The deal that really could save the world
First published in the Telegraph on 3 December 2009
Did you know that one of the main causes of the spread of Aids is truck drivers? In the early days of HIV, a study showed that more than half of all freight drivers in Africa had the virus, and more than three quarters regularly had sex with prostitutes along their routes. It didn’t take an epidemiologist to predict what happened next.
What turned these outbreaks into a plague, however, was not merely a lack of medical infrastructure, but pointless customs rules. At the border between Kenya and Tanzania – to take one example – you have to leave your cargo for at least three days before moving on. Enterprising businessmen set up a complex of brothels to cater for the captive audience, and so was born an HIV hotspot.
This problem has not been tackled: the delays are still in place, the brothels are still packed. On paper, a solution was agreed years ago. Border crossing times would be slashed, and the World Bank would pump in money to clean up the brothels. But this solution sits inert, locked inside the web of pledges and agreements that make up the Doha Round of global trade negotiations.
World trade talks may not have the razzmatazz of Copenhagen and climate change: trade is not trendy. But saying that the Doha Round is all about trade is rather like saying Paradise Lost was a story about a snake and an apple: there are thousands of proposals and pledges waiting to be implemented, virtually all of which would make the world a better place.
Indeed, for anyone remotely concerned about global health and living standards, this week’s little-noticed World Trade Organisation summit in Geneva – and its ignominious failure – is far more important than the vastly larger affair in Copenhagen.
Why is Doha so vital? Because the rules that determine how goods move from one country to another are archaic, having been drawn up decades ago, before the internet was even imagined. The result is that African customs officers can delay people at a border for as long as it takes to force a bribe out of them; Cambodia pays more in tariffs when exporting goods to the US than France does; and farmers in Europe are paid to leave fields fallow.
Combine all these factors, each of which imposes friction on the free flow of goods, and you realise just how much the world economy is being held back. Release this tether and the amount of wealth generated would be stunning. The unprecedented surge in world trade over the past decade was in large part due to the slashing of barriers under Doha’s predecessor, the Uruguay Round, which was completed in the early 1990s.
Yet that boost would be as nothing in comparison with what would be unleashed by the as-yet-unfinished Doha Round. These negotiations, which have been going on for eight years, finally tackle those restrictions on trade, such as border control issues, that are far less visible than tariffs or subsidies, but just as important. Everyone should benefit: rich countries will be able to earn more from exports of high-technology products; emerging economies will increase exports of industrial goods; and the poorest will be freer to send agricultural goods around the world.
This is first-principles economics: get rid of needless barriers and divide the labour between the most capable: prices fall, everyone prospers. And, at the same time, we rid ourselves of the dangerous rules that helped spread HIV throughout the world.
All of which makes it especially alarming that while the Copenhagen summit has dominated headlines this week, barely a column inch has been given over to the fact that the Doha Round came one step closer to complete disintegration.
The summit that concluded last night in Geneva was supposed to set the negotiations back on track. As has happened again and again, the effort failed, in large part due to the assiduous work of well-connected agricultural lobbyists in the US, who resist any attempt to allow the laws of economics to be imposed on their industry.
It is a depressing thought that politics has been so captured by vested interests – particularly when in the wake of the financial crisis, banking lobbyists have resisted attempts to impose discipline on their sector.
It is hardly surprising that some of the poorer countries yesterday effectively abandoned Doha in favour of their own breakaway deal. You could get worried about the threat of protectionism, and what that implies for international relations; or you could fear for a total breakdown in multilateral relations, which suggests any hope of clinching a deal in Copenhagen is frankly forlorn.
I prefer, though, to focus on the fact that representatives from around the world came within inches of sealing a deal that would have pushed down prices, improved living standards and helped prevent the spread of a deadly virus. And I hope that if more of us realised what was going on, we might be rather more outraged about it.