There will be some praise for India’s toughness at the negotiating table. Toughness, however, is not an end in itself, and it will remain an open question for some time as to whether this was the best window of opportunity for India and China. Food prices were high, meaning dismantling Western subsidies was easier; and, if Obama becomes president, there is a possibility that the wing of the Democratic party that has been captured by labour unions and trade-sceptics will take over. This would be a disaster: one thing that the US can be praised for is keeping so-called “environment and labour standards” — which effectively wipe out poorer nations’ comparative advantage — off the table. If the Democrats put them back on, no deals are ever likely to be made.

Finally, the cloud of gloom settling over the markets, promoted by some analysts, is pointless. Yes, the world could have gained much. But some of the gains will be made anyway, even if through bilateral agreements. Bilateral agreements create difficulties for smaller companies that have to wade through a thicket of rules, and they disadvantage smaller countries. (It’s difficult to imagine Paraguay persuading the US to change its policies in return for trade concessions.) However, a large part of the gains from trade depends on political will, and will be carried through, whether in a bilateral or multilateral setting, if that will exists.

Another advantage is that it will finally be accepted that global governance is in crisis. A new paradigm for creating international and transnational consensus is needed. The universally acknowledged truth that gains to trade exist does not change the fact that freer trade benefits some interest groups and takes away from others. Those losing must be compensated. What is perhaps doomed is the attempt to agree on compensations for domestic groups through international negotiations, using the blunt tools available — tariffs and restrictions. If domestic redistribution or protection from risk is not directly arranged for by governments, we must start thinking differently: those side payments to losers should be put on the table and directly discussed. Doha may have gone down in flames, but the desperation it engenders will be useful only if something wholly different arises from its ashes.

... contd.