A global blame game of accusations and counter-accusations has only just begun in the aftermath of the demised Doha round of WTO trade negotiations. Negotiations floundered on a dispute over the right of governments to raise import duties when agricultural imports surge into their countries. Known as “safeguards”, such measures already exist in the WTO system, but developing countries led by China and India held out for a looser safeguard system that would allow for their greater use.

There is sufficient blame to go around for virtually all of the negotiators. The Indian government did not want to risk a political crisis after narrowly avoiding a no-confidence vote on its civilian nuclear deal with the US. The US team lacked the legislative authority to negotiate without the risk of later revision by the US Congress. The EU was under pressure from domestic lobbies threatened by the continued strength of the Euro and with no desire to open up agricultural markets. Finally, the relatively narrow agenda at Doha sapped much of the enthusiasm among countries who were still trying to implement the results from the previous negotiating round.

The upcoming elections in the US, the instability of the Indian governing coalition and even the selection of a new EU trade commissioner, as well as a possible global economic downturn all mean that it could be years before WTO negotiations resume in earnest.  The resulting stalemate at the multilateral level presents major challenges and opportunities to Asian governments.  

India has traditionally advocated an aggressive program in support of developing country issues. However, in previous negotiations, peer pressure from other countries tended to force India to come around to support a consensusual view.  Now that China, for its own reasons, has also taken a more public stance in support of the developing world, India will have greater freedom and confidence to pursue its program. That program could become even more strident as the Indian elections loom.

China had previously taken a low-key role at the WTO, settling WTO disputes before they could reach final judgment and pursuing a quiet agenda to protect its export interests. The Chinese government’s increasing concern with food security motivated the new position on agriculture, which dovetailed with a desire to garner diplomatic points with the developing countries. China should still promote its export interests through the increased use of WTO dispute resolution, while taking a more defensive approach on agriculture in negotiations. In this regard, China’s trade policy is likely to be quite similar to that of the US, EU and Japan.

Japan’s declining influence in Asian trade matters has been felt over recent years. Before the emergence of China and India, Japanese trade diplomacy greatly influenced policies in Asia. The Doha round failure, where Japan openly criticised China and India’s position on agriculture, definitively ended Japan’s leadership role in Asian trade policy. Japan will probably put more emphasis into its free trade agreement (FTA) negotiations in Asia, but as just another partner rather than as the regional leader.

For most of ASEAN, the Doha round should serve as a major wake-up call. Singapore shrewdly hedged its bets on the WTO by actively pursuing FTAs, and ASEAN as a group has followed suit with FTAs and FTA negotiations with other regional partners. However, without the full adoption of the ASEAN Charter and more effective economic integration, ASEAN will be ill-prepared either to compete or negotiate with the larger economic powers in the region. Both steps are quite necessary if the multilateral WTO system falls into disorder.

The Doha failure could also force the “middle” economic powers of Taiwan and Korea to emphasise regional trade policies over a multilateral agenda. The new government in Taiwan has been discarding restrictions on cross-straits trade and investment rather than pursuing politically driven FTAs with the few countries that recognise it as the government of China. With its FTA with the United States stalled, perhaps indefinitely, Korea may also have to pursue more regional integration initiatives. ASEAN and China have been willing to cooperate, but the big question is whether Japan can bring itself to pursue an FTA with Korea.

The WTO is not dead; it will continue to serve as a useful forum for trade issues and dispute resolution. After a hiatus, trade negotiations will resume, whether as a continuation of the Doha round or as more modest “mini-rounds” on discrete issues. But when they do resume, the Asian trade delegations will reflect on a different trade environment that will be economically and politically more complex.  Asia’s trading partners must take this into account or risk another WTO failure.