The evaluation of the recent Doha Free Trade talks outcomes , the winners are: Governments, farmers, Protectionism policies support. Among the losers are: agricultural exporting countries, less developed countries, industry, services, and cotton producers. Thus, at first glance it seemed that the chances for account that the cost of failure(more losers) was higher than its benefits(less winners). Maybe a lot of the expectation about the Doha talk, has been driven by such cost- benefit failure analysis, measured by those directly involved in the issue. In other words, key sector of global economies, and key emerging economies trying to get over their differences about trade, with good chances for getting an agreement.
However, the real measure for evaluating this 2008 Doha Round incentives, should be the impact on global economy as a whole. On that regard, a positive result of this last round ,implied annual windfall of U$$50 billion to the global economy, plus U$$ 100 billion(over a ten year period),because of tariff reduction. What is the meaning of these numbers? .Actually, World economy GDP is about U$$ 50 trillion. Therefore, the global economic benefits of any accord,(roughly around 1% of global GDP in a span of ten years),was not higher enough over its cost, which it was to keep things the way they are, with global trade (tariffs for poor country exports are 3%),and resources mobility, giving opportunities to all, although to a less extent agricultural product . Thus, there was not strong economic incentives to go further on with negotiations , based on deeper mutual concessions.
On the other side, it is the relevant issue stated by public choice theorist, which emphasizes the lower transaction cost of small homogeneous groups to join themselves around common goals(the previously defined as the winners), related with the higher transaction cost facing the larger heterogeneous groups (previously defined as the losers),which it made a lot more complex the process of negotiations ,because of the election time in USA ,and opinion polls tracking Government performance both in Europe and USA, in time of economic slowdown. Thus, the timing was not free of political pressure, for critical points. The implications are both: a.-Future negotiations would be better based on small groups, sharing common interest dealing with problem of high impact on their own economies. b.- The political background with more big players on the negotiation table, suggest a tougher path ahead ,for agreements at a global scale.
