports would have been counter-productive, especially with current rising food prices. The tariffs would have encouraged this trend instead of making food and other goods more affordable for all their citizens. On the other hand, perhaps developing countries would have been more willing to bring down tariffs if the US and the EU had actually been prepared to reduce the subsidies they pay their farmers.
It's a real shame that 7 years of negotiations have amounted to nothing. But the most frustrating part is that once again governments were far too short sighted, choosing a path that would lead to popularity in the here and now, and did not consider the net benefits and long-term growth achievable through truly free trade.