Thursday, February 9, 2012

Doha Round and beyond

Containers at the port of Hamburg
(Courtesy (c) dapd)
Is the Doha round dead? This piece titled "Doha is Dead.Long Live... Doha?" outlines the reasons for the impasse as well as predicts that though there seems to be no way out of the impasse, there is still hope. Highlighting the often tedious, prolonged and lengthy nature of multilateral trade negotiations, especially with the caveat of a "single undertaking" Pascal Lamy said,
"Given the disappointments of Doha, it's unlikely any genuinely global deals will emerge in the near future. But WTO chief Pascal Lamy refuses to pronounce the talks "dead."
"International negotiations are not animals or plants. Experience shows that dialog never dies," he said, adding that it took the international community 45 years to strike a deal to limit whaling - but they got there in the end."
Calling for joint leadership in solving the Doha impasse this piece on the future of the negotiations states,
The Western business community believes that the outcome of the Doha Round is inconsequential, while trade policy analysts such as Shafaeddin and Dani Rodrik hold that (1) the General Agreement on Tariffs and Trade (GATT)/WTO rules suffer from asymmetries as well as contradictions between the agreed rules and their implementation by the main developed countries, and (2) as far as the Doha Round is concerned, the wealthy nations have not “genuinely” pursued a development agenda despite the fact that the Doha Round was supposed to be a development round. Hence, not only should developing countries not worry about burying the Doha Round, but they should also aim to revise the GATT/WTO agreements to make them development-friendly.
Notwithstanding an official declaration (or lack of it) of the Doha Round’s demise, it has been clear for a while that the status quo in negotiation strategies is not working. The problem, however, is in determining a viable way forward. For decades, many have lamented the extent to which Western countries dominate the global economic system, especially in the governance of multilateral organizations which is seen as favouring Western interests. Despite the talk of reform, industrialized countries have repeatedly countered serious efforts that would result in meaningful erosion of their entitlements. However, while to claim that in the present global economic scenario emerging countries need to step up the plate and take charge of negotiations is justified, the question remains whether the rest of the world, and in particular the industrialized world, is ready to accept their leadership.
For as in the early days of GATT, should China and India (much like the then US and Europe) decide with the other developing countries on a trade package, would the former powers be open to signing on the deal? Would they be agreeable to accepting the consequences of such an economic leadership? For example, will the world accept a global agenda set and run by the emerging economies, where development gets more importance than intellectual property rights and “developmental globalization”, would be a motivating force for trade and welfare gains have greater weight than financial sector profitability? Unlike GATT, WTO is both overtly and covertly more mercantilistic, with negotiations solely focused on reciprocal trade liberalization. It appears that the Western world is not yet ready to embrace this change, and it’s not merely because of the fears of the consequences of a Chinese hegemony in the Asia-Pacific maritime route.
What is the way forward? It is clear that the process requires acceptance of joint leadership by the emerging world as a true and equal partner of the Western powers. Until the global economic and political power play settles in a new equilibrium, it will be futile for ministers to meet for these biennial jamborees."

What if the "emerging economies" of today were "emerging" during the 1970's, 80's and 90's? Would the WTO have come into existence? Would the nature of the WTO Agreements have been different? Would there have been an "Uruguay Round impasse"? Member countries, while accepting the rules of international trade, do act in the interests of domestic economic interests. There is nothing inherently amiss with this approach unless the approach subverts the rules of multilateral trade. For those who believe that the impasse at negotiations is not a major threat to the WTO's credibility as dispute settlement will continue based on rules, it may not be an entirely right belief. Trade rules should reflect trade realities. An outdated system of rules may put pressure on the "quasi-judicial" mechanism to "creatively interpret". While this is not new in domestic judicial systems (often termed as "judicial activism or over-reach'), it could be a strain on the enforceability of international trade rules. Whether by joint leadership or recognising the limitations of judicial interpretation in international law, member countries need to rework their strategies on negotiations.

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