The threat to trade
With precious little good news so far for the world economy, a great deal of hope has been pinned on trade ministers agreeing at their meeting next month in Qatar to launch a new round of world trade talks.
It is a mistake to expect too much from the Qatar meeting. It is unlikely it will result in a major new round of trade talks. And even if by some miracle new talks are agreed to, this will have little or no short-term effect on the speed at which the world's major economies recover. Negotiations to liberalise world trade typically take as long as a decade to conclude, and it takes several years after that for their measures to be fully implemented. So launching a new round of talks is not going to be the panacea that many think it would be.
Having said this, it is important that the Qatar WTO meeting does achieve a more modest aim - to stave off protectionism. Political uncertainty and an economic downturn lead to domestic pressures on governments to raise trade barriers. Jobless workers tend to blame cheap foreign imports for their plight, and domestic industries threatened by weakening markets will increasingly argue they need to be protected from foreign competition by trade barriers.
The experience of the 1920s, when protectionism in the United States aggravated what later became the great depression, is a stark reminder of the dangers of raising protectionist barriers at a time of economic distress.
What the world needs from the Qatar meeting is not a grand new round of trade negotiations, but rather a pledge by WTO members to stick to their existing trade liberalisation commitments, and if possible to speed up the rate at which they are implemented.
Instead of over-ambitious declarations to free up all world trade, WTO members would be far better off negotiating more modest, but in the long-run more meaningful, agreements on issues like further reducing tariffs, improving and strengthening the way trade disputes are settled by the WTO, introducing greater transparency into government purchases and reducing non-tariff barriers to trade.
At this point in time, the world does not need grandiose projects that have a high risk of failure. What it does need is a commitment to ensure that the existing trade regime functions as smoothly as possible.