Wednesday, February 1, 2012

Doha Round impasse - Way forward?

The China Post reported that Pascal Lamy, the Director General of the WTO predicted weaker global trade in 2012. It noted;
He also forecast that growth in 2011 “will finish at around 5.6 percent,” itself weaker than forecast in November, and added: “With an economy that is taking a nose dive globally, I would be surprised if we did as well in 2012.”
Lamy noted that “for now, we have not seen a protectionist wave” that would probably hamper exchanges even more.
Calls for protectionist measures have begun to multiply in countries like France where competitive positions have been undermined by globalization."
With the Doha Development Round not making headway, many commentators have forecast a gloomy next  few years for the multilateral organisation. 

In a refreshing piece "Don't give up on World Trade Talks" Sherman Katz and Gary Clyde Hubauer in an op-ed in Washington post have suggested a "grand bargain" to resuscitate multilateral negotiations.

"We propose an ambitious idea to break the resulting logjam: a grand bargain that couples an early harvest from the Doha agenda with a blessing by the WTO membership as a whole for the future negotiation of specific plurilateral agreements among willing countries.
The early harvest should start with subjects that create minimal commercial pain for any member but deliver widespread gains, thus minimizing the need for difficult tradeoffs (the underlying rationale for the single undertaking). Three possibilities are trade facilitation, duty-free-quota-free (DFQF) treatment of imports from least developed countries, and reforms to the dispute settlement system.
Trade FacilitationTrade facilitation is the concept of moving goods through customs faster and more efficiently, generating annual gains of at least $130 billion, with a disproportionate share going to developing countries. Reforms will slash unnecessary documentation requirements that create delay and abet corruption but do nothing for security or revenue collection. Singapore is the world champion for trade facilitation and a model for everyone else: Singapore requires just four documents, and clears imported merchandise in five days, on average, at a cost of only $400 per container. Sub-Saharan Africa, with double the number of documents, takes up to 44 days to clear imported merchandise at an average cost of $1,986 per container. The need for improvement is obvious and substantial.
Duty-Free-Quota-FreeA second area with strong potential and little commercial pain is the duty-free-quota-free offer made by industrial countries at the 2005 WTO ministerial. DFQF would allow market access to all goods from the least developed nations, as defined by the United Nations, unfettered by tariffs or quantitative limits. These countries account for less than 1 percent of world trade. Like any other offer in the prolonged talks, DFQF was conditioned on completion of all other items on the Doha agenda. Nonetheless Brazil and Norway have already implemented DFQF without regard to the single undertaking. There is no good reason why other large players, including the United States, cannot subscribe to DFQF as part of an early harvest and, at the same time, narrow the percentage of excluded tariff lines, primarily textiles, apparel, and shoes, from 3 percent (the current figure) to 1.5 percent. Precisely by exporting goods now in the excluded categories will the poorest countries—think Bangladesh and Cambodia—have their best chance of lifting themselves out of abject poverty by their own efforts.
Dispute SettlementThird, there is a soft pitch at hand which the United States can knock out of the ball park: reforms to the "crown jewel" of the WTO, namely the dispute settlement system that enables countries to resolve serious differences more effectively. The changes are not major: faster decisions, more control by countries to settle without going to final judgment, and more transparency of hearings and submissions by parties, just to name three on a pending list of 12 revisions."
Along with these three steps, the authors have suggested plurilateral agreements (like the Government Procurement Agreement) to break the impasse. Who needs to take the initiative to revive the talks? Are countries in a mood to revive the talks and think creatively for a solution in times of slow growth in world trade and "protectionist" tendencies? Would pursuing an aggressive line on RTAs sound the deathknell for the multilateral system?

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