Although there is still no end in sight, he explains that abandoning the Doha Round would not only waste the potential economic gains, but also leave the world with the outcome of the Uruguay Round, reflecting a negotiating agenda which is at least 20 years old.
Harbinson considers this unacceptable for several reasons, such as:
- None of the difficult issues, such as egregious agricultural subsidies and tariff peaks would be made easier by starting anew.
- Further distortions of trade due to myriad preferential trade agreements and the misuse of other loopholes in rules for protectionist purposes would be unchecked;
- The erosion of the WTO’s credibility would extend to its valuable surveillance and dispute settlement functions.
Looking ahead, Harbinson examines the self-imposed constraint of reaching a single undertaking to resolve a very large range of issues, listing some of the reasons for pursuing that difficult aim. It was considered appropriate in 2001 after several years of unsuccessful single-issue negotiations on agriculture and services generated by the Uruguay Round’s built-in agenda. Secondly, there is still no prospect of making significant gains in terms of reducing distortions to agricultural trade, and other issues are made hostage to progress in this sector. Moreover, delinking progress on other matters does not guarantee reaching an outcome which is considered to be ‘balanced’ by negotiators.
On the other hand, agriculture comprises a rapidly shrinking share of global trade. The range of issues which remain to be addressed continues to widen, including the trade policy implications of any international agreement to limit climate change. It would take many years just to agree on a new agenda which could be expected to lead to an agreed single undertaking. Therefore, on balance, Harbinson argues that ‘The world of international trade may have become too complex for traditional “rounds”. New negotiating paradigms have to be found.’
Considering the potential of ‘variable geometry’ where groups of economies can agree on some arrangements ahead of others, Harbinson warns that the governments with most to gain from progress are most often those who are least able to reach agreement. In practice, many exceptions, exemptions and variable deadlines for various undertakings already create complex ‘variable geometry’.
Harbinson also notes the positive features of ‘critical mass’ type of agreement along the lines of the 1997 Agreement on Information Technology. A welcome feature of that approach is that the results are applied to all on a non-discriminatory basis, provided that the ‘critical mass’ threshold for the issue in question is met.
He suggests the answer might lie an ongoing sequence of permanent, manageable, non-comprehensive negotiations, with subjects linked together less formally than in the current ‘round’ format. In such a ‘repeated game’ environment, outcomes of a successive negotiations on separate issues could provide the prospect of an acceptable balance of perceived long-term gains compared to short-term sacrifices.
The complexity of the challenges facing the WTO could actually be eased by an option that Harbinson does not consider. Harbinson draws attention to the potential value of facilitating trade by reducing the many logistic and administrative problems of moving products across borders and notes that dealing with such matters is a positive-sum game. However, he does not follow up by saying that such trade facilitation need not be negotiated. Moreover, the many opportunities to facilitate trade do not need to be dealt with at the same time – there is no need for package deals when solving positive-sum games.
Indeed, negotiations are not all that relevant to substantive progress on facilitation. For example, easier movement of business people cannot be achieved by negotiating statements of good intentions. Real progress needs patient work and resources to set up compatible information technology to allow such movement of people consistent with obvious security requirements.
APEC’s voluntary process of cooperation on this issue and many others, such as improving customs procedures, are already saving billions of dollars per year for Asia Pacific economies. As I have discussed in an earlier posting, this example can be followed by any other interested governments.
The G20, a new global voluntary process, could not only turn its attention to seizing such opportunities for mutual benefit, but its leaders could also help mobilise the financial resources needed for build the capacity needed to adopt practical arrangement to reduce the cost and risks of international commerce.