Doha Round Collapse Threatens Local Businesses

Strategic Insights -

The collapse of the Doha Round of world trade talks will make it more difficult for businesses like Minuteman International Inc., which exports industrial sweepers and other floor-care equipment to Brazil despite tariffs ranging from 30% to 40%. Small and medium-sized enterprises, like those in the cleaning industry, were counting on reduced tariffs and regulatory roadblocks in developing countries to boost their sales. However, the talks broke down due to the unwillingness of the US and other countries to make concessions on agricultural trade, which is considered the most politically sensitive area.

Key Takeaways:

  • The collapse of the Doha Round will have a negative impact on William McNamara, the director of international sales for Minuteman International Inc., who sells floor-care equipment to Brazil despite high tariffs.
  • McNamara's company exports to about 50 countries worldwide, and the high tariffs in Brazil are a major obstacle to their growth.
  • The collapse of the Doha Round is a setback for small and medium-sized enterprises like those in the cleaning industry, which rely on exports to developing countries.
  • Marshall Bouton, president of the Chicago Council on Global Affairs, states that "We've done the easy stuff" in past trade agreements, now the WTO is facing a more difficult issue - agricultural trade.
  • The impetus for free trade among local companies comes from giants like Boeing Co., Caterpillar Inc., Motorola Inc., and Archer Daniels Midland Co., which manufacture overseas or don't face huge trade barriers.
  • These companies push for free trade to promote economic growth worldwide for their products.
  • McNamara's goals for Doha were more specific, including reducing high tariffs and regulatory roadblocks in developing countries like Brazil, China, and India.

Statistics:

  • 30% to 40%: Tariffs on floor-care equipment exports to Brazil
  • 50: Number of countries worldwide where Minuteman International Inc. exports products
  • 50%: The share of exports that Minuteman International Inc. hopes to increase through reduced tariffs
  • 1 million: The estimated number of cleaning firms worldwide that could be affected by the collapse of the Doha Round
  • 5 years: The duration of the Doha Round trade talks initiated by the World Trade Organization (WTO) in Doha, Qatar

Sources:

  • Paul Merrion, "Doha Round stymied by farm subsidies, trade barrriers", Crain's Chicago Business (unspecified date)
  • William McNamara, director of international sales for Minuteman International Inc. (quoted in Crain's Chicago Business)
  • Marshall Bouton, president of the Chicago Council on Global Affairs (quoted in Crain's Chicago Business)
  • Tamara White, senior director of trade and foreign markets for the Illinois Farm Bureau (quoted in Crain's Chicago Business)
  • Doug Crew, governmental affairs manager for Caterpillar (quoted in Crain's Chicago Business)