From a Der Spiegel article (via today’s WPR Media Roundup) on the failure of the latest WTO negotiations on the Doha round:
Still, the real reason for the failed negotiations runs deeper. Concerns about globalization have become greater than the hopes it engenders, even in the industrialized nations and the successful emerging economies. . .
The result is the death of a grand idea. . . In the coming months, experts expect to see a sharp increase in the number of bilateral negotiations aimed at setting up mini trade alliances.
Now this mirrors a theme that I’ve been developing on and off for a while, namely that globalization is approaching a tipping point where its perceived costs outweigh its potential benefits, resulting in regional integration that will reinforce what other people call poles, but what I think of variously as orbits or constellations of geopolitical power.
The failure of the Doha round, though, doesn’t undo what’s already been accomplished, and there’s no reason to believe that the status quo, supplemented with regional and bilateral agreements, won’t continue to have the same impact in terms of the redistribution of global wealth. In other words, the “Rest” will keep on rising,
From the perspective of the developed world, though, it seems like the process has been locked into a situation where the status quo benefits multinational producers, but puts wages in a pretty tight squeeze. Meanwhile, the major advantage of outsourced production, namely lower consumer prices, has taken a hit from the rising cost of commodities. Here’s Der Spiegel:
The collapse of the WTO talks means an end to the trade-war truce agreed to by countries around the world.
Part of the backlash will probably take the shape of regulation — of norms, standards, wages and benefits — but combined, the result will put the brakes on a bit. The question is how that will impact domestic economies that have become recalibrated to cheap labor and cheap prices. Any economists out there, feel free to drop a line.