Documents circulated on 21 April 2011 show – for the first time in 10 years of talks – the Doha package in its entirety. They also highlight the deadlock that is holding up the Round. US President Obama thinks he cannot win the domestic political battle against US protectionists without fulsome support of US export interests. Such support, he believes, would require much larger tariff cuts by emerging economies – especially China, India, and Brazil. As these nations believe that they cannot offer greater cuts, Doha is deadlocked.

President Obama and the leaders of China, India, and Brazil – must choose one of two paths:

• The politically expedient path of putting Doha on hold, or

• The leadership path of engaging constructively and creatively in breaking the deadlock.

Many believe 2013 provides another opportunity to break the deadlock (after the US elections and the Chinese change of senior leadership). This is a false promise based on woolly thinking – the options are now, or not before the end of the decade. US Congressional politics will be much rougher from 2013 – scared by divisive debates over spending and taxes driven by extreme positions taken on the role of government.

In this poisonous climate, the US President will find it harder to compromise on multilateral trade liberalisation than in 2011. Likewise, the new Chinese government can hardly start off their stewardship of China-US ties by making major tariff concessions. Think of 2013 as 2011 with less goodwill internationally, more poisonous politics inside the US, and a Chinese leadership that must prove its toughness.

One of the Round’s big problems was that its agenda speaks little to the commercial interests of rising Asian powers. The predicament is that adding such prizes would require new negotiations on an expanded Doha agenda. History tells us that it takes years to negotiate a new agenda, and then years to complete the actual bargaining.

This is why 2011 is a fork in history’s road. If the US and China are unwilling to break the deadlock in 2011, no deal is likely before 2020. Realistically speaking, a brief pause is not an option; numerous delays in the past did nothing to narrow differences.

As Peter Drysdale notes, the idea that it would be harmless to allow Doha to languish for years is dangerous. Failure to conclude the Doha Round this year would damage the multilateral system in an era when multilateral cooperation is in short supply.

• The multilateral trading system is the economic sinew that constrains the exercise of international political muscle in ways that damage global wellbeing and inflicts national self-harm.

• With the rise of China, a US that is turning inward, turmoil in the Middle East, and a damaged and imbalanced global economy, the world needs such sinews now more than ever.

If leaders do not have the foresight to tackle Doha while it is still possible – and all indications are that they are likely to opt for expediency – the world trade system will be in for an extended period of institutional decay – on a path towards continuing erosion of the WTO’s centricity in global trade governance.

Like global warming, the erosion of WTO centricity won’t be an event, it will be a process. And like global warming, the costs will come in unexpected spurts and in unexpected ways.

One of the hidden costs of the ‘delay option’ would eventually include erosion of WTO members’ respect for verdicts of the WTO’s ‘court’ – the Dispute Settlement Mechanism. It is naïve to believe that the Mechanism will remain an isolated Garden of Eden while the negotiating and legislative function of the WTO falls into abeyance for a decade or more.

A very different set of costs would come from the uncoordinated system of regionalism that will surely arise if Doha flounders. The problem is that the ongoing Round prevents the WTO from addressing 21st century trade policy issues; regionalism is filling and will continue filling this governance gap.

Multilateralism and regionalism have gone hand in hand throughout the GATT/WTO’s history. Regionalism in a world where multilateralism was permanently deadlocked would be a very different proposition – regionalism would begin to act as a substitute to multilateralism rather than a complement. One example that many pointed to was the Trans-Pacific Partnership (TPP) – the regional arrangement that the Obama Administration is pushing so hard to complete in 2011. Although some support the initiative, all thought it would be more clearly beneficial if it was signed just as the WTO was coming off a fresh win on Doha. As China will not find the terms of the US-led TPP acceptable, TPP could develop as an ‘everyone but China’ agreement. In absence of a vibrant and active WTO that could potentially multilateralise TPP-disciplines, this arrangement could entrench the adversarial political psychology that is developing in US-China relations in a way that would be very difficult to reverse. By contrast, if TPP was agreed along with a finished Doha package, it could be very constructive – helping to frame the critical issues that the WTO must move on to after Doha is completed.

In this time of global economic crisis and political uncertainty, there is a distinct possibility that regional arrangements could reinforce, not stem, a retreat towards protectionism. Recall the 1930s spurt of bilateralism.

A collapse is unlikely to happen immediately, or completely. It could start with a slow rise of protection during the next few years, as it happened in the 1920s before the explosion of protection in 1929-1930. Political circumstances are favourable. In 2012, the elections at the highest political level in several G20 countries—China, India, the US, and France and Mexico—open the doors to people eager to present trade as the scapegoat for national problems – things such as unemployment and austerity measures in the US and Europe, and inflation and inequality in China and India.

The WTO’s rules have had a beneficial effect on many developing nations – providing them with a rule-of-law framework that encourages trade, investment and growth. A failed or delayed Round would also be blow to the least developed countries who have been promised quota free and tariff free access to developed nation markets.

Ernesto Zedillo, a former head of state himself argues forcefully that direct involvement of heads of state is required. Failure of such engagement would put globalisation, and its enormous benefits, at serious risk.

US and Chinese political concerns at the heart of deadlock, however, cannot be denied or waved away as a lack of vision. In today’s circumstances, to issue statements that merely call for a successful conclusion to the Round is simplistic and naïve. If US and Chinese leaders are to find more room for compromise, they must find ways to loosen their domestic political constraints. This means challenging the premise on which the deadlock is based – namely, the view that Doha is mostly about new market access.

President Obama and the Chinese leadership need to make the case to their own domestic constituencies that Doha matters for reasons far beyond the tariffs on the table. These leaders, and indeed all WTO members, must start making the case that Doha matters for systemic reasons.

They should argue that Doha needs to be done to preserve one of the world’s most precious public good – the rules-based, WTO-centric trade system – a system that has created so much prosperity in America and lifted so many people out of poverty in China, India and Brazil.

World leaders should also consider compensatory arrangements that could make The Obama Administration and Chinese leadership should ‘sell’ completion of the Doha Round to their own domestic audiences on national security grounds.

A flourishing multilateral system that has moved forward for 60 years has proved to be one of the cheapest and surest ways of fostering world peace and security. Both the old superpower and the rising super-powers should view doing Doha as a good, practical and immediately available step towards the sort of mutually beneficial, mutually respectful relationship that they must develop if they are to maintain internal and external harmony.

Above all, world leaders should not give up on Doha by letting it drag on beyond 2011.

Richard Baldwin and Simon Evenett are at the Graduate Institute, Geneva and CEPR and University of St. Gallen and CEPR. This essay is digested from the lead-in to the eBook, ‘Why World Leaders Must Resist the False Promise of Another Doha Delay‘, just released by VoxEU.