Author: Geethanjali Nataraj, NCAER
The Doha round of the WTO launched in September 2001 is yet to conclude.
The stalemate is largely due to the reluctance of both developed and developing countries to move from their established positions on issues related to trade-distorting agricultural subsidies and non-agriculture market access (NAMA); in particular, reduction in industrial tariffs.
After several failed attempts to revive the round and bring it to an end, there was still hope that it could be saved as the G20 leaders, at the 12 November 2010 Summit (held in Seoul), gave a strong commitment to direct negotiators to engage in across-the-board negotiations to promptly bring the round to a successful and balanced conclusion. The leaders acknowledged that 2011 would be a critical window of opportunity, albeit narrow, and that engagement among different groups and countries must intensify. They also reaffirmed their commitment to resist all forms of protectionist measures.
At the 30 November 2010 informal meeting of the Trade Negotiations Committee, WTO Director-General Pascal Lamy (pictured) outlined a process for translating the leaders’ commitments above into the Doha Round negotiations in Geneva. Lamy urged the WTO members to operate on a tight deadline in order to conclude the round by the end of this year. To this end, he proposed the following work program: from 10 January, the Rules, Trade Facilitation, Trade and Environment, TRIPS and Development groups to commence intensive sessions; from 17 January, Agriculture, NAMA, Services and Dispute Settlement groups to begin intensive sessions.
But why is the Doha round so important and are we anywhere near striking a deal?
The conclusion of the Doha round is necessary for several reasons. First, the agreement is expected to provide a cushion against future protectionism by consolidating the large amount of unilateral liberalisation that has taken place since the Uruguay round in the 1990s. Second, the deal would bring in large-scale reforms in farm trade by binding subsidy levels in the developed world and eliminating export subsidies. Third, it is estimated that the gains from the conclusion of the round are around $360 billion — if a deal is struck then it could be one of the most ambitious packages of trade liberalisation negotiated multilaterally.
Last and most importantly, the conclusion of the Doha round would protect the WTO and the multilateral trading system itself, which could be seriously damaged by the failure of a round, especially a round explicitly designed to integrate the emerging economies into the multilateral trading system.
According to Professor Jagdish Bhagwati, the permanent collapse of the Doha round is likely to provoke a wave of preferential trading agreements that would fragment, rather than integrate, the multilateral trading system. The efficacy of multilateral institutions, especially the WTO, is at stake and everything depends on the successful conclusion of the Doha round.
In spite of all the furore over the success and future role of the WTO and the inability of the member countries to conclude the round, there is no doubt that the WTO has gained in traction over the years. The number of countries waiting to seek accession and become members corroborates this. The WTO Annual Report 2008 indicates that its total membership stands at 153 and a further 20-plus countries are negotiating accession. These countries account for nearly 90 per cent of world trade. In another WTO Annual Report 2005, it is said that the elimination of barriers to merchandise trade in both industrialised and developing countries could result in welfare gains of $250–620 billion annually. More rapid economic growth associated with a reduction in global protection could reduce the number of people living in poverty by as much as 13 per cent by 2015. It is clear that for small and poor countries, the WTO is the right platform to go ahead with reforms and pursue their goals of economic development through enhanced trade liberalisation.
The differences between rich and developing nations have been a stumbling block in the conclusion of the talks. Unless the developed and developing countries move from their established positions, it would be difficult to conclude the round. This year is being touted as the make or break year for the Doha round. We can only hope that there is a breakthrough and that everybody benefits in the process.
In the meantime, it is essential that developing countries like India continue to follow unilateral trade policies suited to their own domestic needs but within the framework of the changing international trade environment. Hopefully ‘Doha’ won’t prove a jinxed venue for the WTO but the name for a landmark agreement in the history of multilateral trade.
Geethanjali Nataraj is a fellow at the National Council of Applied Economic Research, India.