INSTANT ANALYSIS: Implications of the failure of WTO talks
GENEVA (Reuters) - Ministers from about 35 countries have failed to make a breakthrough in the World Trade Organization's (WTO) Doha round to open up global trade.
Here are the implications for trade and the WTO, according to economists, diplomats and officials.
THE TALKS
* The deal broke down over a relatively obscure but complicated proposal to protect farmers in developing countries from a surge in imports.
* No one expected the "special safeguard mechanism" (SSM) to be the rock on which the talks foundered.
* If the Doha round is suspended indefinitely it is unlikely it can be brought back to life -- the agenda has changed since the launch in 2001 with the rise of China, a jump in commodity prices and concerns about climate change.
* But ministers may opt to come back after the summer break for one last roll of the dice.
* A new administration taking over next year in Washington after November's election, changes next year in the European Union's executive Commission and a likely election in India in the near future could also set new priorities for trade.
TRADE AND THE INTERNATIONAL TRADING SYSTEM
* Failure to agree in Geneva this month damages the credibility of the multilateral system and will encourage greater reliance on regional trade deals -- politically easier but economically less beneficial than a global deal.
* There will be no immediate impact on trade flows, given the long implementation periods for the measures under discussion -- typically five years for developed countries and 10 for developing countries, but as much as 14 years for China.
* But this month's failure could damage business sentiment.
* Will it encourage protectionist behavior, a big factor in the Great Depression with its accompanying mass unemployment? Failure to agree a deal liberalizing trade further removes an obstacle to protectionism, but could also frighten policy makers into fighting it more firmly.
THE ROLE OF THE WTO
* The WTO is not only about trade talks. Arguably its most important role is dispute settlement -- acting as the umpire of the international trading system within agreed rules.
* That role continues with the WTO enforcing existing trade agreements up to the last deal, the 1994 Uruguay round.
* The WTO can continue to promote global trade liberalization through accession negotiations with countries that have not yet joined, such as Russia.
THE WIDER WORLD
* The talks reflected the changing balance of economic power as emerging nations in Asia and Latin America grow in influence.
* Indian Commerce Minister Kamal Nath was a key figure in the talks, fighting intransigently for the right to protect millions of subsistence farmers from poverty over efforts by rich countries to promote mere "commercial prosperity".
* WTO Director-General Pascal Lamy brought China into a core Group of 7 countries that tried to find a compromise, recognizing the clout of the world's second-biggest exporter.
* The talks exposed once again the faultlines running through the European Union, as French President Nicolas Sarkozy rallied opposition to an emerging deal even as European Trade Commissioner Peter Mandelson was trying to negotiate it.
