Grain and thunder

DEADLINES are a mixed blessing. A ticking clock can focus minds, but it may also leave too little time to resolve hard choices. Either outcome is possible as negotiations on several big trade deals reach their final weeks.

The good news is that there is lots of activity. In February America announced plans for an ambitious Trans-Atlantic Trade and Investment Partnership (TTIP) with Europe. Its name is an echo of the Trans-Pacific Partnership (TPP), a planned tie-up among Pacific-rim economies that grew in importance when Japan joined the talks in March. More encouraging still was the revival of the Doha round of multilateral trade talks at the World Trade Organisation (WTO). These had collapsed in 2008 but resumed last year with an eye towards completion of a deal this year.

In this section

The bad news is that many of these negotiations have hit rough patches. That is partly a function of deadlines: both TPP and Doha are due to conclude next month, so the trickiest details can no longer be put off. Yet recent glitches also suggest that politicians overestimated political support for big new deals.

The threat of failure in the Doha round is most serious. The WTO’s members have not agreed on any broad cuts to tariffs or in other trade barriers since its inception in 1994, despite repeated attempts. In early December trade ministers will meet in Bali, Indonesia, in theory to sign a deal. Yet negotiators are still at loggerheads.

Simplicity is the watchword of the revived talks. The “single undertaking” approach, in which no issue could be considered settled until an entire deal was worked out, has been scrapped. Instead negotiators are aiming to take what they can get and leave the rest for later. At the heart of the Bali package is a pact on “trade facilitation”, measures to reduce the cost of trade through investment in infrastructure and alignment of customs rules. It is hard to imagine who could object to that. Yet some developing countries worry that they may be unable to overhaul their customs regimes on the required schedule.

Agriculture, as ever, is a problem: “food security” is the biggest stumbling block. After recent rises in food prices many developing countries adopted new agricultural subsidies to encourage farmers to grow more. Such arrangements are likely to break WTO rules, which specify that subsidies should not exceed 10% of the total value of production.

A group of developing countries led by India wants to amend the rules. One option, a “peace clause”, would prevent challenges to such subsidies within the WTO’s dispute-resolution mechanism. Rich countries have balked. America, in particular, is worried about the effect the subsidies might have if the resulting grain ends up on world markets.

A temporary fix could defuse the conflict. Rich countries could consent to a peace clause lasting three or four years, rather than the indefinite waiver the Indians would prefer. The hope is that India’s government might be more malleable after elections scheduled for May next year. But such a cop-out would reinforce the impression that the WTO cannot get substantive deals done.

As The Economist went to press, negotiators haggling at the WTO’s headquarters in Geneva still seemed hopeful that an agreement would be reached. Yet the risk that it will be a hollow one is high. Given Doha’s tortured history and its now limited agenda, failure would probably mean a total loss of credibility for the WTO as a forum for multilateral trade negotiations. That, in turn, would make it more likely that regional or bilateral deals lead to Balkanisation of the global trade system.

Regional deals, however, face problems of their own. As the TPP deadline approaches its opponents are mobilising in America. The administration of Barack Obama had hoped that Congress would grant it “trade-promotion authority” this year. That would guarantee any trade agreement it negotiates an amendment-free vote in Congress, giving trading partners confidence that deals struck in talks will not later be undone by the legislature. Congress has not handed out this fast-track favour since 2007, however, and looks unlikely to do so this year.

Worse, the foot-dragging seems to be at least partly the result of misgivings about free trade, rather than political horse-trading or a busy legislative schedule. Nearly half of the members of the House of Representatives have signalled reluctance to grant trade-promotion authority without various assurances. Many on the left, for example, are calling for an extension of “trade-adjustment assistance”, which provides funding for training and relocation to workers harmed by trade. These measures are scheduled to expire at the end of next year.

Democrats and Republicans alike also want to include restrictions on currency manipulation in any new deal (though they do not agree on what such rules would look like). Some legislators have expressed frustration with the secretive way in which TPP is being negotiated. That concern was exacerbated when WikiLeaks, a whistle-blowing website, published a draft TPP chapter that seemed to reveal a push to disseminate America’s onerous copyright rules.

Another deal to have hit an unexpected snag involves a subset of WTO members seeking to liberalise trade in information technology. Chinese objections brought the proceedings to a halt in July. A few weeks ago China agreed to resume talks, only to stay away on the appointed date. The world of trade negotiations, alas, is forever full of obstacles.