So how is trade integration going?

I’ve seen better weeks for those who want trade expansion. At the Summit of the Americas in Mar del Plata, everyone took a “wait-and-see” approach to the proposed Free Trade Area of the Americas. The Economist explains:

At the first Summit of the Americas, in Miami in 1994, all the region?s governments signed up to a common vision of democracy and free trade. That consensus was starting to fray by the third summit, in Quebec in 2001; now at Mar del Plata, the fourth, it has unravelled. The gathering?s worthy official theme was to promote employment. But how? The plan for a Free Trade Area of the Americas (FTAA), originally due to come into effect this year, has stalled, as Mr Bush admitted even before the summit, saying that the Doha round of world trade talks should take precedence. Brazil echoed this sentiment at Mar del Plata, saying it wanted to see the outcome of negotiations at the World Trade Organisation (WTO) before moving forward on a regional agreement. Argentina also demurred. With three out of Latin America’s four biggest economies reluctant, hopes for a regional agreement were dashed.

This makes sense. So how are those WTO negotiations going? The Associated Press reports that India’s Commerce Minister is not optimistic:

The World Trade Organization may not be able to achieve the goals it has set for a new trade treaty when ministers meet in Hong Kong later this year, the Indian commerce minister said Monday. “With the few days left, with the vastness of what is on the table, we may not be having” the complete blueprint that was planned, Kamal Nath told reporters following a meeting of key trade negotiators. Ministers from the 148 WTO members meet in Hong Kong Dec. 13-18 aiming to create a detailed framework for a major trade treaty that would lower import barriers and reduce subsidies. But major differences exist in areas including agriculture and market access for manufactured goods. “It isn’t that Hong Kong is going to be a failure. We are tempering expectations based upon the timing and the intricacy,” said Nath, who chaired the meeting of ministers from India, the United States, the European Union, Brazil and Japan. With only weeks to go before the Hong Kong meeting, ministers seemed to be trying to avoid the kind of crushing disaster they faced at the last WTO ministerial in Cancun, Mexico, in 2001, which collapsed in disarray and acrimony, paralyzing the global trade body for months.

[So this is Europe’s fault, right?–ed. Well, at this point the answer is yes and no. Certainly EU intransigence on agricultural matters doesn’t help. On the other hand, the developing countries are now in a position where they need to make concessions as well. Consider the Indian Commerce Minister’s remarks in this story by the Independent‘s Philip Thornton In a wide-ranging interview with The Independent, Kamal Nath lashes out at the attitude taken by rich nations in the WTO talks ? especially that of Europe’s trade commissioner Peter Mandelson. He appears baffled that Europe has offered to eliminate domestic subsidies and reduce tariffs ? but in exchange for concessions in other areas, notably service industries and market access for industrial goods. “I welcome Peter Mandelson’s proposal to say he will reduce by so much but then he says ‘I want my pound of flesh’,” Mr Nath said. He compared Mr Mandelson to a politician seeking a knighthood simply for obeying a traffic light. “He is looking to be rewarded and rewarded for behaving as one should. “It is a step in the right direction but it is a question of giving an inch and asking for a mile ? not just asking for a foot but a mile.”

On the one hand, Nath is correct in saying that the EU should liberalize its agricultural sector no matter what. On the other hand, the GATT/WTO process was designed for states to get concessions from other countries in order to gain the concessions they want. From an economic standpoint, this kind of reciprocity makes no sense (it’s better for countries to unilaterally lower all their tariffs, quotas, and barriers). From a political standpoint, however, the Indians — and other large-market developing countries such as Brazil and China — are going to have to reciprocate for the Doha round to have any meaning. UPDATE: Oh, goody, the U.S. has scored a trade “victory,” according to Edward Alden of the Financial Times:

Tuesday?s deal to restrain imports of Chinese textiles and clothing is the latest and largest ? and the most surprising — of those agreements. As recently as last month, the talks broke down in the face of Chinese demands for annual increases of as high as 30 per cent in exports to the US. But on Tuesday Beijing signed off on a deal that will bring it little more than 10 per cent annual growth through the end of 2008. Mr Portman, speaking in London, called it ?an example of how the US and China do have the ability to resolve tough trade disputes in a manner that benefits both countries.? Bo Xilai, China?s Commerce minister, said that while it?s ?still a far cry from our original expectations? of free trade in textiles and apparel, the stability it brings is ?a win-win result.?