WTO chief Pascal Lamy has formally suspended talks on a multilateral trade deal, bringing five years of negotiations to an end. Major trading powers, including the EU are blaming the US for the collapse.
Market access: No deal means Europe and the US will lose new access to the markets of emerging economies like China and Brazil for their exported industrial goods and services. It also means that agricultural exporters will miss out on the deepest farm tariff cuts ever offered by the EU. And furthermore, failure also means passing up on the recent multilateral agreement to grant duty-free quota-free market access to all Least Developed Countries.
Trade distorting subsidies: The US and the EU will be able to continue subsidising their agricultural production, thereby artificially enhancing their competitiveness, leading to over-production and dumping, which hurts poor farmers in developing countries.
WTO credibility: Failure could inflict a serious blow to the credibility of the international trading system and the WTO as an institution. The Dispute Settlement Body, which is currently the only supranational body capable of rendering compulsory judgements on disputes between countries, could be undermined.
Return of bilateralism: Failure could signify the return to a system of bilateral agreements and FTAs in which the large would be able to strong-arm the small and where the multiplication of trade rules and tariffs would generate higher transaction costs and damage the trading and investment environment.