Dr Kamal Monnoo A lot of water has flowed under the WTO Bridge since September 2007 when we witnessed the last serious efforts to reach a meaningful agreement on Doha Talks. The world, in between, saw perhaps the worst financial meltdown ever: commodities crashed and global markets slipped into a recessionary cycle, which arguably was even deeper than the Great Depression of the 1930s. Naturally, this meant that somewhere along the line amidst frantic efforts of countries to recover, the lofty ideals of WTO got compromised. Nations and economies that were champions of global free and fair trade suddenly swung towards protectionism in a bid to save local industry and control rising unemployment at home. These, indeed, are worrying times for the world trade. Despite a recent somewhat levelling out of things (compared to the early period of collapse) the World Trade Organisation (WTO) reckons the global trade volumes to be around 10 percent lower for the period January-December 2009 than the same period in 2008. The 2010 outlook, though, looks slightly more promising, and reaching the pre-recession levels will, by all accounts, entail a slow and painful process. Trade Ministers from leading world economies, who met in November 2009 in New Delhi, to help resurrect the Doha trade talks, regrettably, failed to reach any real consensus to take things forward. Yet, amid this general gloom, activity on at least one sort of trade - bilateral free trade agreements (FTAs) - continues to assume a high global pace, and a feverish one in Asia in particular. In November 2009, another long elusive deal was signed, this time between India and South Korea, the first agreement between two of Asias four biggest economies, China, India, Japan and South Korea. However, the stream of FTAs, typically between one large and the other smaller economy, has become quite common in the last 18 months. According to an estimate by the Asian Development Bank (ADB), the number of FTAs in Asia may just have doubled since 2007. While the overriding argument for such deals is that something is better than nothing, most countries in the world, especially the poor and the developing ones, are worried that the flurry of bilateral deals may have come at the expense of a world trade agreement. For example, Gary Haufbauer of the Peterson Institute of International Economics in Washington goes as far as to allege that economic powerhouses like China and India have decided that they would rather pursue bilateral FTAs than make the necessary concessions to push Doha across the finish line. Their feeling that as the Doha round of world trade talks languishes, Asia cannot afford to sit on their hands and wait for Doha to revive. That means that it is better to loosen up trade with simpler deals between a couple of countries or, if you are truly ambitious, between a handful Some FTAs may have, indeed, added to economic well-being, but the kind of deals that are now being signed are likely to benefit their countries economies less than the egos of the politicians who sponsor them. Taken as a trend, they amount to a dangerous erosion of the system of multilateral trade on which global prosperity depends. In a world of collapsing exports and rising protectionism, the fashion for bilateral deals, on the face of it, looks like a welcome boost to the concept that trade in any form is always good; however, peer deeper and the message is far less reassuring. For a start, bilateral deals impose so much paperwork and bureaucratic hiccups on trade that companies rarely make use of their provisions. Only about a fifth of the 609 firms in four Asian countries, surveyed by the ADB in 2008, took advantage of the agreements that applied to them. When bilateral agreements are attractive to companies, it is often for the wrong reasons. Many bilateral trade deals offer favourable treatment to a few companies from a particular country at the expense of all the rest from elsewhere in the world. The companies that lose out may well be lower-cost producers, since such agreements are dictated more by politics than by economics. If so, the economy will suffer. Even if such a deal is eventually superseded by a broader one, it may already have caused long-term damage by allowing less efficient firms to become entrenched. Economies that are too small to extract concessions from their bigger bilateral negotiating partners fare particularly badly. Defenders of the current trend, the bilateralists, claim that tricky issues that stand in the way of a multilateral deal can be more easily resolved when only two countries are sitting on the table. They tend to argue that the multilateral trading system is littered with rows, hiatuses, disillusion, despair - and only some abrupt success. In the 1970s, many people wrote off the precursor to the WTO. The ministerial meeting of 1982 failed and the later Uruguay round of talks nearly collapsed as well, before being successfully concluded. Even now, amid deep pessimism about ever finishing Doha, there is hope of success. However, if the world truly wants Doha to succeed, the bilateralists need first to acknowledge that their own deals are poisoning its chances. Pakistan is one of the most compliant WTO nations. It stands to gain more through a multilateral trade culture via the success of Doha talks, instead of pursuing the course of bilateral trade agreements. Having said that, it is not possible for our government to just simply sit and wait, while our regional neighbours in particular, and other developed economies in general conclude FTAs, thereby, constraining our trade and markets, at least in the short-term. In such a situation, we also need to sign FTAs where we feel they are essential to our needs on market share sustainability and growth, but at the same time, we also need to be very careful that as a country we sign only those FTAs, which are absolutely necessary and prudent in the larger context of our position as a facilitator and supporter of the Doha Talks. The multilateral, free and fair trade agreement, if achieved, will still be our main strength. However, various traits of human nature can easily cloud our intuitive decision-making. One potential pitfall can be our tendency to see patterns where none exist. Thus, continual self-checking and feedback are crucial and while these should surely be an integral part of our decision making culture, they should not at any stage stop us from simply trusting our gut instinct to move forward in safeguarding our own national interest amidst the fast changing global scenarios. The writer is an entrepreneur and an economic analyst. Email: kamalmannoo@hotmail.com.