Frankly, I do remain worried however that the US is not in a mood to see others’ viewpoints. And Australia has to be careful not to align itself too much with US viewpoints on everything, since the US is not any longer Charles Kindleberger’s ‘altruistic hegemon’ but rather what I have called a ‘selfish hegemon’, seeking its own lobby-driven interests farther than what we economists call ‘cosmopolitan advantage’.
I am, of course, for trade liberalization by India and am delighted that India’s average applied tariffs on manufactures have come down to around 9 per cent, including a fair amount in the last 7 years of Doha Round negotiations. This comes through the budget, of course, whereas the bound tariffs are handled by Commerce (Minister Kamal Nath). We certainly need more and lower bindings and even lower applied tariffs. But Susan Schwab reportedly wanted bound tariffs reduced from an average of 40 per cent to below the applied tariff rates! Get real, Susan.
Susan Schwab should have been full of praise for what India had done unilaterally; instead she kept blaming India for the last 6-8 month for holding up the Doha Round, for being a ‘rejectionist’. The USTR even maintained a steady public assault on India (and then China) during last week’s tense negotiations. And some Australian policymakers reportedly bought into this, which does not help Indian-Australian relations, I am afraid, though the two countries are strongly bonded by cricket and economists!
Putting pressure on one another for trade liberalization through the WTO is absolutely proper and necessary; but not when the US does it by pressuring others and itself fails to make the subsidy-capping moves which the Cairns Group and agricultural traders have been asking for, at least for the last 7 years!
Jagdish Bhagwati is professor of economics and law at Columbia University and senior fellow in international economics at the Council on Foreign Relations.
Salvaging the Doha Round was not something that was high on many governments priority. Tariff levels in developed countries are already low for many products. Many countries are also unilaterally reducing tariff rates through preferential trade agreements. The WTO as an institution in its current form has probably reached its shelf life. Similar to many other multilateral institutions. Look how effective is the UN and its agencies (e.g. IAE). Its not just a problem in the global trading system. It’s a far larger problem.
I was an Australian servoces industry observer at the recent WTO mini-Ministerial representing the Australian Services Roundtable.
While I do not want to buy into the agricultural debate, it is important when considering the cuttent status of the Doha Round to look at the 3 pillars, Agriculture, MANA and Services as a package especially as many of the gains in trade could have manifested themselves in services. This is especially important as service industries are such a significant proportion of the economies of both developing and developed countires. The trade in agriculture and NAMA of developing countires can be substantially enhanced by accepting services from developed countries as well as provide benchmarks for developing their own service industries.
In the case of the spat between the US and India, it can be argued that neither proposed sufficient changes in both agricultural and NAMA to satisifdy each other and many other WTO members, but I got the imporession that the US were indicating cocessions on Mode 4 that were demanded by India. Surely some greater recognition of the total package, involving all 3 pillars, should have been a catalyst for compromise.
As pointed out by Greg Lopez, many countries have made deals through preferential trade deals (free trade agreements?). The failure of Doha will acceletate the proliferation of FTAs with the likelihood of the smaller lesser developed countries beeing left out. I agree with Greg’ view about the shelf life of the WTO in its present form – unless it come up with better rules for its own operation. especially its principle of consenus being 100% agreement – it will find it difficult to remain relevant.
I have much sympathy with Professor Bhagwati’s views on Australia’s contribution to the fatal blow to Doha. As a small open economy, Australia has everything to gain and little to lose from unilateral liberalization. Why the need to side with the Americans, or for that matter anyone else, on agricultural subsidies? What does this do to PM Rudd’s vision of an Asia-Pacific community?