Monday, August 6, 2012

Time for a Trade Facilitation Agreement to break the Doha impasse?

The Doha round impasse in multilateral trade negotiations and the possible way forward has been the subject matter of many scholarly articles, discussions and vociferous debates. I have blogged about some of them here, here and here. Should the "single undertaking" condition be waived to seize low hanging fruit and move the negotiations forward? Are there areas in which both the developed and developing world can see a common benefit and agree to disagree on the rest? The Doha Ministerial Declaration in 2001 which began the Doha round of negotiations was clear on the 'single undertaking" when it stated:

"With the exception of the improvements and clarifications of the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations."
A Project Syndicate piece by Robert Zoellick, Ahmad M.Al-Madani, Donald Kaberuka, Haruhiko Kuroda, Thomas Mirow, Luis A Moreno titled "How to Make Trade Easier" highlights the need for an offensive by the WTO to clinch achievable missions to make international trade more attractive to both the developed and developing world. Arguing that efforts must be made to make "trade easier, they have canvassed for a new "Trade Facilitation Agreement" to benefit all trading countries. Offence, in trying times, is the best form of defence.
"The WTO’s best defense of open trade is a good offense. A new WTO Trade Facilitation Agreement would benefit all by increasing developing countries’ capacity to trade, strengthening the WTO’s development mandate, and boosting global economic growth. More than a decade after the launch of the Doha Round of global free-trade talks, this agreement could be a down payment on the commitment that WTO members have made to linking trade and development.
Developing countries stand to gain the most from improving trade facilitation. The right support would help traders in poorer countries to compete and integrate into global supply chains.
There are rich opportunities for gains. Inefficiencies in processing and clearing goods put traders in developing countries at a competitive disadvantage. Outdated and inefficient border procedures and inadequate infrastructure often mean high transaction costs, long delays, opportunities for corruption, and an additional 10-15% in the cost of getting goods to market – even more in landlocked countries."
Implying  that a Trade Facilitation Agreement is a non-controversial subject, benefitting all countries it can be agreed upon coupled with capacity building and technical assistance to countries who need to implement it. 
"In international negotiations, there is always a way forward if the benefits of an agreement are shared by all. Trade facilitation offers a development dividend for all countries. It is time for WTO members to make progress on issues where there is room to do so. It will be a down payment on a solid investment."
 Some observations:

1. Will countries be willing to give up the "single undertaking" principle so easily? Can there be other such non-controversial subjects in the basket of negotiating agendas that can be agreed and implemented? 

2. On a more skeptical note, does Trade facilitation impact developing countries and the developed world equally? It is seen that less developed countries and some developing countries have archaic trade procedures that impact both their exporters and importers. Trade Facilitation will help simplify non-transparent rules and procedures. Is this a way of increasing access of developing countries markets to the developed world? The developed world already has better trade procedures which may not be impacted by the Trade Facilitation Agreement.

3. One area where the Trade Facilitation Agreement will certainly help is capacity building and infrastructure support to improve trading and reducing transaction costs. If it helps a poor exporter from a developing country to access developed markets, the Trade Facilitation Agreement is a welcome relief. However, the impact should not be one sided - improving access to developing countries markets while the developed markets remain a distant reality.

4. What is stopping countries from agreeing on a Trade Facilitation Agreement if it benefits one and all? Is it only the single undertaking pitfall or is there something more?

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