Resident Scholar Claude Barfield

The WTO should come to terms with political realities and suspend the Doha negotiations until January 1, 2010. It is time to step back and plot a course for the long-term revival of the negotiations and of the WTO as an institution.

On December 12, the multilateral trade negotiations in the World Trade Organization collapsed--or, more accurately, trade negotiators from the member states finally acknowledged what had been evident for months--that substantive divisions on central issues were too deep and political will too puny to bridge the gaps.

In recent weeks, there have been frantic calls for quick action to restart the negotiating process. That would be a mistake.

The credibility of world leaders--and the credibility of the fora through which they express themselves such as the G-7, the newly upgraded G-20, the World Bank and the International Monetary Fund--has already been severely debased by a succession of toothless and increasingly vacuous demands that the negotiators settle their differences and wrap up the round.

Beyond this, the stature of the WTO itself has suffered incalculable collateral damage by seven years of fruitless, arcane negotiations and, more recently, by the petty bickering and blame-games of national trade ministers.

It is no coincidence that over the past decade an alternate system of bilateral trade agreements--which now number over 400--has blossomed.

Recent in-depth analysis by Paul Blustein of the Brookings Institution on the breakdown in Geneva, first last July and then again in December, demonstrates that negotiators were still far apart on a number of issues--and not tantalizingly within reach of an agreement after a few adjustments and compromises.

It is time to step back and plot a course for the long-term revival of the negotiations and of the WTO as an institution. To that end, Director-General Pascal Lamy should move to suspend formal negotiations for one year, until January 1, 2010.

Such a timetable would match political realities. First, Barack Obama's incoming administration will have its hands full in the immediate future with the economic crisis.

Planning and pushing through a huge stimulus package, reforming health care, shoring up the U.S. housing system and constructing a new energy policy--to name just a few big-ticket items--will tax its human and intellectual resources to the maximum.

In addition, though the Democratic Party's platform endorses a successful conclusion of the Doha Round, Obama will still face difficulties constructing a coalition to support and approve any Doha package.

Over the last few weeks, powerful trade associations from U.S. agricultural and manufacturing sectors have signaled adamant opposition to the compromises on the table in Geneva; these concerns were strongly echoed by congressional leaders of both parties.

Further, over the course of the next year, two other key actors in the WTO, the European Union and India, will get new governments: India through national elections and the EU after the arrival of a new European Commission. In the interim, India in particular will not be in a position to agree to politically difficult compromises, and the EU will be in a holding pattern.

Suspension of the formal negotiations over the next 12 months, however, does not preclude important incremental actions that attempt to head off a wave of protection in the interim and enhance the chances for the ultimate success of the Doha Round.

First, under Lamy's leadership, WTO trade ministers should formally agree to a "stand still" pact, by which all member states would pledge not to introduce new protectionist measures--increased tariff rates, a surge of anti-dumping actions, investment restrictions--in the coming months.

In addition, WTO members could agree to a new system of surveillance that would track and report all new national trade restrictions. Of course, there would be no legal recourse for countries that enacted new protectionist policies, but "naming and shaming" would act as an important deterrent.

Finally, as suggested by leading international trade economists Richard Baldwin and Simon Evenett, developed countries should move forward with plans for aid and technical support for trade facilitation with developing countries, such as upgrading and cutting red tape at border crossings--even to the point of establishing a provisional fund to support such efforts.

Its own economic problems notwithstanding, the U.S. remains the "indispensable nation" and guarantor of the global trading system. As a candidate, Obama was equivocal on trade issues. Yet a constant theme of his campaign was the necessity for the U.S. to eschew unilateralism and re-assert its support for global teamwork.

Thus, early on, it will be important for Obama to enlist the soaring rhetoric that will define his presidency to the cause of the multilateral trading system embodied in the WTO.

Claude Barfield is a resident scholar at AEI.