Tuesday, October 9, 2012

A Global Recovery Round for trade negotiations required?

A lot has been written about the Doha impasse and the way forward. How does one move forward? What are the dangers for multilateral trade if the negotiations impasse continues?

The Economist had this to offer in a recent piece titled "Goodbye Doha, hello Bali".
"Instead of allowing the Doha round to be replaced with a patchwork of regional deals, the WTO’s boss, Pascal Lamy, should close it and resurrect the best bits in a “Global Recovery Round”. He should drop the all-or-nothing “single undertaking” rule that helped kill Doha. Instead, talks would be broken up into small chunks and allowed to progress independently of one another. Negotiations would be open, so that any member could leave or join. Some deals, therefore, would not include everyone. But another of the WTO’s guiding principles—the “most-favoured-nation” clause—must apply. This rule means that any deal between a smaller group must be applied to all WTO members, even if they do not reciprocate. WTO-brokered regionalism would thus lower trade barriers for all. 
The Global Recovery Round should focus on manufacturing and services. Manufacturing represents around 55% of total trade. There is much to be gained: tariffs on cars, buses and bicycles are still high. Even low-tariff countries maintain a selection of high ones. In America ski boots attract a zero tariff, but golf shoes can face a 10% rate, and steel-toe-capped boots 37.5%. Services, which account for only 20% of world trade but are more important on a value-added basis, have hardly been liberalised at all."
Calling for a "Global Recovery Round" of multilateral trade talks, the way forward offered is:

1. Abandon the "single-undertaking" rule.

2. Move forward in specific areas independently of reach other and then apply the most-favoured nation principle. (How this would be acceptable to countries is difficult to fathom.)

3. Focus more on manufacturing and services and less on agriculture.

Pascal Lamy recently indicated that there were signs of a renewed interest n breaking the impasse.
"At this juncture, I believe we can and must explore those spaces, areas or topics on which we can make progress. We need to explore any and all options, small as they may be, for incremental progress on the negotiating agenda. Taking small steps now will be crucial for the credibility of the rule-making capacity of the WTO tomorrow. And as we take these small steps, we must also look at the wider picture, at the areas where progress has been more elusive, and start exploring and testing new approaches, including on so-called more intractable issues, to deliver results."
Whether Bali in 2013 would be the forum that where this can be achieved is debatable. A new WTO chief, a Global Recovery Round and lesser protectionism - hopeful prescriptions for 2013?




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