Any number of reasons have been attributed to the failure of the recent ministerial negotiations in Geneva, the most simplistic among them being the reported intransigence of both the developed and developing country leaders, who were more focused on domestic issues and national electorates than the gains from trade. Naysayers even take their argument a bit further and argue that the repeated failure of the talks has more to do with growing misgivings about the impact of globalisation. But a closer look shows that most of these views are based on anecdotal evidence and not on any hard analysis of the objective conditions in the global economy, especially international trade.
How does one then explain the repeated failure to arrive at a consensus even seven years after the Doha declaration in 2001? The numbers on global trade, which show a sharp pick up in export growth of both goods and services to unprecedented highs over the last seven years, provide an answer to this question. And with exports still surging, despite the global slowdown, the negotiators never really faced any binding constraints that would have pushed than towards a consensus. So, if anything or anybody is to be blamed for the protracted negotiations, it is the better-than-expected success of the WTO in boosting global trade and pushing up the share of merchandise exports in global output by around a third to 25.3% after the Doha declaration. With these surging export earnings, the trade negotiators could certainly afford the luxury of waiting out for the best possible deal.
Let us look at the macro figures now. Growth of global merchandise exports in dollar terms, which averaged 6.4% in the eighties and 6.8% in nineties, has registered a sharp turnaround in the new millennium. This was quite unexpected, given that exports scenario was not too encouraging in the early years of the WTO. In fact, numbers show that global merchandise exports initially took a sharp dip, with growth plummeting sharply from 19.3% in 1995, when the WTO was established, to a fall of 1.3% in 1998. Though global exports picked up briefly, they soon hit a new low falling once again by 4% in 2001, the year the Doha Round started.
But there has been a sharp turnaround of fortunes since then with merchandise exports steadily soaring to touch a peak level of 22% in 2004. Though growth dipped marginally, it was still a formidable 15% in 2007, more than twice the growth averaged in the eighties and nineties. The most recent figures on merchandise exports show growth has further accelerated to 22.9% in the first quarter of 2008, even as global GDP growth falters.
Most of the key negotiating nations at the Geneva talks have managed to corner a large share of this unexpected bounty. Export growth figures for the period from January to May 2008 show that merchandise exports of the US have surged up to 18.4%. Export growth also accelerated in other developed countries including Japan (19.8%), Germany (22.4%), France (21.8%) and United Kingdom (18.4%). Though the most recent export gains of the developing countries are a few notches lower, their exports remain buoyant with the highest gains being posted by countries like Russia (51.2%) and India (25%). Other major developing countries that fared equally well included China (22.2%), South Africa (22.1%) and Brazil (18.8%): all-important economies that played a leading role at the negotiations.
One reason for the sharp surge in dollar export earnings was the pick up in prices. Apart from oil, the prices of both manufactured goods and non-oil commodities have surged. The growth in world trade prices of manufactured goods, which averaged a bare 0.3% in dollar terms in the nineties, has shot up to 7.2% between 2002 and 2007. In other commodities, the falling trends in the last decade were significantly reversed. The average annual increase in prices during 2002-07 was the highest in metals (23.3%), followed by beverages (11.4%), food (8.1%) and agriculture raw materials (3.1%). The weakening of the US dollar also added to the growing export revenues.
p.raghavan@expressindia.com