Doha is too important to fail

In Geneva, negotiators continue working towards an agreement in the World Trade Organisation Doha Round.

The summer deadline, imposed chiefly by the expiry of the US negotiators negotiating authority, is looming. The broad outlines of an agreement between the EU the US and the advanced developing countries is now visible. From there a wider agreement among all WTO members can develop. As we weigh the chances of success in Geneva, we also need to contemplate the costs of failure.

The multilateral trading system is the engine room of the global economy. The multiplier effect of a global deal like Doha is so great that no bilateral oiling of the wheels can match it. Successive rounds of trade liberalisation since World War II have pushed down barriers and generated huge gains for the global economy. In the last decade, hundreds of millions of people have been lifted out of poverty through freer trade.

A successful and ambitious Doha Round would offer a €100 billion annual shot in the arm for the global economy. It would result in a steep reduction in trade-distorting farm subsidies, new markets for trade in farm goods, manufactured goods and services, new aid for trade for the poorest and an opportunity to strengthen the WTO rulebook to make it easier to trade.

Failure would be a tragedy given how far we have come, and why. Doha was launched in the shadow of 9/11, 2001. It was an assertion of our common commitment to use multilateralism to shape our world for the better. It meant using trade liberalisation to advance development and social justice in an uncertain world. This trade round is about global politics as well as global economics.

Yet, in my year and a half as Europe's Trade Commissioner I have been struck by the lack of public consensus on the link between trade liberalisation and development. Although every successful example of economic development in the 20th century points to the value of such liberalisation, some people still believe, no doubt with the best of intentions, that liberalisation is something developing countries must endure, not something they need.

Of course it is complicated making economic liberalisation work for development. Of course, it needs sensitive political management and financial support. But the development argument deserves better than dogma.

Europe has been criticised for suggesting that the Doha Round should aim to liberalise trade between developing countries, and for asking for new market access for industrial goods and services trade in the booming markets of the advanced developing countries like China and Brazil. But most developing country trade is in industrial goods, as are most of the tariffs they pay. And most of the tariffs they pay on industrial goods they pay to other developing countries. Is there a development argument for reducing these barriers? Of course there is.

Services trade, equally, provides a vital means of transferring expertise and technology between developed and developing countries, and when it brings much needed capital investment with it, is an important way to build the transport, communications and banking sectors that are the backbone of any growing economy. Research shows that an ambitious services deal could outstrip the gains for developing countries from new trade in agriculture and even industrial goods over time. I recently travelled to Malaysia where a decade of foreign investment and imported foreign experience in the construction sector has underwritten the development of a thriving local construction industry. But at every turn this agenda has been painted by NGOs as anti-development.

A Doha round that opens south-south trade, between developing countries, will reflect the growing reality of the global economy - that China and Brazil and the emerging economies of Asia and South America have a new power but also a new responsibility. Doha is an opportunity to integrate these markets further into the global economy. That opportunity will not come again soon.

Failure of Doha would be a blow to the credibility of the international trading system.

We would risk a return to a system of bilateral agreements in which the large can strong-arm the small. Trade muscle instead of multilateralism.

Failure means losing the possibility of binding the EU's agricultural reform into the WTO rulebook in Geneva and the possibility of locking in similar reform in the United States. The world would lose new market access in farm goods - the deepest, steepest farm tariff cuts ever offered. New trade in manufactured goods would also be lost, trade which is not just vital for the EU and the US but for the growing industrial sectors of the developing world. To lose even a modest deal on services trade would mean foregoing the developmental benefits of foreign investment and the global flow of skills and experience to the developing world.

We would lose a new multilateral agreement on duty-free and quota-free market access for the least developed countries. We would lose a huge new global package of financial assistance to help build capacity to trade in the poorest countries. We would lose the chance to rewrite the global trade rulebook in a way that opens the door to new trade and reduces corruption. And we would lose the conviction that the WTO system can function with a membership that reaches 150 and mirrors every increment of size, interest and capacity in the global economy.

In Geneva all negotiators, and all those who criticise the process from the sidelines, need to contemplate the truly enormous costs of failure - both economic and political. The price of negotiating machismo at this moment is stalemate, and stalemate means failure. We can all afford to compromise. No one can afford to fail.