The Rocky Road to Free Trade
Nov. 15, 2001

Two years ago, the World Trade Organization met in Seattle to advance the cause of free trade. The palaver, marred by obstreperous protests by a motley group of labor unions, environmentalists and students, was doomed by internecine wrangling among the member countries themselves. Despite days of intense negotiations, they failed to arrive at an agreement, and when they finally left Seattle, cowed and dispirited, prospects for increased global trade appeared bleak.

That was then. This week, the WTO met in Doha, Qatar. Intense negotiations followed. But this time, their efforts were not bootless: the member countries agreed to launch a new trade round. (The last round, the Uruguay Round, went into effect in 1994, marking one of Clinton's signature achievements.)

The Doha talks almost foundered.

First, there was the European Union, and France in particular, with its implacable opposition to the removal of farm subsidies, a key issue for developing countries anxious to increase exports of agricultural goods. In the end, the EU relented, although at France's insistence, the goal of “phasing out” subsidies was replaced by a more nebulous intent to explore such a move without “prejudging the outcome.” A small victory, admittedly, in the fight for free trade, but a victory nonetheless–and one that promises dividends for US farmers who now face fewer trade barriers in Europe.

A second bone of contention was the issue of drug patents. Developing countries sought assurances that they would be able to produce generic versions of drug to treat AIDS and other epidemics. Western drug makers were bitterly opposed, arguing that if drug patent rights were not protected, they would be forced to scale back research and development of new drugs.

But their position was weakened by the US government itself. In the first few days of the anthrax scare, Tommy Thomson, in a veiled threat to Bayer, the producer of Cipro, indicated that if it failed to bring its prices down, the government would turn to generic products. Bayer grumbled, but it did lower Cipro's price.

With the Cipro incident fresh in their minds, the WTO negotiators agreed to give developing countries the right to override patents and purchase generic products in serious cases.

There were other contentious issues. Several countries, including Japan, decried US anti-dumping policies designed to protect domestic producers of textiles and steel. Europe and the US pressed for greater access to developing-country markets for Western banking and insurance companies. Europe tried to establish linkages between trade and environmental standards, a move vehemently opposed by developing countries.

Some decisions were less acrimonious. China and Taiwan were both admitted to WTO. With Putin in Bush's good books, the likelihood that Russia will soon become a member has improved.

If the Doha talks do lead to yet another trade round and the subsequent dismantling of trade barriers around the world, WTO would have ample reason to be satisfied. The imbroglio in Seattle would then become a distant memory.