Monday, December 12, 2011

Doha again!

Its time for the Eighth Ministerial Conference of the WTO from the 15th to the 17th of December at Doha.

The future of the Doha Development Agenda talks is in balance with experts predicting the imminent failure of the negotiations due to a variety of reasons.

The WTO website has a document called "Elements of political guidance" which will be presented to the Chairman of the Ministerial Conference to be included in its agenda. The three broad themes of the document are the importance of the multilateral trading system and the WTO, Trade and Development and Doha Development Agenda.

The document had this to say on the three issues briefly:

Importance of the Multilateral Trading System and WTO

"1.         Ministers emphasize the value of the rules-based multilateral trading system and agree to strengthen it and make it more responsive to the needs of Members, especially in the current challenging global economic environment, in order to stimulate economic growth, employment and development.

2.         Ministers underscore that the WTO's role in keeping markets open is particularly critical in light of the challenging global economic environment.  The WTO has a vital role to play in the fight against all forms of protectionism and in promoting economic growth and development.  Ministers also acknowledge that experience has shown that protectionism tends to deepen global economic downturns.  Ministers fully recognize WTO rights and obligations of Members and affirm their commitment to firmly resist protectionism in all its forms."

Trade and Development

"1.         Ministers reaffirm that development is a core element of the WTO's work.  They also reaffirm the positive link between trade and development and call for focused work in the Committee on Trade and Development (CTD) which is to conduct this work in accordance with its mandate and report the results achieved to Ministers at the Ninth Session.  Ministers call on WTO Members to fully operationalize the mandate of the CTD as a focal point for development work.

2.         Ministers reaffirm the need for the WTO to assist in further integrating developing countries, particularly LDCs and, without creating a sub-category of WTO Members, small, vulnerable economies, into the multilateral trading system."

Doha Development Agenda

1.         Ministers deeply regret that, despite full engagement and intensified efforts to conclude the Doha Development Agenda single undertaking since the last Ministerial Conference, the negotiations are at an impasse.

2.         Ministers acknowledge that there are significantly different perspectives on the possible results that Members can achieve in certain areas of the single undertaking.  In this context, it is unlikely that all elements of the Doha Development Round could be concluded simultaneously in the near future.

3.         Despite this situation, Ministers remain committed to work actively, in a transparent and inclusive manner, towards a successful multilateral conclusion of the Doha Development Agenda in accordance with its mandate. 

4.         In order to achieve this end and to facilitate swifter progress, Ministers recognize that Members need to more fully explore different negotiating approaches while respecting the principles of transparency and inclusiveness."

The document is a fine act of political balancing and is actually treading the middle path of espousing the virtues of a globalised, free trade paradigm along with a commitment to development. They are not seen as mutually exclusive. Perhaps the reflection of reality is found in the last part wherein the impasse of the Doha negotiations is laid bare. 

The Economist has reflected on this impasse aptly,

"The last big push to complete the round collapsed in a bout of finger-pointing in July 2008. Optimists argued that differences between rich countries, led by America and the European Union, and emerging ones, led by China, India and Brazil, could be ironed out if only there were enough effort. The arrival of Michael Punke as America’s ambassador to the WTO in March 2010 did cause serious discussion to resume, but rather than hasten convergence it seems to have exposed new areas of discord.

In 2008 disagreement centred on developing countries’ ability to respond to surges in agricultural imports. Now it appears that the real bone of contention is the aim of proposed cuts in tariffs on manufactured goods. America sees the Doha talks as its final opportunity to get fast-growing emerging economies like China and India to slash their duties on imports of such goods, which have been reduced in previous rounds but remain much higher than those in the rich world. It wants something approaching parity, at least in some sectors, because it reckons its own low tariffs leave it with few concessions to offer in future talks. But emerging markets insist that the Doha round was never intended to result in such harmonisation. These positions are fundamentally at odds."

In the Book "Unfinished Business? The WTO's Doha agenda", Aaditya Mattoo and Arvind Subramanian have argued,

There is a fundamental shift taking place in the world economy, to which the multilateral trading system needs to adapt. We advance five propositions. First, the traditional trade negotiating dynamic, driven by private-sector interests largely in the rich countries, is running out of steam. Second, the world economy is moving broadly from conditions of excess supply to stresses on supply, and so economic security has become a paramount concern for consumers, workers and ordinary citizens. Third, international economic integration can contribute to enhanced security. Fourth, addressing these new concerns requires a wider agenda of multilateral cooperation involving not just the WTO but other multilateral institutions. Fifth, despite shifts in
economic power across countries, the commonality of interests and the scope for give and take on these new issues make multilateral cooperation worth attempting. 

The Doha Round has always been plagued by a private-sector interest deficit. The corporate demandeurs (the traditional protagonists) of the north were conspicuous by their absence. This absence was the result of a number of factors, mainly unilateral and regional liberalisation in goods and services, which has reduced the incentive to negotiate multilaterally. With all of this happening outside the WTO framework, northern countries do not have to expend negotiating coinage within the WTO to secure outcomes that their firms are obtaining costlessly."

They have also argued that ignoring China and other emerging economies interests in the multilateral neotiations would be disastrous.

On the other hand, if China were to be part of the process of creating the rules for such a trade partnership, why exclude the other big players such as Europe, Brazil, and India? If the problem of a rising China is that it will have a lot of bargaining power by virtue of its economic size and dominance, then a multilateral process will add more negotiating heft on the other side of the negotiation. China is more likely to agree to disciplines on contentious issues if there is a consensus among a broader group of countries.

Regional and discriminatory solutions make less sense. The challenge of anchoring China in the multilateral trading system—as well as providing a fillip to growth in industrial countries through further liberalization—can be addressed by embarking on a new and comprehensive multilateral initiative. This would anticipate the changing interests and concerns of all the big trading nations in a way that the Doha agenda did not. A new initiative would also pave the way for a reciprocal liberalization mechanism—you open your markets in return for me opening mine—that has been the basis for previous successes in the trading system."

It would be interesting to see the results of the Doha round. Would it pave the way for a renewed round of negotiations or as Pascal Lamy feared "throw away ten years of solid multilateral work"?

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